Making an informed decision
EB-5 due diligence: the questions to resolve before you invest
Build your decision around the investment documents and your own immigration circumstances. Establish who is responsible for each part of the work.
In short
- Documents
- Offering documents, business plan, job-creation analysis
- Regional center
- On the current USCIS list; ask about Form I-956F
- Costs and repayment
- A written fee schedule; the risk and repayment terms
- Representation
- Your own immigration attorney
Ask for evidence you can review
The investment structure
Identify the legal entities, the recipient of the capital, the use of funds and the rights acquired. Review the offering documents with an appropriate adviser.
Employment and immigration evidence
Request the business plan, employment analysis and relevant project filings. Ask your attorney what those documents establish for your individual case.
Fees, risks and repayment
Ask for a complete cost breakdown and read the provisions governing losses, extensions and repayment. A projected date needs its assumptions and contractual basis.
How do I do due diligence on an EB-5 project?
Start with five things, in documents rather than in conversation. First, that the regional center is on the USCIS list of approved regional centers. Second, whether Form I-956F for the offering has been filed and approved. Third, what the offering documents say about risk of loss, repayment and extensions. Fourth, the evidence that the project will create at least 10 full-time jobs per investor. Fifth, every charge beyond the investment itself. Have your own immigration attorney review them before you commit.
What is an EB-5 regional center, and how do I check one?
USCIS describes an EB-5 regional center as an economic unit, public or private, in the United States, involved with promoting economic growth. An investor who participates through a regional center files Form I-526E. USCIS publishes a list of approved regional centers by state and a separate list of terminated regional centers: confirm that the regional center named in the offering documents is on the current list before you commit funds.
What is Form I-956F, and why ask about it?
Form I-956F, Application for Approval of an Investment in a Commercial Enterprise, is the form a designated regional center uses to request USCIS approval of each particular investment offering through an associated new commercial enterprise. Ask whether the I-956F for the offering has been filed and whether USCIS has approved it, and ask your immigration attorney how that status affects your own Form I-526E.
How do I show the lawful source of my EB-5 funds?
The investor must show that the capital was obtained through lawful means and document the path of the funds into the investment. For petitions filed now, USCIS lists evidence such as personal tax returns filed during the past seven years, foreign business registration records, business tax returns and documents identifying every other source of capital; loan agreements, employment records, gift documents and property records are also used. Gifted or borrowed funds are documented the same way, for the donor or, if not a bank, the lender. Start gathering these records early.
Who represents you in an EB-5 transaction?
Retain your own immigration attorney and budget for legal fees separately. The lawyer’s client and scope of work should be stated in an engagement agreement.
Ask the person presenting an offering to identify their role, the company they act for and any compensation connected with the investment. The answer should be specific to that offering.
Who answers which questions
Investment questions belong to the issuer’s documents and your own attorney. Questions about the residences go to the broker.