What EB-5 Investors Want in a Regional Center

By offering the extra protections that help investors feel secure, a Regional Center can build a reputation for helping immigrant investors achieve their goals.

When new Regional Centers and developers enter the EB-5 space, one of the most challenging aspects of the industry can be understanding what makes EB-5 investors different from other investors, and what they’re actually looking for when they select a Regional Center and project.

Developers want to finish the project on time and on budget, and deliver returns for their investors. But for EB-5 investors, there are a lot of other concerns that can take precedence over traditional financial priorities. Understanding what these investors value, and how to make them feel confident in their choice, is what makes the best EB-5 Regional Centers successful.

Protecting investors’ EB-5 funds

Under the EB-5 Reform and Integrity Act of 2022 (RIA), the minimum investment amount for infrastructure projects and those in rural or urban high-unemployment areas is $800,000; for all other projects, the minimum is $1,050,000.

That’s a significant amount of capital to be putting at risk. While some EB-5 investors may be high net-worth individuals (HNWI), that isn’t always the case. Many EB-5 investors have to borrow money from friends and family, sell assets, or use their entire savings in the hopes of immigrating to the U.S. Some have been living and working in the United States for years under F-1 student visas and H-1B visas, and are now putting everything they’ve worked for at risk in order to continue living here. That kind of sacrifice should be treated with respect; with so much on the line, investors want to know their invested funds will be treated with care.

When immigrant investors first sign on to a project, getting their EB-5 funds to the U.S. poses unique challenges due to currency exchange, remittance restrictions, and source of funds documentation. Many banks are hesitant to accept EB-5 deposits because they don’t have experience with the program. And if there is an issue with the project, investors want to be able to have their funds returned to them quickly so they can find a different project or pursue another immigration avenue.

This is where JTC’s wide range of services can come in handy. Because we are a global financial partner working across many sectors, we’ve developed relationships with a network of banks, including those that understand EB-5 and work with us to handle compliance issues. As an independent escrow agent and administrator, we can work with Regional Centers to identify the right banking partners to deposit investor funds before they are deployed to the project.

While some banks have deposit sweep solutions, these offer little choice as to where deposits are held, and if there is an issue with the bank, it may be difficult to move funds quickly. JTC’s flexible banking solution provides investors with full FDIC insurance so they can be confident that if anything happens with the bank, their funds will be protected.

At the same time, Regional Centers can maximize banking relationships to gain access to lines of credit or better interest rates. If a situation occurs where money needs to be moved, it can be done quickly because we’re an independent escrow agent. And with JTC’s cosignatory services, investors will know that funds won’t be deployed to the project unless the transaction has been reviewed and approved by JTC.

In addition to protecting their funds before they are deployed, investors also hope to get their investments back at the end of the process. That means they want reliable projects that mitigate risk as much as possible. The more you can demonstrate the stability of your project through the track record of the Regional Center, developer, and third-party service providers, the more confident investors will feel putting their futures in your hands.

Meeting job creation requirements

A key requirement for any investor petition is that the investment must be used to create at least ten full-time jobs. If those jobs aren’t created, the petition won’t be successful. Investors want to be sure not only that the project will be able to create those jobs as promised, but that the necessary information will be tracked so they can prove to U.S. Citizenship and Immigration Services (USCIS) that the requisite jobs were created. Offering documents need to properly demonstrate how jobs will be created, and progress should be consistently communicated to investors throughout the process.

Another requirement is that the investment must be put at risk for a minimum of two years. This sustainment period needs to be properly calculated, because if the investment is returned too early, investors will have to redeploy. Understanding the rules regarding calculation of investment sustainment and proper investor communication around this issue will be critical.

Some investors may want their investments back as early as possible, but most will wish to invest in whichever project appears most likely to return their capital and help them meet their immigration requirements. Part of the investor due diligence process is confirming that EB-5 immigration components have been properly integrated into the offering. If you can show that your project will meet these requirements and provide investors with the information they need, they’ll feel confident working with you.

Compliance with the RIA

In the past, EB-5 was plagued by bad actors who harmed the reputation of the program. To combat this, the RIA instituted strict integrity measures for Regional Centers. Failing to follow these measures can result in Regional Centers being terminated or individuals being barred from EB-5. This helps to keep bad actors out of EB-5, but it also presents a new worry for investors, who want to know their Regional Center won’t be terminated while their investments are still at risk.

One of the RIA’s provisions is a requirement for third-party fund administration. While it is possible to obtain a waiver for this requirement by performing an annual GAAP audit, this type of audit can only catch errors after the fact, and doesn’t provide the consistent oversight a fund administrator can provide. Investors are learning about the value of fund administration and may look specifically for a Regional Center that obtains third-party controls.

The RIA also has strict rules regarding recordkeeping and mandates that USCIS audit Regional Centers at least once every five years. A failed audit can result in steep penalties, and failure to comply with audits can jeopardize a Regional Center’s status. That’s why JTC offers EB-5 audit services to help our clients ensure they have the information necessary for audits and investors will know their Regional Center is prepared.

Communication

Many EB-5 investors live abroad and speak English as a second language (if at all). With their capital and immigration status at risk, they can be understandably worried about how the project is going. The better you communicate with those investors, the more comfortable they will feel working with you.

JTC provides an online portal that lets investors view project information at any time, 24/7, from anywhere in the world, so they can check the movement of their capital and the progress of job creation. What’s more, they can view customized reports and get the information they need for their immigration petitions without having to contact someone at the Regional Center.

Having an online portal and another point of contact through the fund administrator shows investors that the Regional Center is looking out for every contingency. If the project were to go bankrupt, or the Regional Center principals debarred, how could investors get the information they need? With JTC, they’ll still have access to key data online and can contact us for help. You may not think it’s likely to happen, but by showing investors they won’t need to worry even in the worst case scenario, you’re demonstrating how much you’re thinking about their needs.

Understanding investor priorities and immigration goals

The most important thing for EB-5 developers and Regional Centers to understand is just how much EB-5 investors have at stake. All investors put capital at risk, but not all investors have their life savings, immigration status, and their families’ future on the line. For these people, it’s worth it to have additional protections in place, which is why third-party controls are such a valued component of EB-5 investor due diligence. They want to know you care about their goals and have processes in place to help them succeed.

As an EB-5 administrator with a commitment to best practices, JTC provides security through our escrow and banking solutions, along with cosignatory services and fund administration that shows investors their money is being handled properly. We provide transparency through a 24/7 online portal that allows investors to track investments and download necessary documents when they need them. And investors will know you care about compliance because you’ve engaged third-party oversight from a trusted name that has helped facilitate successful petitions for many years.

Earning investor trust is difficult, but with JTC, you can prove you’re willing to go above and beyond.