Friday, September 23, 2016

EB-5 Regional Center Program termination would lead to Direct EB-5 Takeover

Yesterday, Senator Mitch McConnell filed a Continuing Resolution (CR) that would extend the EB-5 Regional Center Program through December 9, 2016. This would be similar to 2015 when EB-5 Regional Center Program was extended for nearly 3 months before getting another extension to September 30, 2016. If the EB-5 Regional Center Program was to expire after December 9th, we would see a race for developers to use Direct EB-5 to secure capital for their projects. 

Direct EB-5 only considers direct W-2 employees for job calculations which makes it hard for large projects to raise sufficient funds to be cost-effective. The rise of franchise models such as restaurants, spas, dental offices and child cares along with small projects (under $10 million) would be the future of the EB-5 project. Less than 5% of all EB-5 projects currently use direct EB-5 program so we would see a significant decrease in the use of the EB-5 Program after December 9thHopefully the Congress will pass a new EB-5 regional center program for five years beyond December 6, 2016.

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