EB5 Investors Magazine Volume 1 Issue 2 | Page 28

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✓ Required Licenses and Permits : Operating a business means addressing all required permits and licenses . Federal and state licenses are generally required of businesses that fall under categories important to the general public , or those that provide professional services vital to the public welfare . Local licenses usually fall under the category of occupational licenses or business taxes , and possibly sanitation or similar permitting for specific businesses .
✓ Timetable for Hiring : The EB-5 program requires the new business to create a minimum of 10 new full-time jobs for a period of two years and / or to save 10 jobs that would have otherwise been eliminated . A compliant business plan needs to demonstrate that each investment will create 10 jobs through a detailed staffing plan , including a clear timetable for employee hiring , ideally in the narrative and visually .
✓ Job Descriptions : Job descriptions are an essential part of any business organization and an important element of a business plan . Job descriptions ensure that USCIS understands the jobs that will be created by the business , and the roles and responsibilities of each job . They should be practical , clear , and accurate , and directly correlate to the project .
✓ Budget and Financial Projections : The business plan must be well-documented with financial projections including sales , costs , budgets , and income over a period of five years . The budget must also show the basis and assumptions for these projections . It must show the source of funds to start up , support , and maintain the business , as well as detailing the uses of funds raised from investors . All financial projections must be based upon generally accepted accounting principles and reasonable business models .
As the most critical piece of the EB-5 puzzle , the business plan process can be overwhelming . The key is that you don ’ t have to know everything — you just have to know enough about the process to understand it and then hire experts to develop your business plan , preferably a trusted authority with the education , experience , and expertise to deliver success .

Lauren Cohen is an active AILA member with first-hand knowledge of the visa process , having immigrated from Canada . Lauren developed e-CouncilInc . com to focus on designing professional business plans for all types of visas , with a focus on EB-5 business plans for direct investment and regional center projects . e-CouncilInc . com ’ s team of attorneys and other professionals also offers ancillary services ranging from feasibility studies to financial projections . The company ’ s stellar track record speaks for itself .
The plan also should discuss the capitalization for the hotel along with the status of the other parts of the financing and when they will enter the project . The construction budget used to calculate the construction jobs must be in the business plan , and inputs for the economic model must always be laid out in the business plan . A detailed multi-year financial pro forma must be in the business plan , along with a complete discussion of the calculations for RevPar , average daily rate ( ADR ), and the occupancy rate . The plan also should cite the source of these calculations and any financial assumptions .
Additionally , business plans must clearly discuss the hotel brand and the material agreements in place for the hotel brand and management . It is best if both the franchise and management agreements are executed prior to filing any EB-5 petitions . If they are not , the business plan should discuss the timelines for executing the franchise and management agreements and letters of intent with the franchisor , and the manager should be included with the EB-5 petitions .
The Economic Report
The economic report is a primary document for any EB-5 case through a regional center , as it calculates the number of jobs that will be created by the project . Most EB-5 petitions for hotels will create jobs through construction and then operations .
Construction jobs are relatively easy to calculate using the EB-5 eligible hard costs ( less contingencies ) plus the EB-5 eligible soft costs ( engineering , architectural and legal ). Operations jobs for the project are usually calculated using hotel revenues . The revenues for this purpose are taken from the hotel ’ s pro forma found in the Matter of Ho business plan . For the purpose of developing revenues for the business plan and the economic report , revenues are usually calculated by RevPar — revenue per available room . RevPar is calculated by multiplying the hotel ’ s average daily room rate ( ADR ) by the hotel ’ s occupancy rate . The ADR and the hotel ’ s occupancy rate always must be found in the Matter of Ho compliant business plan .
A common issue arises from the use of operations jobs resulting from the restaurants , bars , and nightclubs operating at the hotel or resort if the hotel does not own and operate those establishments . USCIS may view these as “ tenant ” jobs and apply the February 2012 Tenant Occupancy Guidance to those jobs . However , if the hotel or resort is the owner and operator of the restaurant , bar , or nightclub , those jobs can be included in the overall operations jobs calculation .
Another hot issue in hotel economic reports is whether the operations jobs can be counted at all if the construction timeline is protracted . USCIS has imposed an arbitrary rule that jobs must be created within two and a half years of the I-526 petition approval per the December 2009 Neufeld EB-5 Memorandum . While this is not law , it is an adjudicatory standard used by USCIS in the EB-5 adjudication process . Depending on when the construction of the hotel starts and how long the construction takes for the hotel , the timeline must be examined to see if operations jobs can be used at all . For example , if construction will not start until the EB-5 money comes into the project , and construction will take 30 months , then the economic report may
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