[Immigration Law] A. Direct EB-5 Investment: Cost Structure and Considerations

The EB-5 visa program offers a powerful route to obtaining U.S. permanent residency, but for those pursuing direct EB-5 investments, the cost structure is complex. Investors who choose direct EB-5 investment are responsible for developing and managing their business, making it crucial to understand the variety of costs involved. This column provides a detailed breakdown of the major cost elements for direct EB-5 investments.

1. Overview of Direct EB-5 Investment

Direct EB-5 investment refers to scenarios where the investor creates and manages their own business. The investor is responsible for the realization of their business idea while pursuing U.S. permanent residency through the EB-5 visa. With direct EB-5 investment, the investor assumes full responsibility for both the investment and the day-to-day operations of the business, bearing all associated costs.

2. Management Fees and Additional Costs

• EB-5 Management Fees: Unlike regional center EB-5 investments, direct EB-5 investments do not typically involve management fees, since the investor is in charge of the business's design and operation. However, there are still certain professional fees required to ensure EB-5 program compliance, which may include the following:

  • TEA Reporting Fee: If the investment is located within a Targeted Employment Area (TEA), the investor must obtain a TEA designation report. This report confirms that the investment falls within a designated TEA and typically costs between $500 and $1,000.

  • EB-5 Business Plan Fee: A critical component of direct EB-5 investment is the preparation of an EB-5-compliant business plan. Depending on the complexity of the business, the cost for this plan may range from $2,500 to over $10,000. Additional fees may apply if a separate market research report needs to be prepared for inclusion in the business plan.

  • EB-5 Attorney Fees: It is essential for direct EB-5 investors to consult with a competent immigration attorney. Immigration attorneys will assist with the preparation and filing of the I-526 petition, the initial step in the EB-5 process. The fees for this service can exceed $50,000. Additionally, direct EB-5 investors may require legal counsel from corporate attorneys, real estate attorneys, and others, depending on the nature of the business. These additional legal services will incur separate costs.

3. Differences Between Direct EB-5, Existing EB-5, and Regional Center EB-5 Investments

Existing EB-5 investments and regional center EB-5 investments offer pre-structured investment models. These models typically include management fees and allow the investor to pursue the EB-5 visa with relatively minimal involvement. In contrast, direct EB-5 investment requires the investor to manage and execute all aspects of the business, which involves additional costs and efforts.

While direct EB-5 investment provides the investor with greater freedom, it also comes with significant responsibilities and costs. Careful planning and appropriate legal guidance are essential to ensure compliance with the EB-5 program and to guarantee successful investment outcomes. Investors must fully understand and prepare for all the cost factors associated with the EB-5 visa process to navigate their investment smoothly. By working closely with an immigration attorney, investors can effectively manage the complexities of the process and meet all legal requirements for a successful application.

This column provides general legal information regarding immigration law and should not be interpreted as specific legal advice for individual situations. The laws and procedures applicable to each case may vary, and legal responsibility is not assumed based on the information provided in this column. For specific legal advice, it is essential to consult with an attorney.

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Chris W. Chong, Attorney
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