EB-5 Regional Centers & Accessing Chinese Money

EB-5 Regional Centers & Accessing Chinese Money

The EB-5 immigrant visa program has been around for over 20 years. But it has only recently taken off, as many Chinese investors have found that the reduced investment required to qualify for EB-5 visas (from the usual $1,000,000 to only $500,000 for Targeted Employment Areas or TEAs) suits both their personal and economic goals. Indeed, over 85% of the current EB-5 visas are issued to Chinese Nationals, with South Korea, Taiwan, Iran and Venezuela being distant second, third, fourth and fifth. Big projects such as the SLS Hotel in Las Vegas, the Ritz Carlton and JW Marriott in downtown Los Angles, and the Silverstein project in New York City all have EB-5 money in them.

The EB-5 Win-Win

For the Chinese investor, the beauty of an EB-5 visa is that he or she can obtain provisional U.S. residency, then a permanent residency card (green card) and, after 5 years of residency, U.S. Citizenship. For the developers or other businesses who can be assured of creating at least 10 jobs, the EB-5 program provides a relatively “cheap” source of funds (generally 1% to 5% interest rate) for development of the business. It is proverbial win/win situation.

EB-5 Investment in Practice

Projects that are seeking EB-5 money generally structure the investment in the form of a limited partnership: the Chinese national invests in the LP and the LP either loans, or takes an equity interest in, a qualifying project that results in creating the minimum of 10 jobs per $500,000 of investment. Once the Chinese investor receives his or her permanent green card – generally in 3 to 5 years – the project developers return the money to the investor, thereby relieving the investor of having to lock up his or her money. This money would then be free for the EB-5 investor to use as he pleases. The project developer, if necessary, finds another means of financing (either with a new EB-5 or with traditional financing) from a more established business position.

Chinese investors typically invest in an EB-5 program via a regional center set up for the sole purpose of arranging financing or through a dedicated regional center set up either by a group of investors or, in the case of Michigan and Vermont, by the State Government itself. IPO Pang has substantial experience in setting up regional centers, in connecting developers with qualified Chinese investors, and in assisting and coordinating the closing of the transaction where funding actually occurs. We also can assist the developer or EB-5 capital seeker in preparing all the legal documents necessary to effectuate a successful “road show,” including connecting with high net worth individuals and angel investors who are amenable to considering projects that otherwise might be overlooked.

Where there is a need, IPO Pang is there for you.