In 1998, the Administrative Appeals Office (“AAO”) issued a precedent decision known as Matter of Ho that set forth the requirements of an EB-5 compliant business plan. According to Matter of Ho, as part of an I-526 petition an EB-5 investor must submit a comprehensive business plan demonstrating the following elements:
- A description of the EB-5 business, its products, services and objectives
- A market analysis, including the
- names of competing businesses and their relative strengths and weaknesses,
- a comparison of the competition’s products and pricing structures, and
- a description of the target market/prospective customers of the new commercial enterprise.
- Confirmation and listing that the company has received or is in the process of applying for project specific permits and/ or licenses
- If applicable the EB-5 business plan should describe the manufacturing or production process, the materials required, and the supply sources
- Detail any contracts executed for the supply of materials and/or the distribution of products
- Provide an overview of the marketing strategy of the business, including pricing, advertising, and servicing
- The business plan should outline the business’s organizational structure and it’s personnel experience
- The business plan must also explain the business’s staffing requirements and contain a timetable for hiring and job descriptions for all positions
- Contain sales, cost, and income projections and detail the bases therefore
- Finally, the business plan must be credible
Additional requirements related to business plans were imposed by the December 2009 Neufeld Memorandum which introduced the concept of “material change.” The memo noted that any change in a business plan might be considered material and may result denial of investors’ I-829 petitions. Draft guidance issued in November of 2011 and January of 2012 by USCIS, aims to loosen this requirement somewhat, However, that guidance has not yet been finalized as binding policy guidance by the USCIS. In light of the current interpretation of material change, EB-5 business plans that are general and conservative in their projections may have an easier time passing muster at the I-829 stage.