Understanding the Differences Between EB-5 Direct Investment and Regional Center Investment

The EB-5 Immigrant Investor Program offers foreign nationals a pathway to U.S. residency through investment. Through the program, there are two investment options: direct investment and regional center investment. Both pathways aim to stimulate the U.S. economy through job creation, but they differ in their structure and requirements.

EB-5 Direct Investment

In a direct EB-5 investment, the investor puts their capital directly into a specific business, either by starting their own business or investing in an existing business. Features of a reliable direct investment include:

1. Feasibility: The project or business venture is practical, achievable, and likely to succeed based on thorough analysis and planning. 
2. Direct Job Creation: The investment directly creates at least 10 full-time jobs for U.S. workers.
3. Control and Oversight: Investors have more control over the business operations and the ability to oversee their investment.

Direct investment is ideal for those who have experience in managing businesses. It often appeals to investors who want to establish and run their own company in the U.S.

EB-5 Regional Center Investment

Conversely, the regional center program allows investors to pool their funds into larger projects managed by a designated regional center. These centers are pre-approved by USCIS to sponsor EB-5 projects. Notable features include:

1. Passive Investment: Investors are usually limited partners and have a more passive role in the business. In fact, the investor can live in any state in the United States and invest in a regional center in a different state. 
2. Indirect Job Creation: Jobs can be created directly or indirectly, including through economic activity generated by the project. The term “direct” job as it relates to a regional center, is a job that is held by an employee who works directly for the regional center. In contrast, “indirect” being jobs that are created outside of the regional center by the investment. Examples typically include independent contractors, such as consultants and suppliers. Think of these jobs as indirectly created thanks to the project’s expenditures.
3. Multi-layered structure: Regional Center projects are structured in layers and involve multiple entities, including the Regional Center, the developer and the entities that facilitate the investment and distribution of EB-5 funds. 

Conclusion

Choosing between EB-5 direct investment and regional center investment depends on your individual preferences, investment goals, and desire to engage in business operations. Understanding these differences is key to making an informed decision and successfully navigating the EB-5 program.