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EB-5 Program

Rural EB-5 Investment: A Faster Path to U.S. Green Cards

Investing in a rural EB-5 project is one of the fastest ways to get U.S. Green Cards for yourself and your family. Under the EB-5 program, investors who choose EB-5 projects in rural targeted employment areas (TEAs) gain exclusive benefits. These benefits include a reduced minimum investment amount and a faster immigration process.

By investing $800,000 in a rural EB-5 project, you could obtain work and travel authorization in just days. Your initial rural EB5 Green Card could be approved in a matter of months. For those facing roadblocks to U.S. immigration, such as Indian and Chinese nationals, the benefits of making a rural EB-5 capital investment are especially significant.

We invite you to consider how a high-quality, low-risk EB5 rural investment offers a faster, safer path for you and your family to live, work, and study in the United States.

1. What is Rural EB-5 Investment?
2. Key Rural EB-5 Benefits

• Lower Investment Amount
• Priority Rural Petition Processing
• Rural Set-Aside Visa Category

Hawthorne World’s Rural EB-5 Projects: High-Quality, Low Risk Rural EB-5
Investment Opportunities

• Rural EB-5 Projects 2026

Get Your Rural Set-Aside Visa with Hawthorne World

What is a Rural EB-5 Investment?

A rural EB-5 Investment is a qualifying capital investment in a project that is in a rural TEA as defined by the EB-5 Program. Rural TEAs are one of two types of TEAs. The other type is a high unemployment, or urban, TEA. These two TEA categories were created to encourage EB-5 investment in U.S. locations that have a significant need for projects to stimulate economic growth.

EB-5 Rural TEA Requirements

EB-5 rural TEAs are based on population. An era must meet the following criteria to qualify as a rural TEA.

• Be located outside a metropolitan statistical area (MSA) as defined by the U.S. Office of Management and Budget (OMB).
• Not located on “the outer boundary of any city or town having a population of 20,000 of more.
• Have a population of no more than 20,000 according to the most recent decimal census.

EB-5 Rural vs. Urban TEAs

While EB-5 rural areas are based on population, urban TEA status depends on the national average unemployment rate. Investments in urban TEAs can help improve the labor force employment measure. A location qualifies as an urban TEA if it meets the following criteria:

• Be located within an MSA as defined by the OMB.
• Have an unemployment rate that is at least 150% of the national unemployment average.

Beyond differences in how EB-5 rural versus urban TEA status is decided, these two types of TEA offer different benefits. Urban TEA projects tend to benefit from their location in major population centers. But rural projects offer EB-5 investors added benefits that are not available through urban TEA projects. Specifically, applications for investors in rural projects are processed more quickly. And each year, more rural EB-5 visas are available than urban EB-5 visas.

The rural EB5 investor benefits are described in more detail below.

Key Rural EB-5 Benefits

Foreign investors who choose EB-5 projects in rural TEAs qualify for the reduced EB-5 investment amount of $800,000 as well as other EB5 rural immigration benefits.

Lower Investment Amount

By investing in a rural targeted employment area project, you qualify for the EB-5 rural minimum investment amount of $800,000. The standard minimum investment amount is $1,050,000.

Priority Rural Petition Processing

While the application process for rural EB-5 investors is the same as for urban investors, the way the application is handled is different. By investing in a rural EB-5 project, you qualify for priority processing of your Form I-526, which is the initial immigrant application. Your Form I-526 may be adjudicated in a matter of months, not years. This means you could get your U.S. Green Cards months or years faster than otherwise.

We often see a faster rural EB-5 processing time for Form I-526 petitions. Many immigrant investors in rural EB-5 projects have received Form I-526 approval within 12 months—and sometimes significantly less time than that.

After you and your family receive your initial U.S. Green Cards, you will be able to live, work, and study in the United States. You will have the freedom to travel within the country or internationally.

Rural Set-Aside Visa Category

Under the EB-5 Reform and Integrity Act of 2022 (RIA), new categories of EB-5 visas were created for investments in TEAs. The EB5 rural visa category makes up 20% of all EB-5 visas, while the EB-5 urban visa category makes up only 10% of all EB-5 visas. Unlike the standard EB-5 visa, these set-aside visas are current and not subject to any backlogs.

For investors from countries with EB-5 visa backlogs, set-aside EB-5 visas help them avoid long delays. Eventually, these set-aside visa categories could face backlogs, too. But with twice as many visas each year as the urban category, the EB-5 rural category is expected to stay current the longest.

As of June 2024, Chinese and Indian nationals face backlogs of pending visa applications for standard EB-5 visas. These backlogs mean that EB-5 investors from these countries often have to wait months or years longer to immigrate through the EB-5 program. With the set-aside EB-5 visa categories, however, no backlogs have been announced.

The urban set-aside category could become backlogged soon. China and India are likely to face backlogs first. Investors from these countries may face long delays before receiving their Green Cards unless they choose rural EB-5 projects.

For a more detailed explanation of why projects in EB-5 rural areas are the safest option for Chinese and, please see EB5AN’s analysis of the set- aside categories.

(In addition to rural and urban TEAs, infrastructure projects also qualify for 
set-aside visas. However, there is still some confusion as to what kinds of developments can qualify as infrastructure projects. In addition, the infrastructure project category makes up only 2% of all EB-5 visas.)

