How to evaluate immigration and
financial risks for EB-5
Investors should consider the risks at each stage of EB-5 process prior to
investing, including the I-526 application, conditional residency period, and
permanent residency.
By Mickayla Zinsli Rosard
P
roperly evaluating the risk profile of an EB-5 project
can seem daunting, as every project has immigration
and financial risks. As a project progresses, these risks
change throughout the three EB-5 stages: I-526 application,
conditional residency period, and permanent residency. It
is imperative for project sponsors and investors to have
candid conversations about risk. To help guide those
conversations, let’s explore the nine most prevalent risk
factors.
STAGE 1: I-526 APPLICATION
DOCUMENTATION RISK
USCIS reported a sharp decline of I-526 approvals in the
third quarter of 2019. The approval rate fell to 58%, the
lowest in 14 years. It is vital that project sponsors and
investors properly prepare the petition with the help of
an experienced immigration attorney. It is the project
sponsor’s responsibility, with the assistance of their EB-5
professional team, to provide substantial documentation in
order to ensure the Matter of Ho standard is met. Investors
should ensure the project has credible documentation
including, but not limited to; third party market studies,
verifiable job creation inputs, and corroborated
construction contract, bid, and timeline documents.
For inves tor s , hiring an immigration at tor ney wi th
ex tensive EB -5 knowledge is equally impor tant. If a
project has preferred counsel, investors should still verify
the attorney’s experience before moving forward. Once
retained, investors must be prepared to provide various
source of funds documentation. With source and path of
funds being the most common reason for an I-526 denial,
it is imperative investors work with immigration counsel
to properly document their investment capital prior to
investing. Similarly, project sponsors should also work with
immigration counsel to review and verify investors’ source
and path of funds documents prior to investing.
FINANCIAL RISK
The most common way to manage financial risk during
the application stage is with an I-526 denial guarantee.
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