With Cross-Training at the USCIS IPO, a New Level of Detail is Necessary in Writing Business Plans for EB-5

Posted on 01-31-2018 by
Tags: EB-5 , Immigration


A Discussion with the Lucidtext Blogger

EB-5 Investment Voice

Mona Shah & Associates Global Podcast Series

Reported by Hermione Krumm, Esq.

 

EB-5 Investment Voice is the only Podcast series that focuses on and the United States immigrant investor visa, EB-5 and foreign direct investment. Mona Shah, Esq. welcomes guests from the industry, including: Developers, Regional Center Operatives, Attorneys, Legislators and Politicians.

In this episode, Mona is joined by Suzanne Lazicki of the famous Lucidtext Blog. Suzanne is a business writer and EB-5 expert. She has a reputation for providing the most up-to-date and well-researched information about the program. Suzanne founded Lucid Professional Writing in 2009, and since then she has prepared over 250 business plans for Regional Centers, project developers and foreign investors. Suzanne was recognized as one of the Top 5 EB-5 Business Plan Writers of 2017 by EB-5 Investors Magazine.

Lucidtext Blog

  • Suzanne’s blog began as a way for her to gather information for business plan clients and learn the most up-to-date information about the EB-5 program. She has a database of 50 links in her browser that she consults regularly, using government sources, other bloggers and reliable industry sites as sources of information.

EB-5 Standstill

  • There is little movement on EB-5 as of late, and public sources are not addressing the program. That will change when the final regulations come out on February 16, 2018, though that date is subject to change.
  • Mona does not predict February 16 as a date for change, despite the recent surge in marketing that utilizes this date as the next deadline. USCIS will most likely issue a 60-day Grace Period prior to the new regulation is going into effect. Mona surmises action around April. 
  • There are two issues to keep an eye on: the Regional Center Reauthorization and the EB-5 Program Modernization. Reauthorization is solely determined by Congress whereas Modernization is dependent on Congress and/or regulations. (There is a common misconception but Reauthorization does not affect direct EB-5 projects.)

Visa Bulletin

  • The wait time to get visa number depends on the country you’re from and the number of applications in the system. Suzanne utilizes the Visa Bulletin, info on the backlog of applications at the Visa Center, and trends in I-526s to predict wait times.
  • There was a surge in EB-5 visa use last year, and the numbers were up almost 37% in the last quarter. Vietnam is likely to face oversubscription in the coming year, and India will be in the same situation the following year. (Mona points out that the popularity of EB-5 in India can be attributed to the fact that their EB-2 and EB-3s are so far behind - USCIS is currently adjudicating cases filed in December 2008. There is also no E-2 option for Indian nationals.)

More Weight Should be Put on Entrepreneurial Business Plans

  • With the surge of applications from India, more entrepreneurial projects come onboard. Among the business plans Suzanne wrote in 2017, half of them are for direct projects. 
  • Entrepreneurial business plans can be more difficult to write than business plans for Regional Center projects, as there is a greater diversity of business types. Suzanne argues that more weight is put on the business plan in the direct EB-5 context because it is the primary exhibit for an EB-5 petition where explanations are given as to how money is being used and how jobs are created.
  • Don’t try to cut corners on your business plan. If you leave out important details, you are likely to receive a Request for Evidence that says your plan is “not credible because the assertions are not supported.”
  • Suzanne also seeks out projects in “real TEA areas” instead of big metropolitan areas, because they are the most satisfying. She wants to tell a compelling story through the business plan, examining the distressed aspects of the area while also pointing out the economic trends that would support a new business.

Matter of Ho Compliant: Credibility & Consistency

  • Suzanne explains that credibility is the top reason why some business plans fail. The legal term for credibility is Matter of Ho-compliant.
  • Suzanne identifies three components of Matter of Ho compliance:
  1. Credibility from evidence: when the business plan makes a material claim, it should back it up with third-party references. For example, if it’s making claims about market potential, it should reference market data from viable sources. If it’s a claim about financial projections and viability, financial ratios and matrix from similar businesses should be referenced. In one word, use footnotes with third-party evidence that will help support your claim.
  2. Credibility from internal consistency: for example, if on page 10 you claim you are hiring X number of people, on page 20, there should be financial projections showing payroll for these people.
  3. Credibility from external consistency: external consistency refers to consistency with information that is available outside the world of business plan. Suzanne sees an increase by immigration examiners in utilizing Google search/map to verify the project site and relevant information. If they discover information that conflicts with your business plan, they will be asking questions.

The Emphasis is on Detail, not Length

  • USCIS IPO has famously identified “all rhetoric, no substance” as one of the most common EB-5 business plan deficiencies in not only their training manuals, but also a lot of RFEs. This indicates an emphasis on detail rather than length.
  • Relevance is the key: it needs to be information that directly answers the questions an examiner is going to ask in order to be eligible. Offer detail around how EB-5 funds will be used, job creation, input to the job creation model, as well as the business plan’s market and financials.
  • The problem lies with laziness – a lot of business plan writers tend to use one template for all or they don’t want to write the market analysis, so as a substitute, they just buy a market report online that does not have much to do with the subject business and just throw it in there and call it market analysis. This amount of irrelevance is all rhetoric and no substance.

IPO’s Cross-Training Begs a New Standard on Details

  • During the Stakeholder Engagement in New York in November 2017, IPO mentioned that it's working to increase capacity by cross-training personnel, meaning that now economists and adjudicators are each being trained to handle a single petition from start to finish, which is in stark contract with the previous approach, i.e. economists reviewed project-related documents for I-526 and economic issues at I-829, while adjudicators looked at source of funds at I-526 and sustainment at I-829. It naturally brings a different standard onboard when putting your business plan together as the audience for your business plan has changed.
  • Now USCIS personnel often have banking backgrounds, and are familiar with reading financial projections. As such, most denials and RFEs result from a lack of detailed information, including, for example, how the bank loan would be covered.
  • Keeping the cross-training in mind, a successful business plan should present itself with a qualitative format that uses words to describe the content as well as a quantitative format where charts and figures are given for people who would like to hit the graphical highlights.
  • Suzanne seeks to be as clear as possible in writing business plans for EB-5, like her blog title “Lucid”. She employs tables and bullet points to make the information easier to digest.
  • When it comes to financials, Suzanne includes sophisticated financial projections AND extensive notes. This way, the information is clear regardless of the adjudicator’s background and experience.

Please see the link below for access to the podcast episode: http://mshahlaw.com/clear-credible-consistent-business-plans-eb-5-suzanne-lazicki/ .

 

About the Author:

Hermione Krumm, Esq. is an associate attorney with Mona Shah and Associates Global. Hermione works with EB-5, corporate, merger and acquisition (M&A), intellectual property and foreign direct investment (FDI) matters involving China, the UK and the US. Hermione writes and comments frequently on current business and immigration issues. Her articles have been published by LexisNexis, ILW, EB-5info, EB-5 Supermarket, etc. Hermione received her LL.B. (Hons) from the University of Manchester School of Law (UK), and obtained her LL.M. from Cornell Law School. Hermione speaks fluent English, Mandarin and Cantonese.

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