Rural EB-5 Project 2026

Concurrent Filing EB-5: A Fast Path to Employment Authorization and a Travel Permit

On March 15, 2022, President Biden signed the long-anticipated EB-5 reform measures into law as part of an omnibus spending package. The EB-5 Reform and Integrity Act of 2022 (the “Reform Bill”) also reauthorized the EB-5 regional center program.

Changes to the regional center program took effect during May 2022—60 days after the Reform Bill’s enactment.

One of the most significant changes brought by the Reform Bill was the ability to file Form I-526 and Form I-485 at the same time (“EB-5 concurrent filing”). EB-5 concurrent filing allows investors living in the United States on non-immigrant visas to apply for adjustment of status when filing their I-526 petitions. Investors who filed their I-526 petitions before the Reform Bill was enacted can now also apply for adjustment of status prior to the adjudication of Form I-526.

1.  What Is Adjustment of Status?
2.  Who is Eligible for EB-5 Concurrent Filing?
3.  Benefits of EB-5 Concurrent Filing
4.  Successful Sample Adjustment of Status Application
5.  EB-5 Concurrent Filing Examples

• Example #1
• Example #2
• Example #3

6.   EB-5 Concurrent Filing: A Unique Benefit

What Is Adjustment of Status

Form I-485 allows foreign nationals temporarily living in the United States on an immigrant visa, to switch from one legal status to another. In the case of EB-5 concurrent filing, investors are expected to enjoy the benefits of lawful permanent resident status, as explained in more detail below.

Who Is Eligible for EB-5 Concurrent Filing?

Form I-485 is used to adjust the immigration status of eligible foreign nationals already temporarily living in the United States. Only foreign nationals in the United States on a non immigrant visa may file Form I-526 and concurrently apply for adjustment of status. Typically, this provision applies to foreign nationals in the United States on H-1B, E-2, and F-1 visas.

EB-5 investors born in countries subject to visa retrogression are not eligible for EB-5 concurrent filing. Such individuals, however, are still eligible to file I-526 petitions.

Visa availability is published on the U.S. Department of State’s online Visa 
Bulletin. Moreover, individuals from China and India (which are in visa retrogression) can avoid the processing backlog and qualify for concurrent filing by investing in a rural project.

Benefits of EB-5 Concurrent Filing

Before the Reform Bill was enacted, EB-5 investors had to wait for their I-526
petitions to be approved before filing for adjustment of status. To remain in the United States after filing their I-526 petitions, investors had to maintain their permanent residence status on some other visa until they could file to adjust their status. EB-5 concurrent filing allows investors greater flexibility.

EB-5 investors who adjust status from H-1B or E-2 can apply for work authorization that is not tied to a sponsoring employer or investment business. Such investors may work for any employer—or choose not to work at all—without jeopardizing their status.

EB-5 investors in the United States on F-1 visas would be eligible, following adjustment of status, to pause certain restrictive requirements imposed on foreign nationals studying in the United States.

While waiting for Form I-485 to be adjudicated, the foreign national’s status would be “pending adjustment.” This pending status is a gray area in which investors are neither conditional permanent residents nor F-1 students.

Under U.S. employment-based visa programs that permit concurrent filing, petitioners are eligible to apply for work authorization and travel permits. These two applications would be approved in advance of the I-485 petition. Once petitioners’ work authorization and travel permits are approved, they may live, work, and attend school anywhere in the United States. Effectively, they would enjoy the benefits of a Green Card without actually having one.

Additionally, the EB-5 concurrent filing process is usually preferable to the consular visa process abroad, which is prone to experience lengthy delays and sometimes unpredictable adjudication.

A recent investor in our Twin Lakes rural project got work authorization and a travel permit in only 60 days.

Successful Sample Adjustment of Status Application

The EB-5 investor’s immigration attorney files an adjustment of status request and at the same time, also asks USCIS to issue work authorization and travel permits to the investor and his/her family members.

View a successful sample adjustment of status request here for an Indian born EB-5 investor based in the US.

EB-5 Concurrent Filing Examples

Example #1:

Ramesh is an Indian national in the United States on an H-1B visa. He works as an IT service tech at a large company. Ramesh would prefer the freedom to work in a different position for another company, such as a start-up. His H-1B visa, however, limits him to a certain type of employment position and to companies willing to take on an H-1B worker. Start-ups seldom offer such immigration benefits.

EB-5 concurrent filing would, following receipt of work authorization, allow Ramesh the freedom to move to a smaller, growing company while waiting for his I-526 and I-485 petitions to be adjudicated.

Example #2:

Veronique is a French graduate student in the United States on an F-1 visa. She is studying business but would like to pause her studies. Her visa restricts her from taking a lengthy leave of absence from school. EB-5 concurrent filing would move Veronique into a pending adjustment status category and allow her to take a leave of absence without fear of violating her immigration position.

Example #3:

Paul is an E-2 investor from Canada who is no longer interested in owning and operating his restaurant. He wants to remain in the United States on a permanent basis but cannot under the E-2 visa. Through EB-5 concurrent filing, after becoming eligible, Paul could follow the EB-5 path to gain work authorization and related benefits, as well as United States Citizenship.

EB-5 Concurrent Filing: A Unique Benefit

EB-5 concurrent filing allows investors in the United States under other visa categories to apply for adjustment of status while filing Form I-526. This new filing option, introduced in the Reform Bill, allows EB-5 investors to enjoy the benefits of lawful permanent resident status while waiting for their I-526 petitions to be adjudicated. For many foreign nationals, EB-5 concurrent filing offers a quick solution to living, working, and studying in the United States without the restrictions imposed by the H-1B, E-2, and F-1 visas.

