This blog is a transcript of the webinar we held with Klasko Immigration Law Partners about the recent EB-5 changes.
Direct EB-5 Green Card – What You Must Know
Patrick: Hey everyone. Thanks a lot for joining us today. My name is Patrick Findaro, a managing partner at Visa Franchise, as well as Vetted Biz. Today we’re very excited to talk about the direct EB-5 Green Card opportunity window. At Vetted Biz, you can see a platform of thousands of different businesses. Some of them are eligible for the EB-5 visa, we’ll be going through that today. And then at Visa Franchise if you want more personal support in terms of finding, analyzing, structuring different investments that might be eligible for an EB-5 visa, we can help you at Visa Franchise.
Klasko Immigration Law Partners
I’m also honored to have on not just one but three immigration attorneys, Ron Klasko, managing partner and founder of Klasko Immigration Law Partners, as well as two of his colleagues, Jessica DeNisi, and Oliver Yang. We’ve had cases with each of the attorneys that we’ll be talking today with a 100% success rate across many different visa categories. They’ll be talking about all things related to the EB-5 and we’ll have Ron Klasko kick it off with an update as June and July have seen a lot of changes to the EB-5 program.
Visa franchise and Vetted Biz
As Visa Franchise, we act as advisors to help you find, analyze and structure a direct EB-5 investment. And then for Vetted Biz, it’s an online database, so 1,800 plus franchises, 1,600 businesses for sale. So if you prefer to do it yourself, you have it out there. All the options are online. You can browse.
Today I’ll be going through a few different franchises that might be eligible for the EB-5 visa as well as if you want us to provide support, I’ll show how we go about finding, vetting, and structuring an investment for the EB-5 together with Klasko Immigration Law Partners. So without further ado, I’m going to go ahead and bring on Ron.
Ron: Well, thank you, Patrick, and thank you to Visa Franchise for inviting myself and my colleagues to talk to you today about a really very interesting subject. We have a perfect storm of unprecedented events that have created a very small window of opportunity for people to get a green card through the direct EB-5 program at a substantially reduced investment amount. And I want to just introduce this, and then my colleagues, Jessica and Oliver will go into the details.
Changes EB-5 Green Card opportunity
But the first thing that we need to understand is that the EB-5 program when it was first established in 1990, only had the direct EB-5 program. It was later in the ’90s that the Regional Center Program was created as a temporary program. And ultimately, the Regional Center Program became a 90 plus percent of the totally EB-5 program. But in June of 2021, two things happened that we’re going to discuss. Number 1 is the Regional Center Program, which I said is a temporary program lapsed as of June 30, and it hasn’t been extended yet.
And number 2, by coincidence, around the same time, a federal court ruled that the immigration service regulation that was passed in November of 2019, and that increased the investment amount from what was in most cases $500,000 to in most cases $1.8 million or in some cases $900,000, was an invalid regulation. And so we go back to what the amount was before in November of 2019, which in most cases is $500,000. So let’s take a look at both of those events as an introduction to what we’re going to be discussing in some detail today about the direct EB-5 program.
Regional Center Program
So the Regional Center Program has lapsed and had deadlines and been extended over 30 times. So there’s nothing unusual about that. The latest extension of the program was June 30. Unlike almost all of the 30 plus times where it was extended, this time it was not extended by June 30. And so we’re sitting here three, four weeks later with no Regional Center Program. Almost everybody expects that the Regional Center Program will be reauthorized, but no one can tell you with any certainty when that will happen.
And almost certainly it will not happen at the very least until probably late September. And we all hope it will happen at that point but no one knows. So what does it mean? It means that the only EB-5 program that exists as we speak today that you can actually file an application under is direct EB-5. Everybody’s heard about the EB-5 program ending or lapsing, that has nothing to do with direct EB-5s, which is the subject of our discussion today. The USCIS will continue to accept and adjudicate direct EB-5 applications.
