11 Jewels in EB-5 Direct

Ever since the Regional Centre (RC) program got shut down on June 30, 2021, there has been continued anxiety amongst aspirants for pursuing their EB-5 investment under the Direct route. It is ironical that when the RC program was active, investors wanted to pursue Direct (under the pretext that there have been frequent RC failures & hence any investment must be in one’s own project – Direct). The harsher truth is that people who are indecisive will always stay so & those who have the knack & insight will inevitably flourish in their investment choices (not just EB-5, it could be real estate, stocks, or simply business).

The process of due-diligence cannot be summed up in a dozen bullet points. The process of auditing an EB5 project in a regional center program is very different than that of a Direct. While there is enormous amount of literature on internet for regional center, there is hardly any data, facts or insights on the direct program. Every other day, we have received queries from anxious applicants wishing to know how to select a direct project. For them, here are a few pointers:

1. Select a project that is already in business as against a project which is going to be built-up with the money of EB-5 Investors
2. Select a project that is already profitable at the bottom line, i.e. Net Profit After Tax
3. Select a project that has minimal amounts of debt on its Balance Sheet
4. Select a project where the promoters have already infused significant capital
5. Select a project which offers plain equity, i.e. ownership, not just preferred equity
6. Select a project that has an updated TEA, i.e. Target Employment Area, Certificate
7. Select a project that has the potential, & necessity, to hire US permanent residents, i.e. a human-capital intensive business
8. Select a project that that agrees to provide you a periodic update
9. Select a project that agrees to refund your capital on I-829 filing, instead of I-829 adjudication
10. Select a project that has the willingness & appetite to refund your capital on I-526 denial
11. Select a project that is in the business where hiring would primarily be of white-collar people as against blue-collar (it is beyond the scope of this article to explain why this is so; just stick to what is said)

Above are the few basics that must exist in any given project. It will take time for you to identify something that matches the above, but so be it. If your case is urgent, then you may compromise on any 1 to 2 pre-requisites.

This article has been written with the intent of helping eb-5 applicants for selecting a project. Hope the reader enjoyed reading it, and picked up a few points that can help in the process.