If you are looking to register permanent residence or begin the EB-5 concurrent filing process, contact us to arrange a free consultation.

EB-5 Investment Transparency: A guide to understanding risks and identifying red flags

1. Basics of EB-5 Investment Risk

• No Project is Risk Free
• Why Do Risky Projects Attract Investors

2. Basics of U.S. Securities Laws

• EB-5 Investments Have Lower Compliance and Regulatory Standards
• Risks Can BE Extreme as Long as They Are Disclosed
• Checking Offering Documents for Risks is Essential

3. EB-5 Investment Diligence Question List

4. Maximize Your Immigration and Financial Safety with Hawthorne World

Basics of EB-5 Investment Risk

The EB-5 program requires investment funds to be “at risk” for an investor to
qualify for a Green Card. This means that EB-5 investors must face the financial
risk of losing their investment.

No Project Is Risk Free

No EB-5 project will be 100% free of financial and immigration risk. The level of
risk, however, can vary among EB-5 projects. Even if a project meets all EB-5 program requirements, it may be high risk. In fact, many EB-5 projects carry levels of risk far above that required to satisfy the at-risk requirement of the EB-5 program.

Hawthorne World offers projects to investors. Most of these projects meet the EB-5 program’s Green Card requirements as long as they follow their business plan. Project success, however, depends on a wide array of factors, including the project’s structure, the construction timeline, and the developer’s track record.
It’s important to note that USCIS, the U.S. government agency that oversees the EB-5 program, focuses on the at-risk and job creation requirements of the program. USCIS is not concerned about whether or when an EB-5 investor will receive his or her invested capital back.

As a result, EB-5 investors should take time to review multiple EB-5 projects. Since each project’s risks will be different, evaluating several projects helps an investor identify the project that is most likely to result in successful immigration and a return of his or her investment.

A recent Government Accountability Office report noted that less than 1% of EB-
5 investments were lost due to fraud. This is a small number. The key word, however, is “fraud.”

The actual percentage of EB-5 investors who lose funds is much higher than 1%.

Not many EB-5 investors lose money due to fraud or illicit activity by a “bad 
actor.” Instead, they invest in high-risk EB-5 projects, often unknowingly. Then the project does not perform well and faces financial issues.

Often when a project is a financial failure, it also fails to create enough jobs for EB-5 investors to meet the EB-5 program’s job creation requirement. In this way, financial risk is tied directly to immigration risk for EB-5 investors.

Why Do Risky Projects Attract Investors?

Why would an EB-5 investor choose a project with more risk? Usually, these investors either do not know when the risk of a project is higher than what is required by the EB-5 program or they do not carefully compare different projects before investing.

To participate in the EB-5 program, investors must be foreign nationals born outside of the United States. Some EB-5 investors may already be in the United States on other visa types such as H-1B, F-1, E-2, etc. Most, however, are living outside the United States when they invest.

Many EB-5 investors have little experience with the United States. Even fewer understand U.S. real estate development projects or U.S. securities laws.

Additionally, while EB-5 investors hire immigration attorneys, these attorneys check whether a project meets EB-5 requirements. They do not generally provide advice on the financial feasibility or the investment risks of a project.

Many EB-5 investors invest large sums of money in a country and industry they
don’t know well, and they have to deal with complex U.S. securities laws they are not familiar with. Most EB-5 investors simply are not equipped to make good EB-5 investment decisions. As a result, many development projects that are unable to obtain financing from public or private markets in the United States successfully raise EB-5 financing.

Basics of U.S. Securities Laws

EB-5 Investments Have Lower Compliance and Regulatory Standards

U.S. securities laws were made to protect American investors. One goal of these laws is to ensure that investors are not exposed to high-risk investments. These laws are more relaxed for accredited investors who meet certain income and net worth requirements.

EB-5 investors are foreign nationals, not U.S. citizens. And almost all EB-5 projects require EB-5 investors to be accredited investors. Because EB-5 investors are accredited foreign investors, EB-5 projects are subject to less stringent standards.

Risks Can Be Extreme as Long as They Are Disclosed

EB-5 investments are mostly structured as private offerings. This means they are not marketed to the general public and do not need to register under U.S. securities laws. Private offerings are required only to accurately disclose to potential investors the key risks of the investment. This means that an EB-5 project can have an unlimited amount of risk as long as all the risks are disclosed in writing.

As mentioned earlier, EB-5 investor funds must be at risk of loss. That risk,
however, does not need to be high to qualify an EB-5 investor under the program.

Checking Offering Documents for Risks

Selecting a low-risk EB-5 project can be difficult. How can you know whether a project is high risk like the rental project from the example above?

To learn key project details, like the status of construction and what financing is currently in place, you will need to ask a lot of questions. Ultimately, the information you need to know should be found in the offering’s documents.

In many cases, what is missing in the offering documents is even more important than what is in them. Having a list of questions before you begin to review a project’s offering materials is critically important. With such a list, you can see what issues are not addressed in the offering documents that you need to ask the project’s sponsors about.

An EB-5 project salesperson will be quick to tell you every positive detail about a project. They may tell you verbally that a project has a senior loan in place and that the developer is financially strong.

