Having started a new year, and there being many concerns with the “winds of change” taking place within USCIS and the immigration world (especially in the EB5 world), this article will briefly outline some of the new requests generated by USCIS based on their latest RFEs. What follows are some of the major points that caught my eye on an RFE for an EB5 case that was submitted in 2017 and just received an RFE this month.

As you can imagine, this concerned me greatly, especially because I make sure all Matter of Ho points are being addressed in order to avoid possible RFEs stemming from those points.

Looking to share some insight about RFEs that come across my desk with my known and unknown immigration colleagues, I decided to finally do what I have been talking about for years and present you what I encounter with RFEs in the business plan writing industry.

I call attention to these because I have not seen this language or type of specific requests come through in previous EB5 RFEs. They also caught my attention due to the contradictory nature of the request for information. (At least in my eyes after more than15 years of writing EB5, E2, L1 and other immigration related business plans).

To put things in context, it must be noted that the EB5 plan is for a retailer that will import, and sell an array of furniture, decorative items and silk products. All Matter of Ho areas were specifically addressed in the plan as I have outlined below.

Without further delay, here are my take-aways from my first 2019 EB5 RFE. What follows is the exact wording/phrasing form the RFE in italicized bold and then my comments in regular font.

…”the business plan does not provide any detail on how the NCE will brand its name and products in the United States. Similarly, the business plan states that the NCE will target local area market demand, but fails to specify how it will do this and does not provide any information to demonstrate what the local area demands may be.”

It appears that providing a marketing plan that outlines the various marketing/advertising and sales strategies that will be taken by the NCE is no longer sufficient. Apparently USCIS wants a detailed explanation on how the company will brand its name and products.

This means that either you, or the client will have to provide names of companies or professionals that will help the NCE in developing a brand via the various marketing efforts (e.g. who will be providing internet marketing, or trade publication or magazine advertising, or radio/tv marketing). It must also be kept in mind, that if any company names are provided, the client will need to also have proof of contract or agreements in place, per another point in the same RFE.

Additionally, the plan will need to provide data or information that shows if and how the local area market is demanding the products or services that the NCE will be providing. This means that traditional market information is not sufficient, specific data showing a demand for said product or services needs to be found and included.

This also means that whatever data or information is provided, will need to be considered by USCIS as reliable sources from which reasonable assumptions can be made. Basically, “beauty is in the eye of the beholder” type of approach. It is no longer just the general market data that supports the assumptions, it needs to be specific.

Also, keep in mind that IBISWorld data was used in this instance, a reputable company that has been dealing with industry and market data longer than I have been writing business plans and USCIS did not find this as sufficient data.

…the record does not have sufficient information regarding the relationship that the NCE may have established or is planning to establish with these vendors and manufacturers.

This means that if the plan lists any potential vendors or suppliers, the NCE will be required to be able to show what type of relationship they have or will have with the vendors or manufacturers.

Unless there is some ownership relationship in place, which tends to be more predominant in L1 cases and a few E2s, in most of the NCEs I have dealt with over the years, it is a straight supply and demand relationship. The supplier, vendor or manufacturer provides the goods and the NCE sells them.

On the rare occasion a relationship does exist, then that information is disclosed but what does one do if there is no further relationship other than a simple invoice showing proof of purchase and sale?

In most instances, unless there is some type of specialization or customization involved, most vendors, suppliers or manufacturers will simply require payment and the invoice will be the only form of proof of any relationship, which was the case here but USCIS seemed dissatisfied with this.

…the record does not contain any information regarding…what purchases the NCE has made from these suppliers.

It appears as if USCIS is looking to have a breakdown of what exactly is being purchased from any listed supplier in the business plan. So if an expense is listed for inventory, a detail or summary must be provided as to what was covered by said purchase.

The business plan does not indicate the intended number of hours that the employees will work, or their work schedules.

This one is a new one for me, especially regarding the part of hours and work schedules, being that all the EB5 plans that I have undertaken the past 2 years have been for stand alone, single investor, single NCE, single industry businesses. In all instances, the investor would be committing to hiring at least the 10 full time employees ( full-time being 35+ hours a week)…the entire crux of the EB5 category. So why would there be an expectation that working hours would be less than full-time?

Furthermore, USCIS now also wants to see work schedules for both hired and un-hired employees, which is what most of my EB5 cases have been, including this particular one. This means once again that either you or the client will need to come up with a credible work schedule for 10 employees at minimum, more if the specific business model requires more employees.

…The business plan lists six sales associates, but the amount of inventory indicated on the invoices provided as part of the record, does not justify such a number of sales associates.

This point got me. USCIS wants employee levels to match invoice order amounts, which does not make sense to me since the NCE is bringing in the sales associates to help generate sales and new customers. It must be noted though that USCIS is looking at a full year of operations in this plan, technically the order level does match the employee level since the hiring strategy call for a staggered approach over four quarters. So this means that at the time of the initial order, there was supposed to be only two employees to handle the sales of the order that UCIS saw as too small.

Furthermore, the initial product order is the first order and not the only order for the NCE but USCIS is assuming that this is the case by calling out the start-up invoice amount in light of a full year’s hiring strategy.

In many cases, the goal is to bring on sales associates who will help generate more clients and larger inventory orders thereafter. Most of my EB5 clients have begun their operations with sufficient inventory levels that show an assortment of sufficient products which help generate more client interest, and in turn more sales and larger future orders. Additionally, this business model relies on a high turnover rates on its inventory, meaning that additional orders are required by default in order to stay in business, not just the initial order stated in the business plan.

So does this mean the client needs to use up a substantial amount of the investment amount to stock up inventory that by the time adjudication comes around, will be out of style, season and/or demand?

