EB-5 Visa Business Plan
What are the requirements for EB-5 Visa Business Plan?
To successfully apply for an EB-5 investor immigrant visa an applicant must present evidence that he or she has:
(1) invested a minimum of $900 thousand in either rural or an area with high unemployment or $1.8 million for all other areas, and
(2) has actually undertaken meaningful concrete business activity that will result in the creation of at least 10 full-time jobs. To prove the viability of the business activity and its ability to sustain a minimum of 10 full-time employees the U.S. Citizenship and Immigration Services USCIS requires that EB-5 investor visa applicants submit a professionally written business plan along with other documentation. On its website the USCIS states that it will accept only business plans that meet its standards. For investors and entrepreneurs seeking to enter the United States on an EB-5 investor visa the important questions are: what are the standards for an EB-5 immigration business plan? How important is the visa business plan for the overall success of the application? What should I look for when retaining a professional to prepare the business plan?
First the standards that USCIS requires to accept an EB5 visa business plan are established by a 1998 precedent decision “Matter of Ho”, therefore an immigration business plan that confronts to these standards is said to be “Matter of Ho compliant”. So now the question is
What should a “Matter of Ho compliant EB-5 business plan contain?
Business and Investment Description
An EB5 business plan must include a detailed description of the business and its assets, operating model, services and/or products, intended market, its location, organizational structure, key personnel, and the amount of invested capital. The business plan must also contain a description of the investment, the amount of money already spent and its use.
That might include, when applicable, a description of equipment purchased, any inventories that have been purchased, any money spent on marketing and/or building the brand.
Further the business plan must establish that the investment capital is “at risk” by describing how exactly the investment is made and who is the legal owner of the investment. For example, an investment can be deemed as not placing the investor’s capital at risk sufficiently. Investments such as providing a secured loan or making a real estate purchase would not be deemed to be putting the investor’s capital at risk, while an equity investment in an operating business would be accepted, even if the business itself is not very risky.
The EB5-5 business plan includes an analysis of the industry and market that the new business plans to enter.
The market analysis should first answer what are the drivers that determine current trends in that industry, what are the major players and how concentrated or fragmented the market is, as well as what are the future growth expectations for the industry. The market analysis should also contain the names of competing businesses and their relative strengths and weaknesses and a comparison of the competition’s products and pricing structures relative to those of the new EB5 business enterprise. In addition, a description of the target market and prospective customers of the new commercial enterprise should be provided.
Establish that the enterprise is likely to succeed
In order to establish that the new EB5 business is likely to have a success, the investor must show that it has acquired all applicable permits and licenses, that either he or she has the necessary experience and credentials or has hired a management team that is able to execute, and that business has a well-defined marketing strategy.
- Permits and Licenses – according to the standards set by the USCIS in the “Matter of Ho” an EB5 business plan must contain a list of all licenses and permits that are applicable to the business. For example, if the business is a restaurant it needs to have all local and state permits that required for its legal operation.
- Experience and Credentials of Team – although the investor is not required to have any business or investment experience, the USCIS would consider the experience of the investor if they will be involved in the management of the business when deciding if the new enterprise is likely to succeed. If the investor does not wish to be directly involved in the management of the new business, he or she can hire one or more managers. In that case the EB-5 business plan should show the relevant experience and credentials, including education and professional licenses/certifications, of the team that is selected to manage the EB-5 business.
- Marketing Strategy – this section should discuss the pricing of the EB-5 business’ products and services and how they can be appealing to customers, what would be the advertising strategy and what distribution and sales channels will be used.
The personnel plan should show the business’s intended organizational structure, job description, salary and requirements for each position and the experience and credentials of personnel that has already been hired. In addition, the personnel plan should explain the staffing requirements of the new business and contain a timetable for what positions are going to be filled and when.
Detailed and realistic financial projections should show ability of the EB5 business to hire personnel and that it would enjoy a reasonable financial success.
The financial projections typically stretch 5 years into the future and should include revenue, costs, and net income projections as well as cash flows and a balance sheet projection.
The revenue projections should be based in reality, and include supporting rationale, for example how many units of a product are expected to be sold times the expected price per unit. Costs should also be itemized as much as is reasonable. Although, USCIS examiners understand that the future is uncertain and not all can be predicted in advance, they do expect the financial projections to be reasonable and not wildly optimistic. An important aspect of the financial projection is to show that the business will be able to retain 10 or more full-time (40 hours or more per week) employees on permanent long-term basis of at least 2 years.
A professionally written immigration business plan that meets the USCIS standards is of upmost importance to a successful EB-5 investor visa application. That said, just a well-written business plan is not the solo requirement, rather the business plan should fit well with the rest of the application and not have contradictions with the immigration forms and other evidence. In that sense an EB-5 business plan serves as roadmap to the examining immigration officers when deciding on whether to approve an EB5 application or not.
When an investor is seeking to hire an EB5 visa business plan professional they should look at that person’s experience; have they prepared other successful immigration business plans and/or business plans for other purposes such as raising equity financing or obtaining a bank loan.
Having education from a US business school is also a big plus since US graduates tend to have better command of English, familiarity with business terminology and pay more attention to the credibility of their sources as opposed to most non-US graduates. There is no special certifications or licenses for professional that prepare immigration business plans but experience in business and finance, combined with a solid educational background should be sufficient. Other professional designations such as the CFA (Chartered Financial Analyst) and/or CPA (Certified Public Accountant) can speak well of the professional’s knowledge and dedication to their profession.
If you are looking for an immigration business plan for an EB5 immigrant visa contact us, Key Reef Financial, your dedicated business plan professional and business consultant in Miami, Florida.
Key Reef Financial – EB-5 Business Plan Consultants