EB5 Regional Processing Center Formation:

There are many advantages to receiving EB-5 Regional Center designation from USCIS for your business. Becoming a regional center is an attractive way for a business project to Raise Low Interest Debt, and, in some situations, Equity. Raising capital via the EB-5 Immigrant Investor Program is quite unique compared to traditional sources of funding and EB-5 is an exciting and ever-evolving industry.

The EB-5 program became more popular beginning in 2007 as traditional lending became tougher to obtain during the Great Recession. There are two ways of funding a project with EB-5 capital:

 

Through a Direct Investment or through a Regional Center.

 

The Regional Center option can be more attractive to both project developers and investors, as the designation makes some USCIS requirements less stringent for EB-5 Visa Applicants. Regional Centers are held to more favorable job creation requirements than Direct EB-5 Investment, which focuses on direct job creation. Rather than being required to create 10 direct full-time jobs, regional centers can satisfy EB-5 job creation requirements by creating 10 direct, indirect, or induced full-time jobs. The regional center is afforded the benefit of using economic multipliers to demonstrate the creation of these jobs. However, a particular organization’s specific needs will always determine whether or not regional center designation is most advantageous.

During the last decade, many larger U.S. developers have utilized EB-5 financing as part of their projects' capital stacks.

How to become an EB-5 Regional Center

Nearly anyone can apply for regional center designation—no special licenses are required. The term Regional Center refers to any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment within the EB-5 program. The business models that are eligible to become EB-5 Regional Centers include governmental agencies, partnerships, corporations and any other existing U.S. commercial entity.

Each regional center must obtain its designation from USCIS. USCIS Regional Center designation entails a multi-step process that requires the input of various experts. The cost of obtaining regional center approval is highly variable. The actual application itself, called Form I-924, Application for Regional Center Under the Immigrant Investor Program petition, costs $17,795 to file with USCIS. However, the overall approval cost is often far more and largely dependent on the fees charged by various EB-5 experts.

Steps to Become an EB-5 Regional Center

 

There are several steps that an organization must take in order to obtain EB-5 Regional Center approval from USCIS. The costs involved and the documents that need to be produced will depend on the readiness of the project. Each regional center filing must be accompanied by a project, the readiness of the project falls into three USCIS categories: hypothetical, actual, and exemplar.

  • Hypothetical Project refers to a project proposal that is not supported by a comprehensive, Matter of Ho compliant business plan. A sample project containing general proposals and general predictions may be sufficient to determine that the proposed regional center will more likely than not promote economic growth.

  • Actual Projects require more detail than a hypothetical project in order to conclude that the proposal contains verifiable details and is supported by economically or statistically sound forecasting tools. This generally means a comprehensive, Matter of Ho compliant, business plan and an economic report that accurately describes the project, investment, job creation, and other Matter of Ho requirements.

  • Exemplar refers to a Form I-526 petition, filed with a Form I-924 actual project proposal that contains copies of the commercial enterprise’s organizational and transactional documents, which USCIS will review to determine if they are in compliance with established EB-5 eligibility requirements.

Below we will discuss the steps and additional documents required for each category. Only shovel-ready projects qualify in this category.

  • Determine the Scope of the Regional Center

    Perhaps the most important step of the regional center approval process is for the business organization to determine the geographic scope and economic benefit of the projects for which the business organization is planning to use EB-5 financing. This includes determining the regional center geographic umbrella, business industry focus, corporate structure, operational business model, and required investment amount for the potential projects.

  • Acquire the Services of Professionals Who Will be Integral to Producing the Documents Required For Regional Center Filing

    • Hypothetical Project: Regional center Operational Business Plan, Corporate Structure agreements for ownership of the regional center, (a) sample project business plan, (b) economist report for the project, and sample management agreement between the regional center and the project.

    • Actual Project: The documents listed above with the addition of a comprehensive project business plan, and sample (c) transactional documents (typically an investor subscription agreement and private placement memorandum).

    • Exemplar Project: The documents list above with the addition of final transactional documents, as well as a sample Form I-526 Immigration Petition by Alien Entrepreneur, completed except for details about the EB-5 petitioner.

      • (a) Private Placement Markets' Executives are Business Plan writers with expertise in producing EB-5 compliant business. The business plan is one of the most important documents required for Regional Center filing. The AAO precedent decision Matter of Ho has articulated the standards by which USCIS will review a business plan: The plan should contain a market analysis, including the names of competing businesses and their relative strengths and weaknesses, a comparison of the competition’s products and pricing structures, and a description of the target market/prospective customers of the new commercial enterprise. The plan should list the required permits and licenses obtained. If applicable, it should describe the manufacturing or production process, the materials required, and the supply sources.The plan should detail any contracts executed for the supply of materials and/or the distribution of products. It should discuss the marketing strategy of the business, including pricing, advertising, and servicing. The plan should set forth the business’s organizational structure and its personnel’s experience. It should explain the business’s staffing requirements and contain a timetable for hiring, as well as job descriptions for all positions. It should contain sales, cost, and income projections and detail the bases therefore. Most importantly, the business plan must be credible.

      • (b) An economist associated with Private Placement Markes will prepare an economic impact and job creation report for each project. This is especially important for a Regional Center project, as regional centers are afforded the ability to use indirect and induced job creation numbers. Indirect jobs can qualify and be counted as jobs attributable to a regional center project, based on reasonable economic methodologies, even if they are located outside of the geographical boundaries of a regional center. For purposes of demonstrating indirect job creation, petitioners must employ reasonable economic methodologies to establish by a preponderance of the evidence that the required infusion of capital or creation of direct jobs will result in a certain number of indirect jobs. The economist will also determine whether or not the Regional Center will be located in a targeted employment area (TEA) and prepare the necessary unemployment data report to prove to USCIS that the project meets the rules for TEA designation. These steps are critical because with all things USCIS, the more dubious the standard, the better the expert in the field must be.

