EB-5 Commentary

Canadian Immigrant Investors: Thinking About Moving To EB-5?

Posted by Phil Cohen on Mon, Apr 20, 2015 @ 06:58 AM

describe the imageThe Canadian government unveiled its new Federal Investor Program replacing the prior program which was very popular with immigrant investors.  Unfortunately, the government has gone from one extreme to the other, moving from a program that was one of the most secure offerings around to one which is considerably more risky, vague and which will appeal only to a  select few, in this author's opinion.

The EB-5 program is quickly proving itself to be a viable alternative for immigrant investors who have been pushed out of the Canadian Federal Investor Program.  Like the Canadian program, the EB-5 program allows foreign investors the opportunity to get a path to citizenship in the United States based on making a qualifying investment.  EB-5 investments must be made in a qualifying business and must be 'at risk' (although this does not mean necessarily 'risky').

Some key points about the EB-5 program:

  • The investment required is $500,000 as long as the business being invested in is located in what's called a Target Employment Area (most are)
  • The typical investment horizon is five years
    although some opportunities are for six years or seven years
  • The typical return to investors is in the range
    of 1% per year, but this varies widely from project to project

There are many other considerations involved in looking at the program and one should take good advice from legal counsel and/or from business consultants who may be able to help.

The EB-5 program has all kinds of businesses participating, some good and some not so good.  The key to mitigating risk in the program, in my opinion, is to work with a company that carefully selects projects that it represents and does a significant amount of due diligence (i.e. one in a position to know good from bad and one who is in a position to choose the best).  It also helps to see that the company that you work through does not take on more than one or two projects at a time, so that there is no conflict of interest in how it represents projects.

Those interested in taking advantage of the EB-5 program should be aware that the US government has imposed a start date of May 1, 2015 for 'Chinese visa retrogression,' whereby citizens of China may be put on hold while other countries get an opportunity to have access to the visa quota.  If other countries do not fill the quota then the program will be reopened to Chinese citizens. Chinese EB-5 investors can still have their applications processed and approved, but they will not be issued their green cards until retrogression is lifted again at the end of the program year (September 30, 2015).   

For Chinese citizens especially, it is suggested that moving ahead sooner rather than later on making an EB-5 investment will give them good placement in the backlog line, thereby allowing them to avoid what may end up being a multi-year wait, such as the situation was in Canada.  It is expected that there will be an influx of investors from Canada who will no longer be able to apply to the Canadian program.

Still need help figuring it out?  Contact me.

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Phil Cohen is the founder and President of Strategic Element, a company that focuses on developing regional centers, EB-5 business plans, economic impact reports, feasibility studies and custom 'direct' EB-5 projects for its clients (www.strategicelementconsulting.com). 

Tags: Chinese Investors, EB-5 explained, EB-5 investors, I-526, EB5, EB-5; Canadian Immigrant Investor