New Business Versus Regional Center for an EB-5

New Business Versus Regional Center for an EB-5
by Christy Wallace, Co-Founder and Partner, Ryvin Wallace Group

The following comments are a very cursory analysis of the difference in using a new business versus a Regional Center to ride the EB-5 to the green card finish line. Notably, an EB-5 goes through two stages of approval and none of the substantive qualifications to obtain initial EB-5 approval, nor evidence needed to remove the 2-year temporary conditions on an EB-5 are laid out in this article. But the author does provide an opinion on which method is better for which investor as well as some reasoning and cautions.

New businesses have many risks inherent in the immigration approval process. On top of that, new businesses have pure numbers working against them which is that a large percentage of new businesses fail within the first few years. We never recommend using a new business, owned NOT by a Regional Center, as the EB-5 model. If a person has an existing business which meet the qualifications for EB-5 status and has business indicators showing it will continue to meet EB-5 requirements two years after initial green card approval, only then should he file a non-Regional Center application. To clarify further, this person typically is an individual already working pursuant to E-2 Treaty Investor status. He or she owns a decent business and wishes to upgrade visa status by filing an EB-5 petition based on BOTH existing or prospective business success of the entity in which he is invested. This person may file for EB-5 status using their own company.

The advice given by practicing business immigration attorneys is that if one has money to put at risk, put it into a Regional Center, and not any Regional Center either.

Note that Regional Centers can contain multiple investments under their umbrella name, so an investor wants to be certain that he or she is signing up for an investment that (since 12/09 is permitted) has been pre-cleared by US CIS as a vehicle determined to be sound on its immigration credentials, which inherently include financials viewed as viable/approvable financials from the US CIS's point of view. An investor must still be forewarned that US CIS can make a determination of the soundness of a Regional Center (a pre-clearance) for such Regional Center to essentially "guarantee" EB-5 approvability for any GENERIC investor. Yet, this does not predicting approval for any individual in particular who comes with his own set of background issues. Also, such pre-clearance does not guarantee that the investment will stand up under its own business model over time nor up against economic forces that are out of the control of the Regional Center.

At a minimum, one should obtain advice from three distinct and independent sources when applying for a visa based on investment in a Regional Center: (1) an immigration attorney who is NOT affiliated with the Regional Center to make sure that all immigration venues for the family, immediate and extended, are explored,(2) a tax attorney who has global tax experience and preferably affiliates overseas to obtain first-hand information about source of money problems and restrictions in other countries and (3) a valuations expert who can draw on knowledge of the local market as well as the nature of the investment vehicle.

Read more about RWG's checkpoint visa services for wealthy individuals.