Key Participants in an EB-5 Transaction

The EB5 program is one of the most popular EB5 investment pathways that gives foreign investors the opportunity to settle in the United States by investing capital into economic projects. However, for an EB5 transaction to proceed smoothly and achieve the goal of permanent green card status, investors need to clearly understand the role of each party involved. This article from Newland USA will analyze in detail the parties involved in EB5 transactions, helping you grasp the entire process and make informed decisions for your U.S. immigration journey.

1. EB5 Program – Overview of Operating Mechanism

Before diving into the parties involved in EB5 transactions, you should know that the EB5 program was established by the U.S. Congress in 1990 to attract foreign investment capital into the American economy. Through the EB5 program, investors can contribute capital to U.S. businesses and create jobs for local workers, thereby gaining the opportunity to receive permanent green cards.

The EB5 program requires a minimum EB5 investment amount of $800,000 for projects in Targeted Employment Areas (TEA) or $1,050,000 for areas not classified as TEAs. Each EB5 transaction includes multiple participants with distinct roles and responsibilities, working together to ensure compliance with U.S. immigration and securities laws.

The success of the EB5 program depends on the transparency and professionalism of the parties involved in EB5 transactions. Understanding each party’s role will help investors control risks, protect their legal rights, and optimize their chances of receiving a green card.

2. EB-5 Investor – The Capital Contributor in EB5 Transactions

The foreign investor is at the center of every EB5 transaction. This is the individual or family who wishes to immigrate to the U.S. by contributing investment capital to the American economy through the EB5 program.

To participate in the EB5 program, investors must meet requirements regarding lawful source of funds and commit to maintaining the EB5 investment throughout the green card application process. They need to prove that the investment amount was obtained from lawful sources such as business income, wages, inheritance, or loans secured by personal assets.

The investor’s role in an EB5 transaction is not just as a capital provider but also as someone legally responsible for the accuracy of their application. In the EB5 program, investors need to work closely with immigration attorneys to prepare Form I-526E (for Regional Center projects) or I-526 (for direct investment projects), providing complete documentation of their financial sources.

Benefits that investors receive from the EB5 program include conditional green cards for themselves and their families (spouse and children under 21), the right to live, study, and work in the U.S. After 2 years, if job creation requirements are met, investors can file Form I-829 to remove conditions and receive permanent green cards.

However, EB5 investment comes with “at risk” requirements. Investors may lose all or part of their capital if the project fails, and they may not receive green cards if job creation requirements are not met. Therefore, selecting reputable projects and working with professional parties involved in EB5 transactions is extremely important.

3. Regional Center – The Heart of the EB5 Program

A Regional Center is an organization designated and authorized by U.S. Citizenship and Immigration Services (USCIS) to sponsor EB5 investment projects.

In an EB5 transaction through a Regional Center, investors don’t need to directly manage the business but only need to contribute capital to the investment fund. The Regional Center will be responsible for allocating EB5 investment funds to approved economic projects, typically in real estate, hospitality, infrastructure, or manufacturing sectors.

The biggest advantage of the EB5 program through Regional Centers is flexibility in job creation. Instead of having to create 10 direct jobs as required for direct EB5 investment, Regional Centers can count indirect jobs created from the project’s economic ripple effects. This significantly reduces the risk for investors in meeting job creation requirements.

Regional Centers in EB5 transactions also have the responsibility to report periodically to USCIS about project progress, jobs created, and financial status. They must comply with strict regulations regarding transparency and governance to maintain their operating status in the EB5 program.

When selecting a Regional Center for EB5 investment, investors should consider operating history, I-526/I-526E approval rates, I-829 success rates, and the portfolio of completed and ongoing projects. A reputable Regional Center will have transparent records, an experienced management team, and a commitment to protecting investor interests throughout the EB5 transaction.

4. Project Developer – The Entity Implementing EB5 Investment

The Project Developer is the entity responsible for developing and operating the specific economic project that investors fund through the EB5 program. The Project Developer can be a real estate company, manufacturing business, or any economic organization that needs EB5 investment capital to implement their business plan.

In the EB5 transaction structure, the Developer typically borrows capital from the EB-5 Fund at more favorable interest rates compared to traditional financing channels. This borrowed amount is used to build infrastructure, expand manufacturing operations, or develop commercial projects, thereby creating jobs that meet EB5 program requirements.

The Developer plays a key role in ensuring the success of the EB5 transaction. The Developer’s project management capability, implementation experience, and financial reliability directly impact the ability to return capital to investors and create sufficient jobs according to EB5 program requirements.