Regional Center Program lapses
And again, Jessica and Oliver will talk to you in detail about what’s involved with the direct EB-5. All right. So we have perfect storm number one, which is the Regional Center Program lapses, and all that’s available is direct EB-5. Well, let’s talk about what else happened in June of 2021. The second thing that happened is that a federal court in California ruled that the November 2019 regulation that increased the investment amount was invalidly promulgated. What does that mean?
Without going into a lot of detail, the court ruled that because the secretary of the Department of Homeland Security was never validly appointed by President Trump, the regulation that he signed off on was invalid. And if it was invalid, it means that we go back to what the regulation was before November of 2019. And before November of 2019, the regulation said that if you invest in a targeted employment area, and the way that the TEA was interpreted was very broad and expansive, which means a very, very, very high percentage before November of 2019 of investments qualified at $500,000.
The “Perfect storm” – EB-5 Green Card opportunity
So we’re back today with that situation where most investments in the direct EB-5 program will likely be able to qualify at $500,000. So what’s the perfect storm? And I guess before I go into that I should say that no one expects that the $500,000 is going to be with us for a very long period of time. It will probably be increased probably back to the $900,000 and $1.8 million levels but no one knows for sure. And it will be increased either by congressional legislation or by another USCIS regulation or if the government appeals the federal court decision and the higher court, what’s called the Ninth Circuit Court of Appeals, reverses the decision or stays the decision.
So when will that happen? When will there be an investment amount increase? The answer is no one knows. It could be tomorrow. It could be in three months. No one knows. The only thing we know for sure is that there is a window of opportunity right now to invest at $500,000, do a direct EB-5 and take advantage of the fact that we have this short opportunity where the investment amount is decreased. So that’s the introduction to what you’re now going to be hearing about starting with Jessica on giving you some background on what the EB-5 program is, and then starting to focus specifically on this direct EB-5 window of opportunity. Jess, you want to take it from there?
Jessica: Yes. So, we’ll just start with a little EB-5 “101”. An immigrant investor would qualify for an EB-5 if he or she makes an at-risk investment in a new commercial enterprise. And at-risk investment generally means there’s a chance of gain or loss with respect to the investment. And the investor needs to make an equity investment of capital in the new commercial enterprise, not a loan. A new commercial enterprise is defined as an entity formed for the conduct of lawful business after November 29th, 1990, or in special circumstances, it can be an entity formed before 1990.
One of the things that makes the EB-5 opportunity particularly attractive right now as Ron discussed, is the investment amount. The amount that needs to be invested at risk in the new commercial enterprise currently is $500,000 if the investment is made into an entity, a new commercial enterprise, primarily doing business in a targeted employment area, or $1 million in any other area.
So a targeted employment area can be a rural area, which is more common. An area with a high unemployment rate. The area has to have an average unemployment rate of 150% of the national unemployment rate for the previous year. So now we can find a TEA based on a single census tract, or what’s also very common is you can take the weighted average unemployment rate through combining census tracts. And this is one of the things that changed with the new regulations and is now back in effect, and it allows for a little bit more flexibility in one’s ability to find a location for a project that qualifies for the lower investment amount.
Oliver: Okay. All right. So, thanks, Jessica, for the intro. So I’m going to talk a little bit about the actual filing that’s going to be filed with the U.S. Immigration Service and what you as an investor will need to do. So the actual filing will consist of two parts. One is about the project, and the other part is about your source of funds. And as an investor, the most important thing, you spend a lot of time on gathering source of funds documents because what’s required is usually very extensive.
Source of funds
So let me first talk about the usual source of funds options. Know that this is not a final list and there are certainly a lot of source of funds scenarios. And the most important thing is that we present the source of funds narrative with drawn documentation and describe exactly what happened and how you earned your money. But here are the usual options, you can use your income. So if you have made money, you saved it in the bank account, your stock trading account, you can use the money directly from your accounts.
