strategies, and market analysis). The project summary and
operations sections should follow Matter of Ho to the extent
possible. In reality, some of the required elements (such as a list
of suppliers) will not be available or determined at the time of
the filing and, as such, are not typically included. Moreover, if a
project results in job creation from construction only (i.e., a real
estate development where construction spans 24+ months, but
the building is sold once complete), the plan often excludes the
operations section altogether.
Organizational Structure
With direct EB-5 investment, the
new commercial enterprise (NCE) is
the operating business; it is the
only entity of consequence as
it relates to the business plan.
The plan should clearly address
that entity’s structure, ownership and organization, and provide
a clear description of the NCE’s business activities.
In contrast, it is common for regional center projects to
include multiple entities. One common investment model is
when EB-5 investors invest directly into a lending entity (the
NCE), which in turn finances a project (the job creating enterprise or JCE). In this model, the “business activity” of the new
commercial enterprise is to provide financing for the project,
and it is the job creating enterprise’s activity that most directly
impacts the economy.
A regional center plan should clearly describe the structure
of the project as a whole and include an organizational chart
defining the NCE, its relationship to the JCE, the role of the
regional center, and any other entities involved. The ownership structure and management of each entity should also
be listed, and the flow of funds between the various entities
should be illustrated.
Source and Use of Funds
A business plan for a new company must clearly outline the
sources and uses of invested funds. For direct investment, the
table should list the EB-5 investment (and any other secured
funds) and itemize the uses of those funds. This includes onetime up-front costs, equipment, build-out costs and immediate
inventory expenses. The balance of the investment is considered
working capital, which covers the operating expenses until the
business turns a profit.
In a regional center plan, the capital stack should be detailed,
followed by a summary of the project costs, including hard
construction costs, soft construction costs, FF&E and financing
fees. It is also good to include a detailed construction budget
with line-item hard construction costs.
Timelines
Regional center plans
should include the
general timeline of the
project’s development as well as
a detailed construction timeline,
typically in the form of a Gantt
chart provided by the developer or contractor. An additional
operations timeline should be included if applicable.
Direct plans should include a detailed operational timeline
that states when the investment was made and when the
primary activities funded by the investment will be deployed.
These will vary from project to project, but typically include
major asset purchases, execution of key contracts, launch of
operational activities and hiring.
Management Team and EB-5
Investor Participation
A direct plan should include biographical summaries of the
company’s management team, including a biography of the
investor and an explanation of his or her role in the company (if
managerial or operational).
Regional center investors participate directly through their
partnership or membership i