4 Must-Haves to Help You Snag an Innovative Source of Funding Why a by-the-book approach is crucial to obtaining this dynamic source of funding -- one that gives foreign investors permanent U.S. residency.

By Sam Silverman

Opinions expressed by Entrepreneur contributors are their own.

The EB-5 Immigrant Investor Program allows foreign investors who meet a specific set of requirements to obtain permanent U.S. residency. In effect since 1990, it has gained particular traction in recent years among business owners and project developers, who have come to regard the EB-5 investment industry as a secure and reliable source of capital. The program has poured billions of dollars into U.S. businesses and created thousands of full-time jobs. It also encourages investment in targeted employment areas (TEAs), which are either rural or are experiencing high unemployment. EB-5 investors who choose projects located in TEAs are granted a lower investment requirement of only $500,000, as opposed to the at-least $1,000,000 required for non-TEA projects.

U.S. business leaders can often access EB-5 investment funding at below-market rates, but they must keep in mind that United States Citizenship and Immigration Services (USCIS) closely regulates the industry. If an EB-5 investor does not follow USCIS guidelines, he or she will be ineligible for a U.S. Green Card. As a result, project developers must take care to ensure compliance with such policies.

In my experience as the managing partner of an EB-5 consulting firm, I have noticed that a USCIS-compliant business plan is one of the most important elements in considering such an investment.

Related: What Is the EB-5 Immigrant Investor Program?

The importance of a solid plan

USCIS examines EB-5 business plans carefully before granting approval to a project's investors. In essence, plans must show that the project is financially viable and compliant with regulations. Issued by the USCIS Administrative Appeals Office (AAO) in 1998, the "Matter of Ho" decision provides insights into how USCIS evaluates business plans, especially regarding accuracy, detail and transparency. There has been additional information concerning plan requirements released since, so business owners should make a point of working with immigration attorneys and EB-5 consultants when structuring their offerings.

It is particularly important for plans to show how the EB-5 project will strengthen the U.S. economy and create at least 10 job positions per investor — the two principal objectives of the program. Moreover, investors are unlikely to subscribe to a project with an unconvincing or poorly written plan; investors gravitate toward those that clearly adhere to USCIS standards and thereby offer a higher chance of successful immigration.

Business leaders interested in raising EB-5 investment capital should consider the following components of a solid plan, which will make their offerings attractive to investors from a wide variety of markets.

Related: The 5 Best Markets for Raising EB-5 Investment Funds

1. Potential for job creation

Since one of the main objectives of the EB-5 program is to reduce unemployment, an associated project's potential for job creation is essential. If a plan does not explain how at least 10 jobs per investor will be created, USCIS is unlikely to approve the investors' visa petitions. Therefore, it must include details such as the number of projected jobs, a description of each position and a hiring timetable.

Employment calculation methods are different for direct versus regional center-sponsored projects. The former can count only full-time positions that appear on the business's payroll, while regional center projects can also include indirect and induced employment (calculated by recording a project's development expenditures and operating revenues).

2. Financial viability

EB-5 plans must provide evidence of the project's financial viability. To this end, business owners should commission a third-party analysis that gauges potential for success and explains how the investment funds will be used. It's also important to include details such as projected revenue and expenses, and that the budget is sufficient to cover expenses related to employment creation.

3. Marketing strategy

Every EB-5 project should have a strategy to attract potential clients and investors. Marketing plans typically include hiring foreign migration agents, producing appealing marketing materials and offering informational seminars for interested investors.

Owners should additionally keep in mind that foreign nationals from varying geographic regions have different expectations and preferences when selecting an EB-5 investment opportunity. Consequently, marketing strategy should consider the needs and preferences of the project's target markets.

Related: How to Build Trust With EB-5 Investors

4. Detailed project description

An EB-5 business plan must describe the project's scope, business type, operational plan and timeline. There should also be information on its management team, employees, immigration attorneys and other professionals involved. Owners should aim to provide USCIS with a detailed overview of the organizational structure, which will enhance the plan's credibility and transparency.

Structuring a successful EB-5 project is often a multi-year process that requires careful preparation. Still, many business leaders have found that the effort is well worth it, especially in light of this sector's current success and its potential to fuel accessible funding.

Sam Silverman

Managing Partner of EB5 Affiliate Network

Sam Silverman is managing partner of EB5 Affiliate Network, a national EB-5 visa firm with over 1,800 foreign investors from more than 60 countries. He has extensive real-estate development, management, financing and brokerage experience in the U.S. and in the People’s Republic of China.

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