Real property – Loans with collateral
If you have assets like a real property, if you recently sold the asset or you are going to sell the asset, you can use the proceeds from the sale as the source of your investment fund. You can also take out loans. I listed three scenarios here. The first two scenarios, you’re going to use a collateral, and you’re going to source the collateral, explain how you got the collaterals. For example, if you established the company, then you want to explain how you first established the company and how you earned the money to establish the company.
If you’ve got a property, you’re gonna explain when you got the property and how much you got the property for. And then you’re gonna prove that those collateral is worth how much, that’s probably gonna be enough to cover your loan with a financial institution or sometimes a private third-party. And then you’re going to take out a loan, and then that will be your source of funds.
Loan without collateral
The final scenario, this is sort of a new option is loan without collateral. That was made possible by a federal court case that was recently decided by the U.S. District of Columbia Court of Appeals last year that basically ruled that if you want to take out a loan, like a credit loan, just go to a bank and take out a loan.
If the bank is willing to give you the loan, then you can use the loan as your source of funds without providing a collateral. However, I will say, you know, even if that’s a possible option now, you still want to be careful. If you go to a third party for a non-collateralized loan, whether this loan was a genuine loan issue. So we want to be still very careful but I just want to mention that because of this recent case, this is also a possibility. And next slide, I’m going to talk a little bit about the common issues.
Common Issues – EB-5 Green Card opportunity
So just to go over them very quickly, number 1 is sourcing of additional funds because as Ron mentioned, we’re in the $500,000 range but it is possible because of the case, the USCIS can appeal the case, so it’s possible that the investment amount can be retroactively increased to $900,000, which means you have to source another $400,000. So as a $500,000 direct EB-5 investor, you should definitely be prepared to invest additional $400,000 and source the additional $400,000.
Next is as I mentioned, source of funds is not going to be an easy process. A lot of our clients came to us thinking, “Oh, source of funds is easy because I’ve done that with the banks. They just asked for like wiring documents and that’s it.” But with the U.S. Immigration Service, what they require is really extensive. They want to trace the money all the way back to its origination. And that means that even for…whatever, like the property purchased like 10 years ago, they want some kind of documentation.
Do the affidavit
You may not have bank statements or tax returns from decades ago but we still want to make sure that we do the affidavit. We try to find any kind of secondary evidence. Well, whatever we can find to prove that, you know, you earned the money lawfully in the first place. The third issue usually is the flow of funds, maintenance of funds. I think that’s the number one issue I think in my experience that a lot of our clients have experienced, which is okay, you’ve got the money six months ago but then after you got the money, what did you do with the money?
Step by Step trace
If you left the money in your bank account, and it’s been there for the past six months, that’s great. But if you moved the money anywhere, we have to trace the money step by step. So you cannot have large withdrawals and large deposits in your bank account after we source the original money. And that’s usually a challenge because, you know, people don’t put their money idle in the bank account. There are some currency exchange issues with certain countries, usually in China, Vietnam, and some other countries. They have government sanctions, restrictions on currency exchange and wiring out of the U.S. dollars.
And that could be a challenge if we’re talking about $500,000, usually, that exceeds the limits we’re talking about. So, there may be issues there that we want to address. And then finally, it’s a credibility issue. And that involves…I think this is an omnibus issue that covers a lot of things. For example, we’ve had cases where the government searches your LinkedIn profile and found an inconsistency with your prior employment. We’ve had cases where you said something on your prior visitor visa application about, you know, your employment and then you are saying something else about your employment.
We’ve got issues where, you know, they found like a very slight inconsistency in the document. For example, if there was a typo of the name of the person, let’s say if your supervisor is drafting a recommendation letter for you saying, you know, Tom Johns worked at this company and there’s a typo in the name, they could pick up this issue and say, “We suspect that there’s something going on. There’s some kind of inconsistency and we’re doubting everything else that you are providing.”
