NEW YORK, October 5, 2021 / CNW / – Direct investment is a better representation of congressional intent for EB-5: Immigrants invest in a business that creates permanent jobs in the United States.
1. EB-5 direct investments only count salaried jobs
In the direct permanent EB-5 program, investments only count operational jobs; compare that to the currently expired regional hubs program, where construction workers, supplier jobs, and induced jobs (planned by local spending) are also counted.
Greg Zaïc runs 12-15 Diagnostics, a company that has created a quick and inexpensive COVID-19 testing device, and is reluctant to count the work involved: “It is smoke and mirrors. Any kind of calculation of induced employment is the result of economic theory. I would love to see all of this audited. “
2. Direct EB-5 requires real capital investment – no loan component
Direct EB-5 investments are made directly in the job-creating company.
However, the investments of the regional center are made in an entity whose sole purpose is to raise and lend money. The invested capital is restructured in the form of a loan to give investors more certainty of repayment; the spirit of this precludes the intention of investing in EB-5 shares.
EB-5 Securities Lawyer Robert Corniche Says: “The regional hubs program was supposed to attract foreign capital in the form of equity, but over time it evolved into a lending mechanism. “
3. EB-5 direct investments develop vital businesses – in almost every industry
In less than three months since the regional centers program expired, companies ranging from COVID-19 testing to bathroom fixtures manufacturing to drug treatment centers have created EB-5 offerings. .
Compare that to the investments of regional centers which have focused almost exclusively on large real estate developments in urban areas.
Adityo Prakash from BreezLyte, maker of the world’s most breathable N95 respirator masks, is a direct investment champion in the EB-5: “We need to create jobs that are not just low-paying, labor-intensive jobs; we need to create better and more skilled jobs. The direct program creates a variety of high quality jobs that grow the economy. “
In the report What Ideas Are Worth: The Value of Intellectual Capital and Intangibles in the U.S. Economy economists Kevin a hassett and Robert J. Shapiro say innovation is the engine of the US economy and requires public and private investment. EB-5 direct investments can support innovative companies and thought leadership in almost any industry.
4. EB-5 direct jobs are permanent by design
Direct investments finance sustainable businesses, and direct jobs can be careers.
In the regional centers program, jobs are calculated based on spending whether or not the project is successful. Veteran securities attorney Charles Kaufman observes, “Isn’t that a perverse way to allocate billions in foreign direct investment? EB-5 direct investment encourages investors to find projects that have the best chance of success in the market.
5. Direct investment is not motivated by special interests and does not push for gerrymandered cards
Small businesses using direct capital do not run political campaigns. Or push for less restrictive rules on Targeted Employment Areas (TEAs).
Conversely, giant real estate developers are pushing for easier enforcement of high unemployment determinations – the kind that got Hudson Yards in. Manhattan qualify as a troubled area and raise $ 1.2 billion of EB-5 capital.
Greg edwards from CryptoStopper, an EB-5 direct capital-seeking ransomware detection firm, says, “We are proof that you can start a vital US technology company in the cornfields of Iowa. “
6. Fraud – you don’t hear about it with EB-5 direct investments
A simpler offering structure makes direct EB-5 offers more transparent.
A search for “EB-5 “on the SEC website yields 243 search results. No results appear to be associated with direct investment.
Regional center investments include layers of entities that allow potentially hidden and conflicting interests. The SEC warned investors in regional centers that “layers of companies run by the same individuals “may be a “sign of fraud. “
After 30 years, where is the EB-5 – and where it can go
The Regional Center “The “pilot” program dominated EB-5. But he reduced a job creation program to an offshore capital raising vehicle that lowered the cost of borrowing for large real estate projects, while also enriching overseas agents. And he hasn’t done much to create truly permanent jobs. .
Direct equity investments create real high-end jobs that can last for decades and strengthen the economies of small communities across the United States.
Wasn’t that the intention of Congress when it created EB-5?
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Author Kurt reuss is a registered stockbroker working exclusively in EB-5 since 2013 and founder of eb5Marketplace.com
For more information: Kurt Reuss (646) 708-0922 [email protected]