A successful EB5 investment project depends on the Developer having a solid business plan, sufficient matching funds (equity and bank loans), and the ability to complete the project on schedule. The Developer must also provide periodic reports on jobs created and financial status to the Regional Center.

Investors should thoroughly research the Developer before participating in an EB5 transaction. Factors to consider include: industry reputation, portfolio of completed projects, current financial status, and project capital structure. An experienced and reputable Developer will significantly increase the success rate of EB5 investment and ensure investors receive their green cards.

5. EB-5 Fund – The Bridge in EB5 Transactions

The EB-5 Fund is a legal entity, typically structured as a Limited Partnership (LP), that serves to pool capital from multiple investors participating in the EB5 program and then allocate these funds to specific commercial projects.

In the EB5 transaction structure, the EB-5 Fund operates as a financial bridge between investors and the Developer. Investors transfer their EB5 investment amount into the Fund and become Limited Partners. The EB-5 Fund then lends to or invests in the Developer’s project, usually in the form of a secured senior loan.

The Fund structure in the EB5 program is designed to protect investors through risk control mechanisms. EB-5 Funds typically have priority repayment provisions, meaning that when the project ends or is sold, investors will receive their capital back before the Developer receives remaining profits.

The Fund Manager (General Partner) is one of the parties involved in EB5 transactions responsible for the Fund’s daily operations, including disbursing capital to the Developer, monitoring project progress, collecting debt, and reporting to investors. The Fund Manager also coordinates with the Regional Center to ensure the EB5 program’s job creation requirements are met.

The EB-5 Fund’s Private Placement Memorandum (PPM) is one of the most important documents in an EB5 transaction. The PPM provides detailed information about the Fund structure, investment terms, projects to be financed, risks, and investor rights. Investors need to carefully read the PPM and consult with attorneys before making an EB5 investment decision.

A reputable EB-5 Fund in the EB5 program will have transparent governance mechanisms, periodic reporting to investors, independent financial audits, and strict compliance with securities regulations. Selecting a Fund with a good reputation is a decisive factor for the safety of EB5 investment and the ability to recover capital after receiving the green card.

6. EB-5 Immigration Attorney – The Guide in the EB5 Program

An immigration attorney specializing in EB-5 is one of the indispensable parties involved in EB5 transactions, representing and protecting investor interests throughout the green card application process through the EB5 program. They have deep expertise in U.S. immigration law and understand USCIS’s complex requirements for EB5 investment.

The primary roles of an immigration attorney in EB5 transactions include:

Preparing I-526/I-526E petitions: This is the application for a conditional green card, requiring proof of lawful source of funds, a valid investment plan in the EB5 program, and the ability to create jobs as required. The attorney will collect financial documents, draft declarations, and file applications with USCIS.

Responding to RFEs (Requests for Evidence): If USCIS requests additional documents or clarification about EB5 investment, the immigration attorney will prepare professional responses to increase approval chances.

Filing I-829 petitions: After receiving a conditional green card and 90 days before the card expires, investors must file Form I-829 to prove the EB5 program project has created sufficient jobs and maintained the investment. The attorney will prepare this application with job reports and project financial documents.

Risk counseling: Immigration attorneys help investors clearly understand risks related to each EB5 investment project, assess the feasibility of job creation plans, and provide advice on selecting suitable projects.

In the EB5 program, immigration attorneys not only prepare applications but also serve as long-term strategic advisors. They help investors navigate policy changes, take advantage of benefits like visa queue reservations for countries with quota limits, and plan for the entire family in EB5 transactions.

When choosing an immigration attorney for EB5 investment, investors should prioritize those with EB-5 expertise, experience handling many successful cases, and recognition by reputable legal organizations like AILA (American Immigration Lawyers Association). A skilled attorney will significantly increase success chances in the EB5 program.

7. Securities Attorney – The Guardian of EB5 Transaction Legality

A securities attorney is one of the parties involved in EB5 transactions who ensures that raising capital from investors fully complies with federal and state securities laws. Because EB5 investment is considered a securities transaction, compliance with Securities and Exchange Commission (SEC) regulations is mandatory.

In the EB5 program, securities attorneys perform the following important tasks:

Drafting the PPM (Private Placement Memorandum): This is the legal document detailing the EB5 investment project, including information about the Developer, Fund structure, investment terms, potential risks, and investor rights. The PPM must fully and accurately disclose all material information so investors can make informed decisions in EB5 transactions.

Preparing key documents: Securities attorneys draft legal documents such as Operating Agreements, Limited Partnership Agreements, and Subscription Agreements for the EB-5 Fund, clearly defining the rights and obligations of parties in the EB5 program.

Ensuring compliance with registration exemptions: Most EB5 investment projects are structured as private placements under SEC Regulation D, allowing capital raising without formal registration. Securities attorneys ensure the offering complies with these exemption conditions.