So there are all those kinds of issues that you want to work with your attorney to address to make sure that they don’t slip through the cracks. And then next up, the process. So in a nutshell, I’m not going into too much details but there are basically three steps to the EB-5 process. The first step is to file an I-526 petition, which lays out your source of funds and also very detailed information about your project. And then after that is approved, you will be able to get your green card provided that there’s no visa backlog in your country.
After you get your immigrant visa, you will be entering the U.S. as a conditional permanent resident and a conditional permanent residence carries a green card of two years. And the only difference between a conditional permanent resident and the unconditional permanent resident is that the green card is two years. Otherwise, everything is the same. And then 21 months later, you want to file an I-829 to remove the condition. You have to show in that petition that your business has created enough jobs and your investment has been maintained in the same business.
And with the I-829 approval, you will get a 10-year unconditional green card. So that’s a general overview of the EB-5 process. In terms of timing, so that’s the next slide, we’re unfortunately looking at a pretty lengthy process because of all the delays and the requirements for all those steps. So number 1 is approval of the I-526 petition, which is the first step. Right now, at this moment, it is taking between 34 to 76 months to get this case approved. And the USCIS has been saying that they’re trying to improve their processing time.
We’ve done a lot of mandamus cases to ask the U.S. government to adjudicate the case but this is currently their published timeline for I-526 approval. And then the next step, getting the visa, if you don’t have a backlog, right now every country except China does not have a backlog. You’re looking at a 6 to 12 months adjudication preparation time in total. If you are subject to the visa backlog, right now China has 6 years of wait time but if you file today, probably it’s going to be 10 more years.
And then finally the I-829 process. Right now it takes about 40 to 60 months. So the total investor time, not counting the China wait time will be 5 years, or 5 to 10 years to get your unconditional 10-year green card. So I’m going to bring up Jessica again to talk more about the direct EB-5 project that you will be investing in.
Jessica: Okay. We’re going to talk now about job creation. And so as Oliver discussed, the EB-5 process really starts with the filing of an I-526 petition. And when filing an I-526 petition, we have to show that it’s more likely than not that the investment and the new commercial enterprise will result in the creation of 10 jobs per investor within 2 and a half years of I-526 petition approval. Often with the I-526 petition, we’re showing that these jobs are gonna be created through submitting a Matter of Ho-compliant business plan that shows that the business will be developed as planned and the jobs will be created on time.
We actually have to show that the jobs were in fact created later in the process when filing the I-829 petition to remove conditions on permanent residence. So as Oliver said, that’s filed approximately 2 years after the I-526 is approved. We’re also hopefully showing at this point that the jobs that were created were maintained throughout the two-year period of conditional permanent residence.
The I-829 petition is arguably the most important part of the immigration process because it is our chance to show the immigration service that we actually did what we said we’re going to do. It’s sort of the big finale. And, you know, today we’ve really been talking about direct EB-5 and the direct EB-5 opportunity that’s available right now. And one of the biggest differences between direct EB-5 petitions and regional center petitions is the way that we count jobs.
With a regional center project, we can show jobs using an economic model. We use construction expenditures and revenues as inputs into an economic model. And then, you know, the model kind of demonstrates the jobs that will be created. In a direct EB-5 project, in a direct EB-5 context, we’re not talking about inputs into a model anymore. We’re talking about, you know, live bodies that work. For a direct EB-5 petition, we have to show that the investment and the new commercial enterprise created 10 full-time W2 positions for U.S. workers.
So a full-time position in the EB-5 context means 35 hours a week. And, you know, a lot of people ask this question. It’s not possible to combine, you know, two part-time positions to claim one full-time position for EB-5 purposes. The other thing that often becomes an issue of I-829 time, is that the jobs are intended to be permanent. So EB-5 wouldn’t work in a situation where there’s only going to be temporary employment or seasonal employment.
