Investors find opportunity in the US immigrant investor program as American businesses seek new sources of funding.
It was hard to find a seat at an EB-5 conference in Dubai recently. Investors from around the MENA region packed the room to hear from American entrepreneurs seeking funding for their businesses. But this was not an ordinary investor conference, these businesses were looking for funding through a unique immigrant investor program.
The US’s EB-5 Investor Visa is gaining popularity among both US businesses seeking more cost effective and socially responsible funding in a tight credit environment, and residents in the MENA region seeking US citizenship.
A mutually beneficial program
Established as a government initiative to create jobs in the US, the EB-5 program benefits the American economy, business owners, and citizenship seekers alike. Each EB-5 Visa applicant is required to create a minimum of 10 full-time jobs for US-citizens within two years. In return the government extends permanent residency (Green Card) to the visa holder, the holder’s spouse, and an unlimited number of children below 21 years of age. After 5 years of established residency, they may be eligible to apply for citizenship.
“For foreigners, the EB-5 presents a relatively safe and attractive investment model, but more importantly, it provides the means to a passport over a five-year period,” explained Nicolas Salerno, Vice President of Arton Capital, a global advisory firm with offices in Dubai, specializing in Immigrant Investor Programs.
The benefit to businesses: the EB-5 creates a source of funding that comes at an interest rate of around 1%.
Potential investors are held responsible for performing their own due diligence when considering projects. Reputable immigration advisory firms such as Arton Advisors can guide investors on the rigorous regulations placed upon businesses and visa applicants. Salerno advises on choosing businesses that have an employment buffer of 20% to 30% above the required 10 jobs per EB-5 as it’s well advised to cushion the bottom line.
“EB-5 has been gaining a lot of momentum, especially following the temporary suspension of the Canadian Federal and Quebec Immigrant Investor Programs,” said Salerno.
EB-5 has been gaining a lot of momentum, especially following the temporary suspension of the Canadian Federal and Quebec Immigrant Investor Programs
Investment options
Businessmen have two tracks towards a Green Card. “A $500,000 regional center investment is sufficient, if the project is in a designated economically distressed area (which can be as small as a city block), with an unemployment rate over 150% of the national average—this is classified as a Targeted Employment Area (TEA). Alternatively, there is the $1 million direct investment, where the only requirement is job creation,” explained Salerno.
Businesses incorporating an EB-5 element to the funding structure go to great lengths to safeguard this particular investment, acknowledging that for some, it constitutes precious life savings.
“Applicants have to invest $500,000 as required for the EB-5 program. In addition, a $50,000 fee is payable to the Regional Center, which is transferred with the investment. Legal fees of $15,000 will also be applicable,” says Salerno.
Competition among projects to win over investors will prove advantageous to foreign nationals, who can cherry pick the most promising investments.
Arton Capital is offering its visa applicants an opportunity to invest in a newly developed Courtyard Marriot hotel in Mississippi. They have joined forces with the Mississippi Regional Centre to develop the project. The hotel will be part of a larger development project named “Cooley Centre Project” consisting of a conference centre and restaurants alongside the hotel, which will be located outside the entrance to the Mississippi State University.
There are 10,000 EB-5 investor visas available on an annual basis, but this quota has never been reached. In 2012, total EB-5 visas amounted to 2,771, according to US Customs and Immigration Services, led by huge numbers posted by China. Additionally, the number of regional centers has increased from 174 in 2011 to 194 in 2012, creating a wider range of options for potential investors.