Chapter 2: Cost of EB-5 Funds
© James C Wolf Feb 2021 (updated July 2021)
Developers consider EB-5 funding as part of their capital stack since EB-5 money typically comes with below market terms, as discussed in EB-5 Intro for Project Developers, Chapter 1: Financial Considerations.
After reviewing the Financial Considerations, a Project Developer typically considers the Cost of EB-5 Funds.
Cost of EB-5 Funds – Securities Law Compliance Expense
EB-5 funding must be supported by a securities law compliant offering. US offering documents can cost $50,000 – $150,000. In addition, the offering documents must be reviewed and approved by local counsel in each jurisdiction where the offering will be made.
Cost of EB-5 Funds – Immigration Compliance Expense
Since the EB-5 offering provides little economic benefit to the Investor, the Investor will want assurance that the investment will actually provide the green card. This assurance is provided by getting an “I-526 Exemplar” approved by the US Citizenship and Immigration Service.
The “I-526 Exemplar” package is prepared by immigration law counsel and includes an EB-5 compliant Business Plan, Market Study, Economic Impact Report and securities law compliant Offering Documents.
- Business Plan: $10,000-$15,000 to Business Plan Writer, or may be prepared internally by the Developer
- Market Study: $10,000-$15,000 to Market Study Writer
- Economic Impact Report: $10,000-$15,000 to Economist
- I-526 Exemplar: $15,000-$20,000 to Immigration Lawyer
Cost of EB-5 Funds – Sales and Marketing Expense
US Offering
If the offering will be made to persons inside the US (US residents), commissions may be paid only to FINRA broker-dealers. A FINRA broker-dealer will typically charge a due diligence fee to review the offering documents before accepting an engagement to make the offering in the US.
Overseas Offering
If the offering will be presented to persons outside the US, commissions may be paid as permitted by local law. In China (the largest source of EB-5 investors), only persons licensed by the Public Security Bureau may handle EB-5 offerings. These agencies typically do not charge any up front fee but their commissions may range from 3-8%.
Cost of EB-5 Funds – EB-5 Regional Center Expense
In order for the Investor to get credit for indirect job creation, the Project must be affiliated with an EB-5 Regional Center.
An EB-5 Regional Center will typically charge a due diligence fee to review the offering documents before agreeing to affiliate.
An EB-5 Regional Center will typically charge an annual fee for required annual reporting to the USCIS on Project activities, Investor’s immigration progress and job creation. In addition, the EB-5 Regional Center typically charges a pro rata portion of the USCIS filing fee for the annual report (Form I-924A).
The Project may engage the services of an immigration attorney to help provide the annual report for the Regional Center.
EB-5 Capital for Project Developers
We give client-centered advice, representing only one side at a time in each EB-5 deal, without conflicts of interest or bias.
We leverage professional experience as an EB-5 attorney, EB-5 regional center operator, EB-5 Issuer, and EB-5 project developer, for benefit of each type of stakeholder.
For further information on EB-5 Capital for Developers, see other chapters in this series.
- Advising innocent partner’s counsel in EB-5 fraud litigation in California.
- Guidance to EB-5 Forensic Accountants investigating collapsed EB-5 investment
- Consulting on complex EB-5 cases.
- Directing and coordinating work of investor representatives in India, Mexico, China.
- Reviewing EB-5 fraud claims as to potential liability.
- Advising on potential EB-5 fund raises.
- Structuring and preparing source of funds documentation.
- Providing outside counsel review of I-526 and I-824 filings.
- Immigration counsel in lawsuits:
- against developer alleging misuse of funds in New Jersey.
- against regional center alleging mishandling of funds in New York.