Having said that, if the jobs were created and the business operated, and for some reason, the business fails, you may still be able to qualify for removal of conditions by showing that the jobs were created even if they’re not still in existence at the time the I-829 is actually adjudicated. Finally, in addition to showing that there are 10 full-time positions through W2s, we also need, you know, tax returns, payroll statements, quarterly tax returns. And then we also have to show that the jobs were held by U.S. citizens or U.S. workers. So that would be, you know, green cardholders and other work-authorized individuals.
Documentation to prove your U.S. workers.
So this means that on top of all of the documentation of the number of employees and the full-time nature of the employment, you know, we also need I-9s and identification documents and things like that to prove the U.S. worker portion of the requirements. And the investor and the investor’s family cannot count for purposes of the 10 full-time jobs. So given the extent of the documentation required at the I-829 stage, it means that pursuing a direct EB-5 involves maintaining very detailed and comprehensive records.
So that you’re ready when your I-829 petition is filed. It’s really important I think when commencing the I-526 direct EB-5 process that you’re prepared to document everything as you’re going along and maintaining all the records so that after making the investment and creating the jobs, you can get past the hurdle of actually providing the correct documentation and ultimately getting your I-829 approved and becoming a permanent resident in the U.S.
Possible Industries – EB-5 Green Card opportunity
Patrick: Okay, perfect. So now I’m going to talk a little bit about different industries that can work for the EB-5 visa, a few different franchise examples, and show you a few different tools so you can find the right business for the EB-5 or if you want our support, of course, we can help you. So, just one second. All right. So right now we’re on our platform, Vetted Biz. We founded Visa Franchise six years ago, and we created Vetted Biz, an online platform for businesses for sale.
There’s 1,600 in the state of Florida. EB-5 purposes, the attorneys can comment more but an existing business is more complicated to get the EB-5 for. Where for a new business, whether that be a startup or a franchise, it’s a bit simpler process. So there’s a lot of different franchises I filtered out here, just like in the minimum investment of about $500k to a million. And you can see, we’ll go through D.O.G Hotels. It’s basically a dog hotel. Preschool, Amazing Explorers Academy, Saladworks, Juicy Burgers, Dog House.
Adjust the business to be EB-5 eligible
This doesn’t mean that they’re going to have 10 jobs, per se. If you want us to check all that and work with immigration attorneys to make sure that the business is in fact eligible for the EB-5 visa, we can support that. But this is just to get really an idea of what’s there. And you have 500 plus franchises that meet the minimum investment threshold at $500k. Then it comes down to, can you legally operate the business? Do you have some other visa category, like an E-2 visa that you’re converting to EB-5 so you can run the business day to day?
Or are you able to hire a general manager or maybe have an operation support contract with the franchisor while your I-526 position is adjudicated and basically while you wait for the green card? So at Visa Franchise, we can help out with all of that, or you can reach out directly to the franchisors and see basically what the job numbers are like if they provide any support on an ongoing basis. Some of the industries that you can consider are restaurants, healthcare is a great industry for EB-5 given the jobs created.
Education, depending on the type of education. Tutoring, a lot of part-time jobs. So it’s not a good fit for the EB-5 but preschools generally have a lot of employees, Montessori, daycare. Those businesses are good fits for the EB-5 visa because they should have 12 to 20 jobs plus.
Food and beverage
Food and beverage still continues to be a very popular category. One thing I don’t like about food though is you’re really locked to the location. And yes, maybe 30% can be delivery and takeout but at the end of the day, when you open up a business and you’re not able to adapt to your customers, and you’re really mostly serving your customers in your location, you don’t know how successful it’s going to be until it opens.
So that’s one of my qualms of food and beverage. And you can see reflected in basically the success rate for food and beverage businesses, and this takes into account 44,000 loans issued in the food and beverage industry, for every 8 that paid their loan back in full, 1 defaulted.
