Regional Center vs. Direct Investment

The following discussion is to compare/contrast the advantages of regional center and direct investment.

Regional Center (RC) EB-5

RCs owned by developers and financiers receive a USCIS charter to pool capital for job-creating projects.

• RCs may count direct, indirect and induced job creation for the 10 jobs each EB-5 immigrant investor must create (i.e., at the project and/or downstream in the economy)
• More jobs can be counted due to the indirect job creation measured by an economic input/output model
• The job creation may be wholly indirect, i.e. the RC builds a hotel and leases it to Hyatt who hires the employees – these are indirect jobs, as they are not paid by the RC Limited Partnership
• Ability to fund larger projects (i.e., a $50-$150 million hotel)
• Ability to obtain project preapproval (“exemplar”), but this takes a long time (about 9 to 12 months, sometimes longer)
• Can take EB-5 equity into a limited partnership which can loan the funds to a project (this is not permitted for a direct investor, except possibly to a wholly-owned subsidiary)
• Note, some projects may be structured to attribute jobs to both direct and RC investors – i.e., the direct investors are attributed the direct jobs and the RC investors the indirect jobs

Direct Investment EB-5

A direct investment involves creating 10 W-2 jobs paid by the company in which the immigrant investor contributes equity.

• Project can attract capital quickly (without having to wait for regional center approval)
• Immigrant investors’ EB-5 I-526 petitions are decided by USCIS much faster than RC cases (about 6 months vs. about 1 year+/-)
• Projects can be developed anywhere – not just in a region as required for an RC investment
• Direct investors often earn a higher rate of return on their investment than RC investors, but this is not required or always the case