Under U.S. securities laws, only the project details and disclosures written in the project’s offering documents really matter. If you are told something about a project but it is not written in the offering documents or provided to you in writing by the EB-5 project sponsor, then you should consider it unverified and untrue. When making investment decisions, do not rely on any information you receive that is not in writing.

Before making a decision, carefully review the full set of offering documents. Set aside time to read every disclosure. Even if you are not an investment expert, this will be time well spent.

Questions about the EB-5 investment

Questions about project feasibility:

Before You Invest in an EB-5 Project, Check Its Financial Statements

Imagine you are planning a long car trip through a desert that has no gas stations or other services. You wouldn’t start driving without first checking how much gas you have, right?

It is the same with investing. Checking financial statements helps you understand the financial situation of a project right before you invest. This information is key to making a smart decision.

Financial statements are like your car’s fuel gauge. Before you invest, you need to check this gauge to avoid taking an unnecessary risk.

In this article, we offer a short explanation of why most EB-5 regional centers do not share financial statements. We then provide some basic information on financial statements, why they matter, and what they can show you. We also list the main financial questions you need to ask before investing in any EB-5 project.

1.  What Are Financial statements and Why Do They Matter?
2.  How to Read and Review Financial Statements
3.  How to Read and Review Financial Statements

• Balance Sheet
• Income Statement

4.  Make Sure You Understand a Project’s Financial Statements before Investing

What Are Financial Statements and Why Do They Matter?

Project details like location, size, and type will vary from one project to another. This can make it hard for investors to compare projects. But financial statements serve as a standard for measuring projects against each other.

Investors usually look at three main financial statements to understand a company’s financial health: the balance sheet, the income statement, and the cash flow statement. Each of these documents offers different insights into the company’s financial status and performance.

In the context of EB-5 investments, all three financial statements are useful. The balance sheet and income statements are vitally important. Less critical is the cash flow statement, which shows where a company’s money comes from and where it goes.

The EB-5 program is focused on the creation of jobs. This goal is more directly
tied to what the company owns (balance sheet) and how much money it makes
(income statement). Also, if a project is successful and makes money (income statement), it can repay EB-5 investment funds.

For these reasons, this post will focus on the balance sheet and the income
statement. These two types of financial statements show how financially healthy,
stable, and profitable a company is. These are essential factors that contribute to the success of an EB-5 project and the timely repayment of EB-5 investment
funds.

How to Read and Review Financial Statements

Following is a more detailed look at these types of financial statements and some basic guidance on how to review them.

Balance Sheet: The balance sheet shows the company’s assets and liabilities at a specific point in time. It provides a snapshot of what the company owns (assets) minus what it owes (liabilities), which is what it has left for shareholders (equity).

Assets: A balance sheet starts by listing assets. Assets are what the company owns. They include liquid assets (like cash and cash equivalents) and non-liquid assets (like property, plant, and equipment). In the case of real estate, property and real estate inventories are the most important assets.

Liabilities: The second major section on a balance sheet is liabilities. These are
all of the company’s debts and the payments it needs to make. In real estate, this usually includes mortgages and other loans as well as accounts payable and accrued expenses. The total amount of liabilities compared to the total assets will give you a sense of how leveraged the company is at the time.

Equity: This is the value that is left when you subtract a company’s liabilities from its assets. The equity section will show the effective “net worth” of a company to its shareholders or members.

For EB-5 investors, the financial health of the project company—or “job creating
entity” —is of primary importance. Of equal importance is the financial health of
any separate company guarantying to repay your EB-5 investment. The amount of equity will indicate how safe or how risky a project is. The larger the amount of equity, the better for EB-5 investors.

Income Statement: The income statement lists the company’s revenues and expenses. Ultimately, this reveals its net income. It shows how much money the company has made (revenues), how much it has spent (expenses), and what is left over (net operating profit or loss) at the end of a certain period.

Revenues: These are the amounts earned by the company through its activities. Usually, for property development projects, this is money earned from the sale of residential units.

Expenses: These are the costs the company incurs to generate revenues. Common expenses for a real estate development company include marketing, real estate taxes, financing costs, and administrative costs.

Net Operating Profit or Loss: This is the amount of money the company makes during a specific period minus its costs. Income will go up and down over a project’s lifecycle. For example, during the first several years of a development project, revenues are low and upfront costs are high. Then, residential units are completed and can be sold to buyers, which creates sales revenues.

For EB-5 investors, income statements are important in two main ways. First, job creation is often measured by how much money is spent. If an income statement shows no spending, that means the project is not creating jobs. Second, project success depends on revenues. If a project is just getting started, revenues may not yet exist—and that may be normal. If a project is later in its development and no revenues exist, this may be a sign of trouble.

Make Sure You Understand a Project’s Financial Statements before Investing

Do not invest without getting a good understanding of the financial status of a project. Just like checking the fuel gauge in your car before a long drive, you need to know the project is financially sound before you trust it with your money.

If you are reviewing a project’s financial statements, take all the time you need to understand what they mean. If you are having trouble knowing whether the project is financially healthy, hire someone to help you. Find an accountant or investment adviser that is independent from the project company and get their opinion of the project.

EB-5 Investments No Longer One Size Fits All: Faster Green Card VS Higher Return VS Shorter Investment

You would choose the project that fits your situation.

