Securing EB-5 Funding For Your Small Business – A Complete Guide

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As a small business owner, finding the right funding to fuel your company’s growth is of paramount importance.

While there are various ways to go about this, such as getting a loan or securing a government grant, the amount of time and effort involved in getting access to the cash might be an insurmountable obstacle.

That’s where EB-5 funding comes into play, so let’s discuss what it is and how you can make your up and coming company attractive to overseas investors.

The basics of EB-5 funding

The EB-5 visa scheme originated in the 1990s as a way of bringing more foreign investors to the US with the promise of giving them a green card in exchange for making a significant economic contribution.

Since the world is full of people with capital who want to plumb this into profitable EB-5 investments, the program has gone from strength to strength, generating billions of funding for startups across the US.

The importance of eligibility

The first step to bringing an EB-5 investor onboard is ensuring that your small business qualifies under the parameters of the project.

There are two tiers of investment available, depending on where your company is based. Businesses in targeted employment areas (TEAs) can be backed with as little as $500,000 from foreign investors, while those elsewhere have to meet the $1 million minimum.

Of course if you’re in a TEA and you need $1 million or more to achieve your goals, that’s still an option. It’s simply a case of knowing that there are different types of investors who will naturally be more attracted to your proposition according to your location.

You’ll also need to provide a comprehensive business plan, and the investment has to create at least 10 jobs. Crucially, this is 10 jobs per investor, not 10 in total, so if you’re looking for funding from more than one overseas individual, the scope of your expansion will need to reflect this.

The relevance of marketability

To get investors interested in your small business in the first place, you’ll need to prove that it’s worthy of their involvement.

Building a research-led, evidence-packed marketing campaign to pitch your company to prospects makes sense. And since there will be other regional projects which investors can support if they choose, you’ll need to do what you can to stand out from the crowd.

The need for transparency

Although good marketing can win the day, it shouldn’t be founded on half-truths or over exaggerated claims.

Investors have to be given a sense of the risks they face by backing you, as well as the potential rewards that lie in wait as well. Give them all the data they need to understand what you hope to achieve, and be realistic about the trials and tribulations you’ll face to reach your goals, so that trust and mutual respect are in place from day one.

The perks of preparedness

Don’t just plan to give would-be EB-5 investors vague answers about how their money will be put to work. Provide specific examples and give them a sense of what exactly you’ll be doing to see that the funding they hand over is securely invested.

The advantage of going above and beyond

We talked about the minimum eligibility requirements for EB-5 investments to get the green light, but you have to remember that you can push beyond what’s recommended, rather than treating it as the upper limit of your ambitions.

For example, rather than only planning to create 10 jobs as part of the investment package, opt for 15 or 20, if the project warrants it. That way you’ll still be able to exceed the minimums put in place by the authorities, even if you choose to shed a few full time positions further down the line.

The role of expert advisors

Lastly, securing EB-5 funding is simpler if you’re working with professionals who are familiar with how this whole process works.

Courting investors can be tricky even if they are already US residents, but with everything else that’s on the line where EB-5 visas are concerned, it pays to have experts on your side from the very beginning.