Handling federal or multi-jurisdictional securities issues: Because many EB5 program projects raise capital from investors in multiple states or countries, securities attorneys must ensure compliance with securities laws of each relevant state or country.

Advising on legal risks: Securities attorneys help parties in EB5 transactions understand and manage legal risks related to securities offerings, protecting them from potential lawsuits or regulatory penalties.

The role of securities attorneys in the EB5 program is extremely important because any errors in securities law compliance can lead to serious consequences, including having to return all capital to investors, civil penalties, or even criminal prosecution. An EB5 transaction properly structured by an experienced securities attorney will protect investors, Regional Centers, and Developers alike.

8. Coordination Among Parties Involved in EB5 Transactions

The success of an EB5 transaction depends on smooth coordination among all parties involved in EB5 transactions. Each party has an independent role but must also work together to ensure the EB5 program project meets both immigration and financial requirements.

The Regional Center coordinates with the Developer to select and structure EB5 investment projects that meet USCIS requirements. They work together with securities attorneys to create a legal and transparent EB-5 Fund structure.

Immigration attorneys work closely with investors to collect documentation of fund sources, while coordinating with the Regional Center and Developer to clearly understand the project’s job creation plan in the EB5 program. This information is used to prepare convincing I-526/I-526E petitions.

The Developer provides periodic reports on project progress and jobs created to the EB-5 Fund and Regional Center. This information is forwarded to investors and immigration attorneys to prepare for the I-829 petition later in the EB5 transaction.

Securities attorneys ensure all financial legal documents are drafted accurately and comply with the law, protecting the interests of all parties involved in EB5 transactions from legal risks.

Transparency and regular communication among parties is key to a successful EB5 investment project. Investors should proactively request periodic updates from the Regional Center and Developer, monitor project progress, and maintain contact with immigration attorneys throughout their participation in the EB5 program.

9. Important Considerations When Participating in the EB5 Program

When deciding to participate in the EB5 program, investors need to note several important points about parties involved in EB5 transactions:

Due Diligence: Before committing capital to an EB5 transaction, investors should conduct thorough due diligence on all parties involved. Check the Regional Center’s operating history, Developer’s project portfolio, attorney reputation, and legal structure of the EB-5 Fund.

Independence in counseling: Each party involved in EB5 transactions has their own interests. Investors should have independent immigration attorneys and financial advisors representing them, not dependent on other parties in the EB5 program.

Read documents carefully: The PPM, Operating Agreement, and other legal documents in EB5 transactions contain important information about investor rights and obligations. Take time to read carefully and consult with attorneys before signing.

Understand the risks: EB5 investment is not just an immigration pathway but also an economic investment with risks. Investors may lose capital if the project fails, and green cards may be denied if job creation requirements are not met.

Monitor the project: After investing capital in the EB5 program, investors should proactively monitor implementation progress, request periodic reports, and maintain contact with parties involved in EB5 transactions.

10. The Future of the EB5 Program and Participating Parties

The EB5 program has undergone many policy and regulatory changes since its inception. The 2022 Reform and Integrity Act (RIA) introduced many new regulations aimed at increasing transparency and better protecting investors in EB5 transactions.

New regulations require parties involved in EB5 transactions to comply with higher standards for information disclosure, fund governance, and reporting. Regional Centers must undergo more stringent review processes and maintain ongoing compliance to continue operating in the EB5 program.

For investors, these changes create a safer and more transparent EB5 investment environment. However, clearly understanding the role and responsibilities of each party in EB5 transactions remains a key factor in ensuring success.

11. Conclusion

The EB5 program is an attractive but complex U.S. immigration pathway, requiring smooth coordination among many parties. Clearly understanding the roles of parties involved in EB5 transactions – from investors, Regional Centers, Developers, EB-5 Funds, immigration attorneys to securities attorneys – helps investors make informed decisions and protect their interests.

Newland USA, with our team of experienced experts and the motto “Secure settlement – Lifelong prosperity,” is ready to advise and support you with information related to the EB5 investment program. Contact Newland USA now via hotline 0785591988 or email: newsletter@newlandusa.asia for detailed and free consultation.

Learn more:

• Ways to Ensure Your EB5 Capital is Safe When Investing in a Project
• What is Form I-829? Guide to Filing a Petition to Remove Conditions on 2-Year Green Card for EB5 Immigrant Investor Program
• The Most Effective EB5 Visa Solution in the Context of Trump Launching Gold Card
• The Optimal Choice for EB5 Investors to Manage a Green Card Investment Project
• Paying Taxes and What EB5 Investors Need to Know