For a long time, the EB-5 market has been dominated by one-size-fits-all
projects. That has begun to change, and EB5AN believes that every investor should have a range of options.

If you are considering an EB-5 investment, we want to help you find a project that fits your individual investment goals. You deserve more than a one-size-fits-all approach that fails to treat you as unique.

Generally, EB-5 investors are interested in two primary goals:
1. living and working in the United States
2. getting their invested money back in a reasonable, predictable timeframe

Beyond these two core objectives, EB-5 investors have a variety of investment goals. Some EB-5 investors are interested in living and working in the United States as quickly as possible. Others may be more interested in a strong rate of return.

With the recent changes to the EB-5 program brought about by the EB-5 Reform and Integrity Act of 2022 (RIA), a larger variety of EB-5 investment features is possible. Now, you can and should consider what you want out of an EB-5 investment and look for the project that best fits your goals. If you take the time to do this, you are far more likely to achieve a positive outcome.

How EB-5 Investment Worked Before the RIA Key Changes to the EB-5 Program through the RIA

• Reserved Visa Categories
• Concurrent Adjustment of Status
• Rural TEA Priority Processing
• Policy Clarification of the Two-Year Investment Period

How to Find an EB-5 Project That Fits Your Individual Case – Project Location: Urban versus Rural TEAs

• Project Structure: Loan versus Equity
• Project Duration: Short versus Standard

Hawthorne World’s Approach: Best-in-Class Projects to fit Every Investor

• Rural Projects for EB-5 Investors Outside the United States
• Urban Projects for EB-5 Investors in the United States
• Equity for EB-5 Investors Seeking Maximum Returns

How EB-5 Investment Worked Before the RIA

The RIA was passed in March 2022. Prior to that, one type of project dominated the market: mezzanine debt for large real estate developments. These projects were typically in urban targeted employment areas (TEAs) that had high rates of unemployment.

Good projects were fully capitalized and had significant job creation. The best
projects were being developed by companies with extensive track records of 
completing projects and repaying debts.

At that time, while many bad options were available, the good EB-5 investment choices were all very similar. The most attractive EB-5 projects were large real estate developments in urban TEAs being built by major developers.

But the calculation changed when Congress passed the RIA.

Key Changes to the EB-5 Program Through the RIA

The RIA made a number of changes to the EB-5 program. The changes that had the greatest impact on investment choice are as follows:

Reserved Visa Categories

The RIA created new EB-5 visa categories that are distinct from the standard EB-
5 visa category. These set-aside EB-5 visas are for certain types of investments. The largest reserved category makes up 20% of all EB-5 visas and is reserved for investments in rural TEA projects. The next category makes up 10% of all EB-5 visas and is reserved for investments in high unemployment urban TEA projects. Finally, investments in certain infrastructure projects qualify for the smallest EB-5 visa category, which makes up 2% of all EB-5 visas.

These reserved visas are particularly important for investors from countries with
historically high demand for EB-5 visas. When demand for EB-5 visas in a
particular country is greater than the number of available visas, EB-5 investors
from that country face a visa backlog, also known as retrogression. When a country has this type of backlog, EB-5 investors from that country face significant delays. But no country currently has a backlog in any of the reserved EB-5 visa categories.

Right now, on the other hand, EB-5 investors from China and India who invested prior to the RIA face long delays due to visa backlogs. By investing in a post-RIA set-aside visa category—rural or urban TEA or infrastructure projects—investors can avoid these backlogs.

Concurrent Adjustment of Status

Some EB-5 investors are already in the United States on another valid visa. The RIA allows such investors to concurrently file Form I-485 applications to adjust their immigration status alongside their Form I-526 immigrant petitions. By adjusting their status concurrently with their immigrant petitions, EB-5 investors can remain in the United States as immigrant investors while waiting for USCIS to approve their Form I-526 applications.

These EB-5 investors can also apply for employment authorization documents (EAD) and travel permits. USCIS has recently approved EAD and travel permits in as little as 60 days for EB-5 investors who concurrently file.

Rural TEA Priority Processing

In most cases, USCIS takes several years to process an EB-5 investor’s Form 
I-526. But EB-5 investors in rural TEA projects are given priority processing for these applications. This means that USCIS will give preference to these investors and process their immigrant applications ahead of those from other investors. With priority processing, EB-5 investors may receive approved I-526 applications in less than a year.

Policy Clarification of the Two-Year Investment Period

The RIA states that an EB-5 investment must remain invested for at least two years. USCIS recently released a policy update that interprets this period as beginning when an investor’s EB-5 funds have been invested in the job-creating entity. This means that an investor can, in most cases, be repaid much sooner than before while remaining eligible for a permanent Green Card.

How to Find an EB-5 Project That Fits Your Individual Case

Due to how the RIA has changed the EB-5 program, investors now have many factors to consider when choosing an EB-5 project. With reserved visas, concurrent filing, priority processing, and potentially shorter investment durations, the project selection process involves more nuance.

Project Location Urban versus Rural TEAs

One of the first considerations for choosing an EB-5 project is whether the project is in an urban or rural TEA. The main concern here is whether or not the investor is already in the United States. If an investor is already in the United States on a different visa and can concurrently file, either an urban or a rural TEA project would be a fine choice.

But for investors living outside the United States, rural TEA projects are often the better choice. Rural TEA projects offer EB-5 investors priority processing of Form I-526, meaning they can be approved for Green Cards more quickly. This makes rural TEA investments the fastest way for EB-5 investors living outside the United States to immigrate.