And if you look at some other industries, let’s say healthcare, it’s generally going to be less…a better rate of success, double. So for every 16 people that took out a loan for a healthcare-related business, and this could be home care, applied behavioral therapy, and there’s all different types of businesses that are comprised of healthcare, so out of these 43,000 loans, on average, 16 people took out a loan and were able to pay the loan back in full, and 1 person defaulted. Presumably, the business failed.
So if you look at the industry level, healthcare is two times as successful as food and beverage based on the data that we have here, where it’s thousands of loans that have been issued for businesses in food and beverage as well as in healthcare. So I encourage you to leverage our site, Vetted Biz, especially if you’re more in the exploratory stage.
And part of the reason why we created Vetted Biz is I got tired of telling clients what’s available. So if you want to see what the options are, you can go on Vetted Biz. If you want us to execute and find you the right business structure for you, work alongside Jessica, Ron and Oliver on the EB-5 position, we can do that but then it would be a closer working relationship. And that would be through Visa Franchise, which is a company I founded with my brother Jack. He worked at very large franchises like Burger King, and they also own Tim Hortons and Popeyes.
So we’ve looked at 2000 plus franchises. We’ve had 400 plus clients supported throughout this past 6 years. Most of them went with the E-2 visa but we have had a few EB-5 directs and other visa categories. So with us, we’ll save you time and limit your risk to the business. And we run a very tight process, where you can be invested in an EB-5 business in about two months if you’re making decisions pretty quickly. However, as you saw in Jessica’s slide talking about the time and it can take quite a long time to get the I-526 petition.
Select the right business
And it’s really important that you have the right business model and then the right general manager operating that business, to ensure that you create the jobs and maintain the jobs for long enough time for the EB-5 visa. And some businesses are going to be better fit than others. You really want to have plenty of jobs, not just 10 jobs but ideally 12 plus. So there’s a little cushion where if there’s some issue with the business and the sales aren’t going as well as they should for a few months, you can lay off a couple workers if needed without worrying about jeopardizing your EB-5 petition.
So a couple of options to go through. The first one is D.O.G Hotels. It’s a pet care business. And they’ve been around for nine years. They’re based in South Florida. We’ve had two clients invest with them for the E-2 visa. And it’s basically daycare, boarding, grooming. Travel’s already picked up a lot, especially out of Miami International Airport. And they’ve benefited from that, as well as adoption rates booming. Everyone’s get…buying a dog, adopting a dog, especially as people have this oftentimes a hybrid work situation where you don’t have to be at the office five days a week and you can spend more time at home.
So their business has definitely rebounded, where there were a few months that it was pretty tough for them. For all the businesses we go through the SWOT analysis. And I just want to go quickly through what an investment would look like for this, where the total investment would be higher than the minimum at $500k but you own 100% of a real business. And you are creating an asset, which ideally, you know, after 5, 10 years plus, after you have your green card and if you want to move on to something else, you can sell it for more than you invested.
Not necessarily a day-to-day business
They charge a 7% royalty, which is in line with the industry standards as well as 2% for the ad-fund. And if you’re not able to run the business day to day, say you don’t have another visa category like the E-2 visa, then you can pay them a flat fee of $1500 per month, and they’ll be your support day to day, and really be your main point of contact with everything that’s going on with the business while you’re EB-5 visa is adjudicating, if you’re not able to be running the day-to-day operations.
Good business in the middle term
And it takes a while to grow the business. This is definitely a business where you’re creating a portfolio of pets and essentially year over year you’re going to expect growth and some of the locations are doing far better than others. And you can see, you know, year over year for the Wynwood location it’s doubled. So it’s a business that will take some time to really build up and break even. But once you’ve already done that, then you can expect to earn a pretty good profit margin for the pet care industry.
IPG Florida Vacation Homes
Another option would be in the real estate. So 90%-plus of people for the EB-5 visas traditionally have invested in real estate, generally through a regional center. But as Ron mentioned, the Regional Center Program lapsed. For this option, it’s a real estate-related business and vacation rental property management, where you could acquire the underlying properties. You’re going to have to have like 60 properties to justify the 10, 11, 12 employees in the business but that’s going to cost you a lot, and $3 million-plus and you’re going to have to use some loans to acquire that many vacation properties in the state of Florida.
