Questions to ask about any EB-5 project

Due diligence means investigating an investment before committing to it. For EB-5, it has two dimensions: whether the investment is likely to support your immigration petition, and whether it is a reasonable investment for you financially. A project can be strong on one dimension and weak on the other.

Ask these questions in writing where possible, and compare the answers against the offering documents. Vague or inconsistent answers are themselves useful information. A qualified U.S. immigration attorney and a licensed securities or financial professional who are independent of the offering can help you interpret what you receive.

The developer or business behind the project (the sponsor) and the regional center are separate roles, and sometimes separate companies. A regional center is an entity that USCIS has designated to participate in the Regional Center Program; designation is about the entity's eligibility to sponsor EB-5 investments, not an endorsement of its projects.

• Who is the sponsor, and how many comparable projects has it completed outside of EB-5?
• Has the regional center sponsored earlier EB-5 projects? How many investors in those projects have had their petitions to remove conditions (Form I-829) approved, and how many have been repaid?
• Are there any past or pending lawsuits, regulatory actions, or investor complaints involving the sponsor, the regional center or their principals?
• Is the regional center currently designated by USCIS, and is it current on its annual statements (Form I-956G)?
• Who are the individuals in control, and what are their relationships with each other and with any marketing agents?

Track-record figures are only meaningful if you can see how they are calculated and over what period. Ask for supporting detail rather than summary percentages.

Under the 2022 Act, each regional center project requires its own application, Form I-956F, describing the investment offering and the new commercial enterprise.

• Has the I-956F been filed? Is it pending or approved? Can you see the receipt or approval notice?
• Have there been any requests for evidence, and how were they resolved?
• Have there been material changes to the project since filing, and how will they be handled?

The capital stack is the combination of money funding the project, such as senior bank loans, mezzanine debt, preferred equity, EB-5 capital and the sponsor's own equity. The order in which these are repaid determines who bears losses first if the project underperforms.

• What is the total project cost, and what share is EB-5 capital?
• Is EB-5 capital structured as a loan to the project or as equity? Where does it rank relative to senior lenders and the sponsor's equity?
• How much of the sponsor's own money is in the project, and when was it contributed?
• Is senior financing committed, or is it still being sought?
• What is the expected exit or repayment source, such as refinancing, sale or operating cash flow? What happens if that source is not available on time?
• Do the documents allow the new commercial enterprise to redeploy capital (reinvest it in another qualifying activity) after the initial investment? If so, into what, on whose decision, and for how long?

Each investor must generally show the creation of 10 full-time jobs (at least 35 hours per week). Regional center projects may count direct, indirect and induced jobs using a reasonable economic methodology, usually set out in an economic impact report.

• How many jobs does the economic report project, and how many investors is the offering raising capital from? What is the cushion (projected jobs above the minimum required)?
• Which expenditures does the job estimate rely on, and are those expenditures being funded by EB-5 capital or other sources?
• What share of the projected jobs comes from construction activity? Under the statute, jobs estimated from construction lasting less than two years may generally count for no more than 75% of the requirement; ask counsel how this applies.
• What is the construction status: land acquired, permits and approvals obtained, general contractor engaged, work started?
• Is the budget supported by a contractor's agreement or independent cost review? Who pays for cost overruns?
• What happens to investors' petitions if the project is delayed, downsized or changed?

• Is investor capital held in escrow? With which institution, and under what written release conditions (for example, a project-application or petition milestone)?
• What happens to escrowed funds if a petition is denied? Is a refund of capital offered, and under what conditions?
• What administrative or syndication fees are charged, to whom are they paid, and are they refundable?
• Are any fees or commissions paid to marketing agents, migration agents or other intermediaries? Does the person recommending the project receive any compensation from it?
• Do the sponsor, regional center or their affiliates earn fees or interest from the project in ways that could conflict with investors' interests?

Administrative fees are separate from the minimum investment amount and from USCIS filing fees, which are listed on the USCIS fee schedule (opens in a new tab).

Interests in EB-5 offerings are generally securities under U.S. law. Many are offered as private placements under exemptions from registration with the U.S. Securities and Exchange Commission (SEC). Depending on the exemption used and where the investor is located, investors may need to meet eligibility standards such as the "accredited investor" definition, and the people who sell securities for compensation generally must be appropriately registered.

• Under which securities law exemption is the offering made, and what eligibility rules apply to you?
• Is the person or firm presenting the offering a registered broker-dealer or associated with one? You can search individuals and firms on FINRA BrokerCheck (opens in a new tab).
• Have you read the joint SEC and USCIS investor alert on EB-5 investment fraud (opens in a new tab)?

• Browse structured project information on EB-5 projects, keeping in mind that listings are not endorsements.
• Read understanding EB-5 investment risk for a broader look at what can go wrong.
• Compare regional center and direct investment if you are still deciding between paths.
• Ask a qualified U.S. immigration attorney and a licensed securities professional, both independent of the offering, to review the documents. You can request a consultation to be connected with qualified professionals.