For EB-5 investors from a country with a visa backlog, a rural project may be the
best choice. While all TEA projects qualify investors for reserved visas, rural EB-
5 projects are likely to remain current the longest. Recently published USCIS data revealed that urban TEA projects attracted more EB-5 investment in the first 12 months of the RIA than rural TEA projects. But urban TEAs have only half the amount of reserved visas. This consideration is particularly important for EB-5 investors from China and India, where EB-5 visa availability is subject to retrogression.

Project Structure: Loan versus Equity

One of the next factors to consider when choosing an EB-5 project is whether the project is structured as a loan or as equity. This structure will impact two key project factors: financial return and financial security.

Both loan and equity projects can offer EB-5 investors low risk and high quality. But these structures have different features, which are outlined below:

EB-5 Loans

EB-5 loan projects are those that lend EB-5 funds to a borrower. EB-5 loans tend to have more predictable repayment timelines. The loan has a specified term, meaning it matures by a certain date. Even if the loan can be extended, such extensions are typically limited to one or two years.

Also, good EB-5 loan projects tend to have additional safety features, like mortgages or third-party repayment guaranties. These features can provide a higher degree of financial safety to EB-5 investors since the EB-5 loan is secured by some kind of collateral. If the borrower fails to repay the loan, the EB-5 lender can enforce their rights, which helps ensure EB-5 investors get repaid.

But just because an EB-5 project has some kind of loan security does not necessarily mean it is lower risk. If a project has a mortgage but the value of the property is less than the loan principal, the mortgage does not increase the project’s safety. In the same way, if a project has a loan repayment guaranty but the company providing the guaranty does not have the finances to repay the loan, the guaranty does not increase the project’s safety.

The best EB-5 loan offerings, however, will have mortgages or repayment guaranties. These projects will be happy to show EB-5 investors the strength of their loan security through financial documents.

With loan offerings, EB-5 investors tend to earn a lower annual return rate. For some EB-5 investors, the amount they earn on their investment is less important. What they want is a more predictable repayment timeline and additional financial security. For those who want higher returns, EB-5 equity may be the better option.

EB-5 Equity

EB-5 equity investments tend to offer EB-5 investors stronger rates of return. In some cases, this higher return rate can result in significant earnings over the investment period.

While the best EB-5 equity projects are low risk, the timing of repayment is more flexible. Unlike an EB-5 loan, the length of an equity investment is not tied to a maturity date. Equity is repaid when the developer sells or refinances the project. Experienced developers can offer estimates of when EB-5 investors can be repaid, but these estimates are subject to change based on project performance.

A developer’s track record is key. If a project’s developer does not have a record of completing many projects and successfully repaying all of its investors, the risk to EB-5 investors is high.

Project Duration: Short versus Standard

With the new USCIS policy allowing for a shorter investment period, EB-5 investors also have more choice when it comes to project duration. Historically, the length of EB-5 investments has been five or more years, but shorter durations of three to four years are now possible.

Shorter duration projects may be structured as a loan or as equity, but they are more likely to be in urban than rural TEAs.

It is important, however, to note that the USCIS policy that allows for shorter investment periods is new and subject to change. USCIS can change the policy at will, or it could be challenged in court or changed by Congress. Investments structured around this policy should include mechanisms that allow it to adapt to any future changes or refinements.

All other facts being the same, a shorter duration investment is better than a longer one. Shorter investment periods mean the money is at risk for less time. And a shorter length investment means having that money back to use for other purposes more quickly. But EB-5 investors should carefully weigh the value of a shorter project and its other benefits against a standard-length project and its benefits.

Hawthorne World’s Approach: Best-in-Class Projects to Fit Every Investor

Hawthorne World has worked to provide EB-5 investors with a range of high-quality, low-risk projects with diverse profiles. We offer both urban and rural TEA projects structured as loans and equity with standard and shorter durations. We recognize that every EB-5 investor is different, and features that appeal to one investor may not be as important to another.

We strive for transparency. We want investors to have all the information needed to make an informed choice. We want to help each EB-5 investor understand the pros and cons of each type of project and then choose the project that fits his or her financial and immigration goals.

Whether you are a Chinese businessman living in China, an Indian national in the United States on an H-1B visa, or a Canadian student on an F-1 visa, Hawthorne World has a project that will fit your goals. Below, we provide brief descriptions of our projects and example investment scenarios.

Rural Projects for EB-5 Investors Outside of the United States

Fictional Example:

Mr. Zhang, a Chinese businessman, wants to move his family to the United States. The fastest way to get an EB-5 visa is to invest in a rural TEA project. He begins looking into projects and finds the Coco Palms Resort, a rural TEA project. This project has low immigration risk since all EB-5 jobs have already been created. Financial risk is also low since it features a 100% equity pledge, future mortgage, and strong existing sales. Zhang likes this project because it is a luxury ski resort hotel and condominium, and he has always loved skiing. He makes his investment, and in 11 months he is approved for Green Cards for himself and his family.