      • (c) Securities professionals with Private Placement Markets will produce EB-5 compliant subscription agreements and private placement memorandums. These documents will comply with Federal and State Securities Laws and Regulations, but also USCIS regulations, the most important of which being the “at risk” requirement: in order to qualify as an investment in the EB-5 Program, the immigrant investor must actually place his or her capital “at risk” for the purpose of generating a return, and the mere intent to invest is not sufficient. The alien must show actual commitment of the required amount of capital. This means that any clause providing a put, call, or redemption of investment funds prior to final adjudication of Form I-829 Petition by Entrepreneur to Remove Conditions, will result in possible denial of the investors application. There must be no guarantee of return of the investment. 

 

 

At a minimum the following documents are required:

  • Submit Form I-924 Petition

    Finally, with all these documents in place, the Regional Center can now submit the Form I-924 petition to USCIS. The regulations provide that once the initial Form I-924 is filed with USCIS, the Regional Center can go to market and advertise its’ project(s). Please note however, the Regional Center cannot accept any investment from qualified investors, until, and only until the regional center is approved. (This also includes not allowing any individual investor to file a Form I-526 petition for any of the regional center's projects.)

  • Submit Form I-526 Petitions

    Once the Form I-924 is approved, the Regional Center can now submit the EB-5 investors' Form I-526 petitions to USCIS: Form I-526 applications will outline the specific EB-5 projects that the regional center will be conducting, and will include either the documents outlined above in the actual or exemplar filing. Approval of Form I-526 petitions enable individual EB-5 investors to start the process of obtaining their conditional green card so that they can live in to the United States for two years.

  • Administer Projects and Maintain USCIS Compliance

    The regional center must monitor its investors and track the job creation requirements for its projects. The regional center must also file and pay the fees for an annual compliance report, Form I-924A, with USCIS. Additionally, the regional center must also be sure to comply with all applicable reporting for Securities and Exchange Commission and other state and local agencies that regulate securities. As part of the U.S. government’s efforts to combat fraud and ensure program integrity, USCIS also conducts site visits of EB-5 regional centers and EB-5-funded projects/businesses. Each regional center is responsible to provide all requested documentation and other information as requested by USCIS for each of these site visits.

  • EB-5 Visa Applicants File I-829 Petitions

    The final step of the EB-5 visa process for individual investor applicants is to file the Form I-829 Petition by Entrepreneur to Remove Conditions. This application demonstrates that the project and investor have met all the requirements of the EB-5 program. Once approved, Form I-829 enables the investors to obtain their lawful permanent resident status (permanent green card). Although the application is filed by the individual EB-5 visa applicants, the regional center and projects must provide evidence of meeting the job creation requirements as well as keeping the investor's funds "at risk" for the requisite time period. 

To Retain and Engage Private Placement Markets for an EB5 Regional Processing Center Formation:

Private Placement Markets regularly works with companies and their legal counsel with respect to the creating EB5 Regional Processing Centers; we consider it one of our specialties.

The process of preparing an EB5 Processing Center can take a few months to prepare (depending on amount of material and complexity of the Fund). The entire Private Placement Markets team is available throughout this entire process.

 

Service(s) to be Provided:

  • Development & Structuring of the complete I-924 Application with all applicable Economic Studies and Offerings.

  • Does Not include any expenses associated with any required Company Formation, I-2924 Filing Fees, MAI Appraisals and/or Legal Opinion Letters.

To engage us for an Offshore Hedge Fund Formation:

  • Private Placement Markets is very selective about the EB5 Processing Center Clients it engages with. Please call our Capital Markets Team or email us as the contact listed to the left, and we will schedule a time to speak regarding your EB5 Processing Center needs.

  • If there is a mutual interest to engage for the development of an EB5 Processing Center, we will forward you an engagement letter to be signed, at which time you will be required to submit a retainer equal to 50% of our service charge for the drafting of the Custom EB5 Processing Center I-924 Application. Our estimated cost for a Custom EB5 Regional Processing Center Registration is a Flat $30,000 USD (50% = $15,000 USD). NOTE: The balance of $15,000 will be due and payable 30 days net from retaining services or upon delivery of a final I-924 Application w/ associated Offering, whichever comes first.

  • Once complete, we will send you an email with information detailing the necessary information we need to get started working on the custom Private Equity Fund Offering.

Mr. Steve Muehler

Founder & Managing Member

Private Placement Markets

101 California Street

San Francisco, CA 94111

Email: Steve@PPMSecurities.com

Phone: (877) 259-8066

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Private Placement Markets, LLC (a Delaware Limited Liability Company) provides no depository services and is not insured by the FDIC. Private Placement Markets is an Investment Banking Industry Document Preparation Company and Capital Markets Advisor. Private Placement Markets does not offer, and does not offer to provide any broker dealer or market maker services. Private Placement Markets operates this website (referred to as the “Website”). By accessing this Website and any pages thereof, you agree to be bound by its Terms of Use and Privacy Policy. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. Private Placement Markets does not provide financial planning services. Private Placement Markets does not provide tax advice and does not represent in any manner that the outcomes described herein will result in any particular tax consequence.

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