EB5 Visa Investments: Direct, Direct Pooled vs Regional Center
Given a choice, would you prefer to invest in own business over Direct Pooled or a Regional Center Project? Of course, you would say yes. Who wouldn’t want to invest the hard-earned money in their own business when the EB5 Investment funds should be “At-Risk” during the course of the EB5 Green Card process.
By the end of this article, you would have an idea about what is the difference between Direct and Regional Center EB5 Investments options. Let’s explore three types of EB5 Investment options:
- Direct Investment
- Direct Pooled Investment
- Regional Center Investments
I’m pretty sure a potential EB5 investor would have explored the possibility of investing the funds in their own business before deciding with a Direct Pooled or Regional Center Project.
Direct EB5 Investment
Direct EB5 Investment is equivalent of starting your own business. It could be a restaurant franchise or any other business of your choice.
For the Direct EB5 Investment, I’m not entirely sure if you have to invest in a New Commercial Enterprise or an existing business! That’s something you have to consult an EB5 Attorney.
The business owner has to create the 10 Direct Full-time Job required to satisfy the EB5 Job creation requirements.
You have direct control of where your money will be invested and used. Along with business operations, revenue and profits.
Direct Pooled EB5 Investment
For Direct Pooled EB5 Investment, the money is pooled from a group of EB5 Investors and invested in a New Commercial/Job-Creating Enterprise.
Under Direct Pooled EB5 Investment, you are investing the EB5 capital in a project and you wouldn’t have control of your money in most cases. And the project would be developed and operated by the Developer.
You wouldn’t have the control of the project nor required to deal with day to day operation of the business. Here’s a typical Direct Pooled Investment structure would look like.
In this case, JCE and NCE (discussed later under Regional Center) are one and the same. The Project developer would have to hire an employee at least 800 employees to meet the job creation requirements.
10 Jobs per Investor. For 80 Investors, at least 800 Direct Full jobs are required.
In comparison to Direct EB5 Investment, where you are responsible as the business owner to create the required jobs, here’s there’s a Developer who does that work.
For example, let’s imagine a New Hotel Construction Project:
- Total Project Cost: 100 Million Dollars
- Developer Capital: 60 Million
- EB5 Funds: 40 Million
- Total EB5 Investors: 80
- Required EB5 Jobs: At least 800 Direct Full Time Jobs
After Due Diligence, if the investor feels comfortable with this project, they would invest the money and wait for their Conditional Green Card and then file I-829 to remove the conditions.
EB5 Regional Center Investment
Regional Centers investment, just like Direct Pooled Investment is a hands-off approach. The major attraction here is how the required jobs are created.
The previous two EB5 Investment options, jobs have to be directly created to meet the job creation requirements. In other words, the business has to hire and employ people on a full-time basis for a long period of time.
As you can see, the last Blur Box in the above chart, Direct and Indirect Jobs can be counted to meet the job creation requirements. I will discuss the Economic model in detail in another article.
To give an idea, 1 Million of Money Invested or Earned as Revenue approximately equated to 18 jobs being created.
Now, let’s apply the New Hotel Construction under Regional Center Model and assume that out of 100 Million, 80 million qualifies for Job Creation requirements.
Direct Pooled Investment
- EB5 Funds: 40 Million
- Investors: 80
- Required Jobs: 800
Regional Center Investment
- Project Cost: 100 Million
- Qualified EB5 Funds: 80 Million
- Jobs Created: 80 x 80 = 1440 (via Economic Model)
This gives the Developer an option to get more than 80 investors.
Plus, about 80 Million of money counts towards EB5 Funds, even if they offer only for 80 Investors.
I have to bring in an EB5 Visa expert to go into details about the math involved in the above calculation process. I gave an example to provide a rough estimate to show the difference between EB5 Investment your business, Direct Pooled and Regional Center projects.
EB5 Visa Related Articles
- EB5 Visa Process for US Green Card – I-526, I-485, and I-829
- Glossary of EB5 Visa Terms
- 20 FAQ’s About EB5 Visa for H1B Visa Holders
- Source fo EB5 Visa Funds for H1B & H4 Visa Holders
- Can $500,000 Investment be Any Type of EB5 Projects?
- EB5 Investment – $900,000 or 1.8 Million
- EB5 Visa Investments: Direct, Direct Pooled vs Regional Center
