The past several months have been the first months in more than 15 years when smaller, direct EB-5 projects have dominated the market. While the regional center program may return in the coming months, it also may not. Regardless, it seems as if a new day in EB-5 is dawning. In the past, regional center projects offered very little immigration risk (due to enhanced job counting possibilities) and the perception of little financial risk. Today, it seems like many of the projects we see in the marketplace offer tremendous amounts of both immigration and financial risk. In analyzing all of this, we usually suggest prospective investors start with these core questions:

Is this a fair deal? What is the potential financial upside and is that commensurate with the risk of losing up to $500,000?
What, if any, assets underlie the investment? This is very important and it is why real estate was always favored among regional center projects - because it is unlikely it will go to zero. There’s absolutely nothing necessarily wrong with investing in a service-related business, but the upside should match the risk.
What is the project structure and who is in charge?
What is the business model? Exactly what is the company selling, how much will it cost to scale, and at what point do you reach break-even?
What are the sources of funding?
How do the projections look? Where did they come from? How reliable are they?
Employment creation - what jobs are being created and how many? Does this look and feel reliable?
What is the payback plan? Again, this comes back to #1 and #2 somewhat - how will the project get you your money back?

A final note of caution I would say to any prospective investor - and I say this as someone who has been a partner in many EB-5 projects - is that a PPM does not protect you, it protects the company offering the investment. It’s a very important document, but what it is really doing is tell you all the reasons you cannot sue the offeror of the investment if things go poorly, telling you all the ways you might lose your money. It is important you understand these things, but the key to analyzing an EB-5 project is not that document; it’s the Business Plan and financial data. That is where I would tell any investor focusing his or her energy in analyzing whether they want to proceed with any project.