Soyini Coke

The financial analysis in your EB-5 application is like the engine in your car . If your engine is faulty , you are not going anywhere . Your financial analysis or projections will most likely come from a model — a series of spreadsheets that analyze the likely performance of a company into which the EB-5 dollars will be invested . This model will then become the basis for all the financials in your business plan , a requirement for either a regional center ( I-924 ) or visa ( I-526 ) application . In particular , your financial analysis proves your business will create the number of jobs required by the EB-5 program .

A well-built model can result in a cogent , credible plan , which leads to an approved application , and eventually becomes a useful tool for strategic and operational decisions . Conversely , a poorly designed financial model may lead to inaccurate projections , potentially resulting in a denial of the investors ’ I-829 application after two years because a business did not create the number of jobs promised in its business plan .

This article discusses assumptions in your business plan via your financial model — what assumptions are , why they are important , and how to develop them accurately . Whether you are a project developer or an investor ( direct or regional center ), being clear about your financial assumptions is critical — their accuracy determines your business ’ s success . New ventures are inherently risky ; however , this approach will allow you to understand and bracket that risk , thereby increasing the likelihood of hitting or exceeding your financial targets .

What are assumptions ? Why are they important ?

Assumptions are the variables that you put into a model — your price , costs , sales cycle , conversion rates , etc . You must assume them because they are not calculated or implied by any other analysis , and they are variable and imperfect . So , even though assumptions are a choice , they should be driven by empirical evidence and logic rather than by conjecture . Assumptions are the key inputs that fuel the model ; if they are wrong , so the entire model will be .

Financial models are used in order to obtain EB-5 approval , to project future profitability , and to market your business to investors . On a broader scale , models are also used to hire employees , purchase inventory and equipment , and take on loans and lease agreements . If your model provides inaccurate results due to poorly chosen assumptions , your company will face enormous pressure , future setbacks , and a general uncertainty that limits your success , costs valuable time and money , or even causes your business to fail .

While the consequences of erroneous financial projections are painful for any investor who loses money , they are even more so for an investor in the EB-5 visa program , who may face deportation if the quota of 10 jobs is not reached . The risk is very real . In a business with $ 1 million in annual revenues , a negative 10 percent error in revenue projections would be $ 100,000 off the top line — that is the equivalent to at least one job in most businesses , which jeopardizes an investor ’ s visa .

Recommended methodologies for developing assumptions Historical data - If you have an established business , the most fundamental baseline is what you historically have charged your customers . If this is not an option , you can analyze competitors ’ pricing levels in comparable market segments .

Industry experts - One way to double-check your assumptions is to consult industry experts . These could be managers in operating roles , management consultants , or even investment bankers and accountants that focus on your industry . Many of these people create their own financial models and will have valuable feedback on your assumptions . Furthermore , you may get advice for free and expand your network at the same time .

