Lower U.S. property values in the past few years have drawn the interest of foreign real estate investors who want to take advantage of the EB-5 immigrant investor program which gives them the opportunity to permanently live and work in the U.S. Thus, borrowers and private lenders alike should be aware of the basics of the program as these investors can be important sources of capital for commercial real estate projects as well as the health care, hospitality and manufacturing industries.

The EB-5, or immigrant-investor, program was enacted by congress in 1990 in order to stimulate the U.S. economy and job growth through foreign investments. This program requires that immigrant investors make an at-risk investment in a project that will retain or create at least 10 full-time jobs for qualified U.S. workers over a period of two years.

There is one part of the program which was piloted in 1992 which earmarks a certain number of EB-5 visas each year for immigrants who invest in regional centers which have been designated by the U.S. Citizenship and Immigration Services (USCIS). These regional centers are chosen through a rigorous application process which requires plans (including business and job-creation) to promote economic growth in specific geographic areas. Once a regional center is approved by USCIS, they can pool together investor funds and provide a stronger guarantee of creating the required number of jobs.

Another aspect of the program of which it is important to be aware is the capital investment requirements. The foreign investor must make a qualifying investment of at least $1 million unless the investment is made within a targeted employment area, in which case the requirement is lowered to $500,000. When the capital investment requirement is met, the investor, along with qualifying family members, receives conditional visas. If the investment is maintained for two years and the required number of jobs have been created or retained, then the conditions are lifted and the visas become permanent.

The EB-5 immigrant investor program can be a flexible source of capital for commercial real estate projects that will create jobs for U.S. workers as interested investors are generally more interested in the viability of the business plan, its ability to create jobs, and the track record of the principal than in a return on their investment. As an alternative source of funding, it can also be set up to supplement financing from traditional lenders or other private lenders.

This blog was written by Bob Amter, President of Montegra Capital Resources, LTD., a Colorado hard money lender.  [google_authorship] has been in the private capital lending business for 41 consecutive years.