Lower investment options
If you’d like to just acquire the right to manage those properties, so you’re not the owner but you’re managing on behalf of others, then the investment amount significantly decreases where it would be more in the range of $660,000 to $740,000 depending on how much revenue those existing real estate property management contracts are yielding.
So this is the type of business that can be a good fit for someone that already has interest in real estate and wants to acquire an asset and potentially structure it for the EB-5, where there’s already some cash associated with the investment. Where you’re buying property management contracts over a year period, you’re hiring to get to those 12 jobs over the first 2 two years, and they could serve for E-2 and EB-5, just as D.O.G Hotels, is eligible for the E-2 visa as well, so you could do both with one investment. And, of course, you’ve got to talk to Klasko Law in terms of how to best file for the EB-5 and E-2 visa and which one do you do first, for example.
A Better Solution Home Care
This next one is A Better Solution Home Care, and this is a type of business where it doesn’t always justify a $500k investment and shouldn’t but we have to work together to justify the $500k investment in terms of additional marketing expenses and working capital.
They’ve been around for 17 years, and it’s basically providing non-medical services to elderly patients throughout the United States. And similar to IPG and D.O.G Hotels, they have a solution for those investors that are not able to manage the business day to day until they have a green card. Where for all 3 of these examples, you own 100% of a real operating business and you contract the franchisor to provide day-to-day operational support.
Full business control
However, you have full control over your business in terms of expenses and how you run it, but you’re contracting the franchisor to support with the day-to-day operations, while your EB-5 visa is adjudicating and potentially after so you have a smooth landing in the U.S. So for this business, you can see total investment’s pretty small, $100k, 169k. However, if you’re not able to work day-to-day in the business, you’re going to have to allocate another $200k of additional capital so you can have a strong manager that’s going to be hiring these home care employees as well as for $4,500 to the franchisor for an upfront fee and then another $1,500 and $2,500 on a monthly basis depending on what sales are like for your home care business.
Long term business
This is the type of business that grows over time, where, you know, in terms of revenue and employees that you’re managing. After 3 years, it could have 75 employees with roughly 25% of those employees being full-time. So it’s the type of business, especially if you’re spending more on marketing, you can perhaps fast track the acquisition of clients and even look to grow inorganically through acquisition. But if you’re looking to grow organically, little by little, it’s going to take some time. So the average gross revenue is around $400k for franchisees of ABS, A Better Solution Home Care. And you can see for the location that they manage and operate the affiliate-owned agency, they do $5.5 million in top-line revenue and net ordinary income of $851,000. But I believe this business has been open for 10 plus years.
So it’s similar to our clients that are investing in accounting business, bookkeeping, insurance, property management, it takes time, it’s not overnight riches in the United States, and it’s going to take time to develop the portfolio of clients and to grow your business. And we have clients that grow solely organically through marketing and sales and referrals, as well as clients that grow inorganically. And they’re coming back to us and asking our opinion on potential acquisitions to fast track their growth.
Success On The Spectrum
Just the last example I wanted to go through is Success On The Spectrum. Let’s see. All right. Actually, let me expand a little more. All right. So this is a pretty specialized business. They’re the only franchise in this space and it’s applied behavioral analysis for children with autism. This is an industry that’s growing quite a lot where roughly 1 in 45 children in the United States are diagnosed with being somewhere on the spectrum. And a lot of state governments are now paying the bill, which can be $5,000 to $10,000 per month per child. Each child’s going to need a therapist.
So although they were just founded in 2015, it’s right now the only franchise in the space that does applied behavioral analysis for children with autism, You have some other autism treatment franchises…oh, sorry, autism geared franchises but they’re more like a play gym. It’s not scientific based. It’s more of an activity center, where this is, you’re going to get paid by the government generally through government insurance, and it’s a scientific approach and you’re behind a franchisor that really knows this space and they’re successfully operating two of their own locations in the Texas area.
