Trying to turn a project into an EB-5 linked project?


With the "revival" or "reinvigoration" of Regional Center EB-5 Program after 2002, and increasing interests that each successful Regional Center EB-5 project generates, more U.S. promoters of U.S.-based projects of various kinds are suddenly interested in trying to turn their projects into EB-5-related projects. During last 4 or 5 years, the phrase "Regional Center EB-5" has gone from close to a pariah status to a sexy immigration avenue that is increasingly being considered and selected by the relatively wealthy investors around the world. Some U.S. project promoters even believe that the participation of EB-5 investors are now essential for the success of their projects in this stagnant economy.

These U.S. promoters of U.S.-based projects should keep one thing in mind. If the U.S. economy is bad, other countries' economies are also suffering. Trying to immigrate to the U.S. via EB-5 route might not be one of the important issues on the minds of potential EB-5 investors right now. For example, the value of foreign currencies, including Pounds or Euro, have gone down substantially against USD, making it less attractive to invest in the United States, period. The bottom line is that the demand for EB-5 market has shrunk -- dramatically.

Therefore, if you are starting your EB-5 projects hoping to attract partial financing from foreign EB-5 investors, think again. You may think your project is a hot stuff, a "can't lose project", but most foreign EB-5 investors are business savvy, as they are self-made millionaires. They will ask "If your project is so hot, how come you can't get U.S. investors to invest in your awesome project, and in most cases, there are bona-fide reasons?" In addition, it's not as if your EB-5 project is the only one around. Also, the EB-5 market comes and goes: The kind of projects you thought will be hot several years ago, might just involve products that no one wants to touch now days.

Another issue of concern for the promoters of EB-5 projects is that although their projects may be real strong business wise, it lacks necessary features or structures that make a strong EB-5 project. For example, the project might not create enough jobs, and it may take too long to raise enough capital. Many times, it's akin to trying to turn a truck into a racing car, or vice-versa. Suffice to say that the different features just might not jive, and in addition, there are many legal and structural considerations that need to be taken into account.

We predict that most of the existing EB-5 Regional Center Programs will be idle for some time to come due to the continuing downturn in the world economy. We would even dare to say that the EB-5 Regional Center Programs has reached a saturation point for now (unless there are certain amendments made that dramatically reduce the risks for the EB-5 investors); and the risk-reward ratio for the promoters of EB-5 projects is not so favorable these days. Simply put, there arn't enough EB-5 investors to soak up all the regional center EB-5 projects out there these days. Therefore, only the strong ones will survive -- and prosper.

Therefore, before you spend money to turn some projects into regional center program, consider using that money.