Creative Financing for U.S. Developers and Businesses

In recent years, developers seeking to raise capital have taken a keen interest in the EB-5 Regional Center investor visa program. Regional Centers are entities designed to use immigrant investor capital to promote economic growth in a particular geographic area or region. Developers seeking to raise capital through this program can invite foreign investors to invest $1 million and pool that capital into a new commercial enterprise that creates employment for 10 U.S. workers for each $1 million invested. Developers with projects located in Targeted Employment Areas (TEAs) can invite foreign nationals to invest at the reduced amount of $500,000. The investor visa program is an attractive source of financing because:

  • Developers enjoy relatively inexpensive bor¬rowing costs (ranging from 3 to 5 percent); and,
  • Developers using EB-5 funds are under no pressure to produce high rates of return; EB-5 investors are more concerned with ob¬taining green cards than the returns on their investments.

Green Cards for Foreign Investors

The EB-5 investor visa program gives permanent residency (a green card) to foreign nationals who invest in individual capital development projects as well as projects sponsored by Regional Centers. After five years of residency, the foreign investors can apply for U.S. citizenship.

The Regional Center Pilot Program

Most investors opt to invest in projects sponsored by Regional Centers. Regional Centers are legal entities organized to use immigrant investor capital to promote economic growth in a particular geographic area in specified industry clusters.

Any entity, government, or private organization may apply for Regional Center designation by submitting a written economic development plan and proposal to U.S. Citizenship and Immigration Services (USCIS). A Regional Center’s proposal must contain a clearly identified, contiguous geographic area typically defined by census tracts. Some Regional Centers cover an entire state, while others encompass several counties or several small census tracts.

If the center contemplates investments of $500,000, it must identify the TEAs.

Most EB-5 visas are issued through the Regional Center Pilot Program because

  1. USCIS allows Regional Centers and the projects they sponsor to calculate job creation through econometric models that count direct, indirect, and induced jobs; and
  2. the Regional Center Program allows for passive investment – foreign nationals need not actively manage the business.

Companies seeking to raise capital through the EB-5 program can either establish their own Regional Center or affiliate with an existing one.

What is a Targeted Employment Area?

A TEA is a rural area or a geographic area or political subdivision located within a metropolitan statistical area (MSA) or within a city or town with a population in excess of 20,000 with an unemployment level at least 150 percent of the national unemployment rate. TEAs within a state are designated by that state’s governor. A rural area (RA) is a geographic area that is outside an MSA, or part of the outer boundary of any city or town having a population of 20,000 or less as shown by population indicators. Typically a Regional Center seeks to encompass one or more TEAs. In certain areas involving sparsely populated states, an approved statewide Regional Center will likely encompass both TEAs and RAs.

Structure of Projects

Projects are typically structured so that foreign nationals invest in a limited partnership that either provides a loan or takes an equity stake in a qualifying real estate or other capital development (i.e., job creating) project. Once the investors have their permanent green cards, most project developers try to “take them out” of the project, either by refinancing or selling.

  • Loan terms are typically four to five years because this is about how long it takes for investors to get their permanent green cards.
  • Once an investor’s funds are committed, the investor’s immigration attorney, working with the Regional Center, files a petition for an immigrant visa on the investor’s behalf.
  • Funds may or may not be held in escrow pending approval of the petition.
  • Petition processing times are about six months. Upon approval, investors can apply for immigrant visas and move to the United States as conditional residents.
  • Twenty-one months after the initial petition approval, the Regional Center must file a petition to remove the conditions on residency. The Regional Center must prove that it followed its business plan, thereby validating the economic modeling and job creation numbers. Upon approval by USCIS, the investors have unconditional lawful permanent residency. The investor may apply for U.S. citizenship five years after getting their initial residency.

Challenges for U.S. Developers and Businesses

Challenges to raising funds through the EB-5 investor visa program may include:

  • Getting regional center designation from USCIS can be time-consuming and costly.
  • Raising funds from investors residing in a foreign country may take substantial time with no guarantee that the effort will succeed.
  • Foreign agents and investors may demand that the EB-5 investment funds be held in escrow until their visa petitions are approved. This can take from four to eight months.
  • If the investment is made through a loan to the developer, the loan likely will be ineligible for prepayment for a period of several years, in order to satisfy the requirement that the investment is committed and “at risk” until removal of the investor’s conditional resident status.
  • At the end of a two-year period, the developer and Regional Center operators must demonstrate (typically through an econometric study) that the project has created the requisite number of full-time jobs for U.S. workers.

Project Types That Have Successfully Accessed EB-5 Financing

The project types most suitable to the EB-5 program are those that create many jobs. Project types are driven by the appetites of investors, particularly Chinese investors. These investors like the loan model; security; and projects with some type of local, state, or federal government backing or involvement. EB-5 capital has been used to fund such projects as farms, ski resorts, film production, mixed use real estate development, nursing and assisted living facilities, hospitals, medical research facilities, manufacturing facilities, large infrastructure and construction projects and bridge construction.


Currently, approximately 85 percent of EB-5 visas are issued to Chinese nationals. After China, the four top countries are South Korea, Taiwan, Iran, and Venezuela.

In 2011, the EB-5 investor visa program issued 3,463 immigrant visas resulting in more than $1 billion in investment in the United States.