Urban Projects for EB-5 Investors in the United States

Fictional Example:

Ms. Patel from India is currently living and working in the United States on an H-1B visa. She wants to adjust her status and concurrently apply for work authorization and a travel permit. Ms. Patel has worked hard and is ready to make an EB-5 investment, but she wants to make sure her hard-earned money is as safe as possible and returned to her soon. Garden Station (Loan) appeals to her since it features an EB-5 loan repayment guaranty from a financially strong guarantor. The loan term is about four years, which means she will have her money much sooner than with other EB-5 loan projects. Ms. Patel invests her $800,000 and files her immigrant petition and her adjustment of status application. Six months later, she has work authorization and her travel permit.

Equity for EB-5 Investors Seeking Maximum Returns

Fictional Example:

Mr. Horton is a Canadian in the United States on a student visa but is about to graduate. He wants to remain in the United States and would like to start his own business some day. He believes an EB-5 investment is his best choice for immigrating, but he wants to earn strong returns on his investment to help him start a business. After some investigation, Mr. Horton finds the Garden Station (Equity) project, which offers a 5.0% annual return and expected repayment after 3.75 years. He figures he could earn more than $100,000 in returns by the time he is repaid, giving him the money he needs to start his business while also helping him attain his Green Card.

Check These 4 Key Factors to Avoid Losing Money in an EB-5 Investment

EB-5 investors are primarily concerned with getting their Green Cards. Of course, investors want to get their money back, too—and earning a return on their investment is also desirable. But successfully immigrating is the only reason to choose an EB-5 investment over another type of investment.

As a result, at Hawthorne World, we structure our projects with immigration success at the forefront of our planning. This means we tend to offer projects where job creation is already happening or is complete.

While our first priority in structuring our projects is immigration safety, financial success is a close second. For some EB-5 investors, losing $800,000 would only be a minor setback, but for most EB-5 investors, such a loss would be catastrophic. You deserve a project where your money is as safe as possible.

Crucially, these two factors—immigration and financial safety—tend to go hand in hand. A project that succeeds financially is likely to result in the job creation needed for you to get your Green Card.

In this article, we will examine the four main diligence items you need to consider to avoid losing your EB-5 investment. First, we will look at the single most important factor for financial safety: borrower quality. Next, we will consider how financing costs can indicate the level of a project’s risk. Then, we will discuss how vital independence is to avoiding unnecessary conflicts of interest. And finally, we will look at how profitability can indicate the financial health of a project.                                 

Borrower Quality

• Project Development Experience
• Borrowing & Repayment Track Record
• Value & Diversity of Assets for Loan Security Track Record of the Specific Project
• Transparency of the Developer and Project

Financing Cost

• Interest Rate
• Position in the Capital Stack
• Financing Transparency

Project Probability

• Current & Future Probability
• Repayment Depends on Profit
• Choose Low-Risk Projects to Avoid Losing Money

Borrower Quality

Most EB-5 projects are structured as loans.

This means that the money from EB-5 investors will be loaned by the investment fund to the borrower—the company that is developing the project. The key question is whether or not the borrower will be able to repay this loan when it becomes due.

To determine borrower quality, you need to look at the borrower’s track record.

How many projects has the borrower successfully completed? How much experience does it have completing projects like the EB-5 project? How much money has the company borrowed in total? Does it have a history of borrowing and repaying funds on time? Has it ever defaulted on a loan?
What assets, if any, is the borrower using to secure the loan?

Finding a borrower with a proven track record is essential.

Project Development Experience

One of the quickest ways to gauge borrower quality is to look at its experience. How many similar projects has the borrower completed? While past success does not guarantee future success, a proven track record suggests that the company knows how to plan and execute its projects.

You should look at the track record of the development company to ensure it has successfully completed similar projects in the past. If the company is new, look at the track records of the people managing it. The more similar projects successfully completed by the borrower, the better.

Borrowing & Repayment Track Record

Another way to assess borrower quality is to look at the amount of money av company has borrowed and repaid. A company’s loan repayment history indicates how likely it is to repay your investment.

For example, if a company has never borrowed and repaid any money, the risk of 
investing in this company is higher because it has no track record for you to consider. In other words, you have no evidence that it will repay the loan on time. If, on the other hand, a company has borrowed billions of dollars and has repaid every penny on time, you have ample evidence that it will repay its debts. Investing in a company like this is generally lower risk.

You should specifically look out for prior bankruptcies, foreclosures, or other similar issues. Be sure to research both the company and the people who are managing it.

Value & Diversity of Assets for Loan Security

For EB-5 loan offerings, the stronger the loan security, the higher the quality of the borrower. A low-quality borrower will offer minimal loan security. Some regional centers and EB-5 projects may claim that EB-5 loans cannot be secured, but this is not true. The EB-5 program allows for secured loans, and the best EB-5 loans are secured.

But not all EB-5 loan security is equal.

Some projects may offer a pledge of equity interests in the project company. While an equity pledge is better than nothing, it may provide limited protection for EB-5 investors. Other projects may offer a mortgage on the property being developed as loan collateral. A mortgage reduces EB-5 investor risk because the lender can take possession of the property in the event of a loan default.

The best projects, however, have loan repayment guaranties from well- capitalized guarantors with diversified assets. A well-capitalized guarantor is one that has more than enough net equity to cover the entire balance of the loan. A guarantor with diversified assets is one that has more than one type of asset used as collateral for the loan. In essence, the more net equity and asset diversity, the better.

Track Record of the Specific Project

The quality of the borrower will also depend on a number of project details.

What are the project’s financing sources? If the project is not being financed by a bank or institutional investor, this may indicate the project is not creditworthy and higher risk.