Similar to home care business
So for this business, again, similar to the home care business, ABS I just went through, the investment amount we’re going to have to work to get to that $500k number, which isn’t a bad problem to have but you can essentially spend more money on marketing. There are different ways to get that total investment over $500k as well as we can work with Klasko Law in terms of having additional working capital that, right here, they put for 4 months, maybe you put that to 12 months, 15 months, and that’s earmarked towards employee salaries. And that could be a strong fit for the EB-5 visa.
The job creation is a lot, so it could be 20 plus jobs once the business is fully staffed and operating. And if you do an aggressive marketing campaign before opening up the business, you can basically have much of the facility operating at a high capacity even before you open. In terms of historical financials for a couple of the centers that they own, it’s right around a million dollars, where there was a dip between 2019 and 2020, mostly related to the pandemic, where if the pandemic didn’t happen, I mean, I’m sure that number would have grown as it had grown from 2018 to 2019. It’s already doing quite well.
Good option for the E-2 visa also
This business as opposed to the other ones does not provide operational support. So it would be a good fit for someone that is already able to reside in the U.S. legally. Perhaps like on the E-2 visa. You can run the business for this 20, 30 hours a week. And you’re gonna have a center coordinator that’s managing all the therapists. That’s pretty much it from my end. I’m going to go back to the other presentation. Let’s see. All right. So now for questions, and it seems like people are being a bit shy.
Job creation timelines – EB-5 Green Card opportunity
If you have any questions, just type in the comment box. I’m going to bring them back on Ron, Jessica, and Oliver. We’re available for the next 10 minutes or so if there are any questions. Thanks for some of the comments that we’ve been receiving. We have one. I don’t fully understand it. But in terms of just the total jobs that you need to create. When do we need to create the jobs? And what time frame?
Ron: Jess, you want to deal with that?
Jessica: Yes, I can answer that one. So the jobs, at the beginning of the process. We showed that we’re going to create the jobs within 2.5 years of approval of the I-526 petition. But you would actually have to submit the physical evidence of the job creation, the W2s. And whatnot when you submit your I-829 petition, which is at the end of the conditional residence period.
EB-5 It’s not a temporary program
Patrick: Perfect. I don’t see any other questions at this time. Ron, Jessica, or Oliver, do you have any closing thoughts?
Ron: Well, I guess my only closing thought is that the direct EB-5 program isn’t going anywhere. It’s not a temporary program. It’s a permanent program. If you’re interested in direct EB-5 and you have no problem with investing at $900,000 or $1.8 million. Then there’s no particular rush. But if you’re interested in the direct EB-5 program and want to invest at the $500,000 level. Then there really is a rush. And we don’t know exactly when that opportunity will end. But my guess is it could very well end within the next month or two. And so if that’s an opportunity you want to take advantage of, there really is a rush.
Patrick: One question from Rafael. So at first, can we submit a business plan? So I guess, do you have to invest the funds together with the business plan. Or is it the business plan first?
Jessica: After you’ve invested the funds, the first step in the process would be to file an I-526 petition. And then with the I-526 petition in order to show that you will create the jobs. It’s common to submit a business plan.
Contact us – EB-5 Green Card opportunity
Patrick: All right. So, I wanted to thank everyone for joining today. You have our emails here for Ron, myself, as well as Jessica and Oliver. You have the contact, the social media handles for Klasko Immigration Law Partners.
Thanks, everyone for joining, and feel free to reach out. We’ll have in the subscription section of this video for you to link. So you can schedule a call directly with an attorney from Klasko Immigration Law Partners. As well as myself or a member from my team at Visa Franchise.
Thanks, everyone for joining. And Ron, Oliver, and Jessica. I really appreciate for joining today and especially the short notice for having this put together.
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