The business plan lists some associates as “in-store sales, ”outside sales,” and “ regional sales” but does not describe what these terms mean and whether the associates will be working out of various locations.

This EB5 model was definitely a one location operation. On the rare occasion that there are multiple locations planned, this is stated but this was clearly spelled out as a one location business…something common to the industry, especially for start-up companies.

Very seldom will a furniture, decorative items and silk products importer have multiple physical locations at the time of start-up, this only tends to happen only after they have been in the market for a number of years.

This business was presented as a location that would target the local market of higher income Asian clients, something that is well represented here in Southern California. One does not need to go into other states to have new markets. Here alone in Southern California you have multiple target markets.

It appears though that USCIS wants this spelled out to the specific markets, even locally, in order for them to find the business model credible. Also, it appears that per USCIS, sales be it in-store, outside and regional sales, have different meaning outside of simply generating additional sales and clients for the NCE. What other terms are they looking for in sales-oriented positions? These titles are self-explanatory.

New Possible Points of Inclusion for Future EB5 Plans

In addition to the above parts that stood out to me, the RFE also provided some new language for what they would like to see as evidence or response that I had not seen in previous EB5 RFEs.

I will say that the language definitely still reads as a “boiler-plate” RFE since it was language meant for EB5s dealing more with project development versus a small import and retailing NCE. As such, I still came across some new language of requirements/ expectation of areas that appear to be sought out by USCIS in current EB5 plans. These new EB5 areas seem to be in addition to Matter of Ho points:

Contracts:

o For any listed contracted company providing marketing, goods, or services for the job creating entity, executed agreements must be provided – so if they are listed in the plan, the client needs to be able to produce an agreement or contract, either at the time of submission or RFE.

o For any contracted distribution company that will be distributing products or services on behalf of the NCE, evidence of contracts must be provided. Again, if they are listed in the plan, the client needs to be able to produce an agreement or contract for this company or professional.

Staffing:

o A timetable for the hiring of the new commercial enterprise’s staff must be outlined, this means the client, or your business plan writer must definitely provide a sensible and credible hiring timeframe for a minimum of two years. This was and should already be done but this is the first time I have seen it spelled out.

o The NCE’s management structure must be indicated – so if the NCE has a layer of management, this must be pointed out.

o Salary for each position and staff schedules for the employees of the NCE,

o Indicate whether the individual is a qualifying or non-qualifying employee – Again, salaries should already automatically be part of the plan but this is the first time I have seen it spelled out. Also, this is the first time I have seen qualifying and non-qualifying employees being brought up for a stand-alone, single investor, single NCE, single industry business or business plan. I have done this for regional center plans and multi-investor/multi-project EB5s but not single EB5s.

o Complete list and supporting evidence regarding which positions specifically were or will be created with EB-5 investment funds. – Again, I have done this for companies that have been bought out/bought over by EB5 investment funds but for a stand-alone, new start-up NCE, this is the first time I have seen this language.

Projections:

o Provide a timetable of actual dates or projected milestones for implementation of project goals (e.g. acquisition of permits, buildings, etc.). as well as the ultimate completion of the project. – I had only seen this for regional center plans and multi-investor/multi-project EB5s but not single EB5s, especially for one that does not have any additional development outside of location remodeling that was detailed by the start-up investment expenses.

o If a milestone has been already met, documentation will be required. – So if a milestone is listed in the EB5, the client will have to make sure they can provide documentation proving that this is the case just in case USCIS asks for it.

o Provide details regarding the sources and/or derivation of the input data being used and the methodological steps taken so that USCIS can determine by a preponderance of the evidence that they are derived from reliable sources using reasonable assumptions. – In other words, you need to not only do the math for them, you also need to show how you arrived to your assumptions and on what data these calculated assumptions were based on for USCIS to determine if your sources were 1) reliable, 2)sufficient in nature to arrive to your assumptions. This is concerning since the data sourced and relied upon for this plan was IBISWorld, a well-known and popular market and industry data analysis and gathering firm that has been around since 1971.

o If a development project is involved, the costs of permits, reports and design fee, developer fees, finance fees, construction load interest fees, and any other costs or fees for each project must be provided. – Again, I have only seen this for regional center plans and multi-investor/multi-project EB5s but not single EB5s, especially for one that does not have any additional development outside of location remodeling that was covered by the start-up investment expenses. It appears that this is no longer the case.

This new language has me concerned since the majority of EB5 applicants come to the table with a goal, the money and what their immigration attorney advises them. Very few investors, in my past 15+ years of writing business plans, come with this level of preparedness to the table. In most instances, they will rely on both their immigration attorney and business plan professional to develop this for them, which is very tough since neither the immigration attorney nor the business plan writing professional is a business consultant.

Also, in my experience, there have been many EB5 applicants that will have a hard time providing (or not be willing to do the necessary legwork) in order to provide the simple, basic information to draft a credible plan, let alone provide the needed information and documentation for this level of scrutiny being applied.

I have also dealt with business entrepreneurs that have built successful businesses from their sheer blood, sweat and hard work but have never had to deal with the details or minutia of things and now they have to in a short period of time if they want to make their dreams come true in the U.S.

In both cases, we have our work cut out for us in that it is not getting any easier, especially in light of current policies and tone set by Washington.

Nonetheless, it falls upon us to be as prepared as possible for new “trends” in the immigration industry and it seems that things are getting only tougher for legitimate EB5 applicants that want to come in, start a business, but have never had to deal with so many requirements.

I hope this helps prepare or give further insight for some of you who offer EB5 related immigration services.

Good luck.

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