Is all financing in place? If not, you need to consider how likely it is that the developer will be able to secure enough financing to complete the project.

Does the borrower have any of its own equity in the project? If not, all of the risk is being borne by investors. Conversely, when a developer has its own equity in its projects, it has a stronger incentive to succeed.

Is the project in a growing or declining market? If the market is declining, the project is at higher risk of failing. The project may be completed successfully, but it may not be marketable and could lose money.

Transparency of the Developer and Project

Transparency is a key factor in borrower quality. You cannot know whether a borrower is high quality unless it gives you access to all of the information you need.

A high-quality borrower has nothing to hide and will give you all of the information you need to make an informed decision. The only reason to withhold information is to hide problems

Financing Cost

While borrower quality reflects the past record of the developer, cost of financing is a key indicator of how risky the project itself is. A developer will spend significant time and effort securing the lowest-cost financing possible from banks and investors.

Interest Rate

Banks and institutional investors assign interest rates based on what they perceive the level of risk to be. The higher the risk, the more they want to be paid. By comparing the financing costs of multiple projects, you will be able to get a sense for how risky each project is compared to the others. For example, if one project has a senior loan with an interest rate of 15% and another has a senior loan at 8%, the one with the higher rate is likely higher risk.

Position in the Capital Stack

Since the cost of financing is tied to risk, the position of the financing in the capital stack will impact its cost. A senior loan is in the first position—meaning it will be the first to be repaid and thus has the lowest risk. This financing is going to have a lower interest rate than other forms of financing.

When a project cannot secure all of its financing through developer equity and a senior loan, it will seek additional financing through a mezzanine loan. This type of loan may be from a bank or another type of lender. The financing cost of mezzanine debt is higher because it has a lower repayment priority than the senior loan, meaning more risk. If something goes wrong with the project, the senior loan will be repaid first, and the mezzanine loan may not be fully repaid—if it is repaid at all.

By looking at the capital stack, you can quickly see where EB-5 financing fits and the risk of the investment relative to the senior loan and any mezzanine debt. If EB-5 funds are replacing senior debt, the risk is lower than if EB-5 is replacing mezzanine debt.

Financing Transparency

The full capital stack should be transparently disclosed to prospective EB-5 investors before they invest. You should carefully examine the capital stack to understand the level of risk being taken on by the EB-5 investment.

You should also look for potential concerns in the capital stack. Some developers inflate the value of land, for example, to make it appear that they have invested more equity than they have. Sometimes, the EB-5 loan is marketed as a senior debt, but in reality, the EB-5 loan begins as mezzanine debt and only becomes senior debt if specific, sometimes highly unlikely, milestones are achieved. Also, the EB-5 loan may start in senior position, but it can become subordinated to a new senior loan or other financing if insufficient EB-5 loan proceeds become available in a specific period to meet the ongoing capital needs of the project.

You will need to carefully review a project’s financial and legal documents to ensure that the developer and regional center are being transparent about the financing. Ask pointed questions about whether the developer equity is cash or land value. Ask about the position of the EB-5 funding in the capital stack and whether that position can change. And, critically, make sure to get these answers in writing.

Without a background in finance, you may find it difficult to compare interest rates, understand the position of EB-5 funding, and sense when something is being obscured or is not quite right. You should take your time to do your research, ask questions, and really understand the project’s financing before you invest EB-5 investors should also involve their immigration attorney in project selection; while an immigration attorney cannot provide investment advice, he or she can advise as to the immigration related aspects of an EB-5 project and their impact on the potential Green Card success.

Project profitablility

While borrower quality has to do with the developer’s track record and financing cost has to do with the perceived risk of the project, profitability has to do with the project’s current and future revenue. The concept is pretty simple—if the project is profitable, you are likely to be repaid; if the project is not profitable, you are likely to lose money.

Current & Future Profitability

For real estate projects, profitability is fairly straightforward. To find the profit, take the sale price and subtract the cost of the land plus the cost of construction.

The best EB-5 projects are already profitable. If a project is already making money, the likelihood that the developer will repay the EB-5 loan is much higher. For profitable projects, the key consideration is whether the project will continue to be profitable.

If a project is earlier in its development, it may not yet be profitable. The key consideration for a project like this is whether it is likely to become profitable and how long that will take. You need to look for clear signs that the project is likely to be profitable in the future. Does the project have sales or non-refundable deposits? Is there obvious demand in the area for the project? You should review any market feasibility documents provided by the project and then do your own
research of the local market to verify this information.

Repayment Depends on Profit

The repayment terms of an EB-5 project are important to consider. You should also consider the promised loan duration and the rate of return. The key, however, is not to compare what projects promise but to evaluate what they can actually deliver.

If a project promises to repay its loan in four years, you need to ask how likely it is to keep that promise. If that project is not economically successful and does not earn a profit—you are not likely to be repaid in the promised time period, let alone receive any of the promised investment returns.

Choose Low-Risk Projects to Avoid Losing Money

Hawthorne World structures its EB-5 projects to minimize immigration and financial risk to its EB-5 investors. Our projects feature best-in-class financial safety measures, including EB-5 loan repayment guaranties. And while we cannot guarantee that our EB-5 projects will always be profitable, we strive to offer projects that are already profitable or have a clear path to becoming profitable.

For more information about how to find a low-risk, high-quality EB-5 project, schedule a one-on-one call today.