The last couple of years have seen a large influx of newly designated regional centers. This article is intended to shed some light on the true costs of setting up an EB-5 regional center. The I-924, Application for Regional Center Under the Immigrant Investor Pilot Program, filing fee of $6,230 is only the tip of the iceberg. If you are serious about establishing an EB-5 regional center, you will need to set aside at least $225,000.
It is assumed that if you are interested in creating an EB-5 regional center you have a project in mind along with a completed business plan. Once you have a qualifying project business plan, you will need to satisfy the Initial Economic Evidence Requirement. This requirement is satisfied by an economic impact report that will cost between $15,000 to $50,000 (depending on the project complexity as well as the economic model utilized).
The second significant cost expenditure of establishing an EB-5 regional center is the legal component. A competent and experienced law firm will need to draft LLC and LP operating agreements, subscription agreements, PPMs, and offering letters. Again, the costs may vary and will depend on the project and offering complexity. For a hypothetical, straightforward project, we have seen these cost as little as $50,000, although they can quickly balloon to over $250,000 for more complicated offerings.
The third significant cost expense is the required capital sufficient to sustain the regional center. This capital must be distinct from the immigrant investors’ required capital investment and can range from $150,000 to well over $1 million. Now, it is important to note that this amount is not immediately spent but rather placed in the regional center’s business checking account to show the USCIS that the regional center has, and will have, adequate capital to operate so as not to solely rely on EB-5 immigrant investor funds.
Ultimately, if you are serious about creating an EB-5 regional center, you will need to set aside at least $225,000 before embarking on the journey. That amount should be sufficient to achieve regional center designation and operate successfully for the first year. However, keep in mind that to seriously compete for EB-5 investors you will also be responsible for significant outside costs such as broker fees and other investor acquisition costs.
For more detailed information on the regional center designation process, visit our Creating an EB-5 Regional Center page.
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