16 EB5 Investors Magazine

The Fuel for
Your EB-5 Engine
Assumptions in Your
Financial Analysis
Soyini Coke
The financial analysis in your EB-5 application is like the engine in your car. If your
engine is faulty, you are not going anywhere. Your financial analysis or projections
will most likely come from a model—a series of spreadsheets that analyze the
likely performance of a company into which the EB-5 dollars will be invested.
This model will then become the basis for all the financials in your business plan,
a requirement for either a regional center (I-924) or visa (I-526) application. In
particular, your financial analysis proves your business will create the number of
jobs require �HHP�MH��ܘ[K���H�[X�Z[[�[�[��\�[[�H���[�ܙYX�H[���X�XY��[�\�ݙY\X�][ۋ[�]�[�X[H�X��Y\H\�Y�[���܈��]Y�X�[��\�][ۘ[X�\�[ۜˈ��\��[K�H�ܛH\�YۙY�[�[��X[[�[X^HXY�[�X��\�]H�ڙX�[ۜ��[�X[H�\�[[��[�H[�X[وH[��\�ܜ��&HKN�B�\X�][ۈY�\���YX\���X�]\�HH�\�[�\��Y��ܙX]HB��[X�\�و����Z\�Y[�]��\�[�\��[���\�\�X�H\��\��\�\��[\[ۜ�[�[�\��\�[�\��[��XB�[�\��[�[��X[[�[8�%�]\��[\[ۜ�\�K�H^H\�B�[\ܝ[�[����]�[�[HX��\�][K��]\�[�B�\�HH�ڙX�]�[�\�܈[�[��\�܈
\�X�܈�Y�[ۘ[�[�\�K��Z[���X\�X��][�\��[�[��X[\��[\[ۜ�\�ܚ]X�[8�%Z\��X��\�X�H]\�Z[�\�[�\��\�[�\���&\��X��\�ˈ�]��[�\�\�\�B�[�\�[�H�\��N���]�\�\�\��X��[[��[�H�[�\��[�[���X��]]�\��\�X�H[�ܙX\�[��HZ�[Z���و][��܈^�YY[��[�\��[�[��X[\��]˂��]\�H\��[\[ۜ��H\�H^H[\ܝ[�\��[\[ۜ�\�HH�\�XX�\�][�H][��H[�[8�%[�\���X�K�����[\��X�K��\��[ۈ�]\�]ˈ[�H]\�\��[YB�[H�X�]\�H^H\�H���[�[]Y܈[\YY�H[�H�\��[�[\�\�[�^H\�H�\�XX�H[�[\\��X����]�[��Y��\��[\[ۜ�\�HH��X�K^H��[�H�]�[��H[\\�X�[�]�Y[��H[���X��]\�[��H�ۚ�X�\�K�\��[\[ۜ�\�B�H�^H[�]�]�Y[H[�[�Y�^H\�Hܛۙ���B�[�\�H[�[�[�K���M����H��Z[�H���B���[�[��X[[�[�\�H\�Y[�ܙ\��Z[�P�MH\�ݘ[���ڙX��]\�H�ٚ]X�[]K[��X\��][�\��\�[�\��[��\�ܜˈۈH���Y\���[K[�[�\�H[��\�Y�\�H[\�YY\�\��\�H[��[�ܞH[�\]Z\Y[�[�Z�Hۈ�[�[�X\�HYܙY[Y[�ˈY�[�\�[�[�ݚY\�[�X��\�]H�\�[YH��ܛH���[�\��[\[ۜ�[�\���\[�H�[�X�B�[�ܛ[�\��\��\�K�]\�H�]�X���[�H�[�\�[[��\�Z[�B�][Z]�[�\��X��\�������[XX�H[YH[�[ۙ^K܈]�[���]\�\�[�\��\�[�\����Z[���[HH�ۜ�\]Y[��\�و\��ۙ[�\��[�[��X[�ڙX�[ۜ�\�B�Z[��[�܈[�H[��\�܈����\�[ۙ^K^H\�H]�[�[ܙB����܈[�[��\�܈[�HP�MH�\�H��ܘ[K��X^H�X�H\ܝ][ۈY�H][�HوL��\����XX�Y�H�\��\��\�B��X[�[�H�\�[�\���] HZ[[ۈ[�[��X[�]�[�Y\�H�Y�]]�B�L\��[�\��܈[��]�[�YH�ڙX�[ۜ���[�H Lٙ��H�[�x�%]\�H\]Z]�[[��]X\�ۙH�؈[�[����\�[�\��\��X��[�\�^�\�[�[��\�ܸ�&\��\�K���X��[Y[�YY]����Y\�܈]�[�[��\��[\[ۜ\�ܚX�[]HHY�[�H]�H[�\�X�\�Y�\�[�\��H[����[�[Y[�[�\�[[�H\��][�H\�ܚX�[H]�H�\��Y�[�\��\��Y\�ˈY�\�\���[��[ۋ[�H�[�[�[^�B���\]]ܜ��&H�X�[��]�[�[���\\�X�HX\��]�Y�Y[�˂�[�\��H^\��HۙH�^H��X�KX�X��[�\�\��[\[ۜ�\���ۜ�[[�\��H^\�ˈ\�H��[�HX[�Y�\��[���\�][����\�X[�Y�[Y[��ۜ�[[��܈]�[�[��\�Y[���[��\��[�X���[�[��]���\�ۈ[�\�[�\��K�X[�Hق�\�H[�HܙX]HZ\��ۈ�[�[��X[[�[�[��[]�B��[XX�H�YY�X��ۈ[�\�\��[\[ۜˈ�\�\�[ܙK[�HX^B��]Y�X�H�܈��YH[�^[�[�\��]�ܚ�]H�[YH[YK���H�
HH��H����HY�H�H�B��