A Matter of Ho is a specific business plan required for the EB-5 investor visa program. It is a detailed document showing the credibility, feasibility, and viability of a proposed EB-5 project. It must meet specific requirements to satisfy the United States Citizenship and Immigration Services regulations.
A comprehensive business plan provides a glimpse into your project, highlights your growth plan for the upcoming years, and states your current business goals and policies to achieve them.
To apply for an EB-5 visa, you must fulfil numerous requirements. The most important ones include investing a minimum of $500,000 in a new US-based business, and you should also use that investment to create a minimum of 10 full-time jobs. You will need a business plan based on a 1998 precedent decision known as the Matter of Ho to confirm that your investment can fulfil that employment requirement. In this regard, a business that complies with the USCIS’s regulations is called a “Matter of Ho compliant.”
Why do you need a Matter of Ho Business Plan?
Having a well-made EB-5 business plan is integral to the success of your investor visa application. Remember that the USCIS carefully examines all EB-5 business plans before qualifying candidates for any EB-5 investor visa. For this reason, it is crucial that your business plan convincingly shows that your project is feasible, will contribute to job creation, and have a positive economic impact.
Moreover, potential investors are not likely to show interest if your EB-5 business plan is not Matter of Ho compliant and lacks the essential details like permits and licenses obtained. EB-5 investors usually seek the most solid and trustworthy projects with the lowest immigration risk.
Matter of Ho Guidelines and Requirements for the EB-5
Clear Description of the Project
One of the important elements of the EB-5 business plan is a clear description of the business, including its products and services. This part of the business plan must include how to tackle two critical questions: what is your project about, and what its goals are. Thoroughly explain your motivation behind starting this project, what sets you apart from similar projects, and why you are a good investment opportunity.
This description should also highlight your capital at risk, meaning you must agree to lose your capital in case the project fails. You cannot enter into a contract that returns or refunds your capital at will. You must back up this statement with plenty of evidence, such as promissory notes, mortgage agreements, or nonredeemable shares in the new company.
On the other hand, you can also give evidence of the funds you will invest upon accepting your I-526 petition. You may also get into an agreement with other EB-5 investors or an EB-5 Regional Center, in which case you must show that your combined investments are all at risk. You must also show that every investor depends on the project’s success to make profits.
Marketing Analysis
Each sponsor of a project or business must have an adequate marketing strategy to ensure profitable operations. A sponsor’s marketing approach to looking for EB-5 investors is just as important; they must consider scheduling a series of seminars and marketing materials for potential investors.
The USCIS also recommends including a marketing analysis, advertising and servicing with your Matter of Ho business plan. It should include a brief summary of how big the market is, a breakdown of your business’ position in the industry, and an summary of the competition. Listed below are some of the things your marketing analysis should answer:
- How big is the current market?
- Who is your target market?
- Is the demand going up or coming down?
- Who are the main competing businesses?
- Who are the key suppliers in the market?
- What trends in the market?
- What will the industry look like in the upcoming 10 to 15 years?
- What licenses, materials, or regular fees will your business need to buy, and how do you plan to afford those expenses?
Employment Creation
Because job generation is one of the EB-5 investor visa program’s main goals, the employment creation section is important as it mentions the staffing requirements. The EB-5 business plan must thoroughly describe the number of jobs the project will create, the supply sources, the manufacturing or production processes, the responsibilities for each position, and an estimated timeline for recruiting new workers.
The methods of showing employment creation vary significantly between direct EB-5 investments and regional centres. Regional centre projects count direct, indirect, and induced positions, whereas direct EB-5 projects only count full-time or immediate employment. Induced and indirect employment is calculated by considering development expenses and operating incomes as inputs to an econometric model in administrative appeals office.
Competitive Analysis
A competitive analysis is part of a business plan highlighting your project’s competitors and their various marketing strategies. Use the information to compare your enterprise’s strengths and weaknesses to each competitor. The analysis should classify your competitors.
For each competitor, give a brief summary of their company, weaknesses, and strengths. When figuring out their main strategies, it is vital to know the following essential aspects:
- The type of target audience they have
- The kind of project they are operating
- Their pricing (low, moderate, high, etc.)
- Any strengths and weaknesses
- Their unique selling point (USP)
Consider all the ways you can surpass the competition and note them in this part of your EB-5 park business plan.
Financial Projections
The EB-5 business plan should also confirm a project’s ability to succeed monetarily. For this reason, it is important to include pricing structure, income projections, financial projections, predicted expenses, revenue, and other details. Reputable data or market studies must verify all predictions. A lot of project developers get a financial analyses made by professionals.
Your financial analysis should contain short- and long-term financial goals, business performance, and strategic resource allocation decisions. Moreover, it should include a 5-year financial statement divided into quarterly or monthly for the first year and every year. Financial statements, including Profit and Loss Accounts, Balance Sheets, and Cash Flow statements, should give a good idea of your project’s financial standing in the short and long run.
Documents Determining Credibility in Matter of Ho
One of the most critical things that USCIS does is look for the credibility of businesses, which means they will reject projects with business plans that seem likely to fail. To prevent this, you should make sure that your Matter of Ho business plan fully demonstrates the capability of your business via the following methods:
Legal Documentation
Many companies must take permits, and permissions to operate. You must take care of these documents before submitting your I-526. Next, you can incorporate those documents into your EB-5 business plan, making your project seem more trustworthy and profound.
Experience
If you have experience relevant to the project, explain it in your plan. Include all details of where you’ve worked before, for how long, and how you benefitted the company. Shed light on the positive, but don’t be afraid to acknowledge mistakes as a learning experience. USCIS aims to see that you have managed a project before, but they don’t necessarily require a flawless track record.
If you don’t have any prior business experience, it is essential to highlight the experience of those around you, such as your partners and employees. An excellent way to demonstrate this is by creating a management team section, where you introduce investors to your central employees, their qualifications, training, and experience, and present them in a manner that attests to their ability to drive a project toward success.
Ideally, you and your team must have adequate experience handling a project/enterprise. You should also add any related experience that will help strengthen your case.
Business Strategy
Lastly, you should add all documents related to your marketing strategies, financial projections, advertising, and operations strategies to your business plan. USCIS wants to see if your business has a fair chance of being competitive, so adding evidence of your competitiveness can tip the scales in your favor.
An excellent way to present your business strategies is in the form of an operations plan, which outlines the main objectives of your business activity, and how you plan on achieving them. Pay close attention to the following points:
- Clearly defining the final goal or vision of the commercial enterprise
- Reviewing and breaking down short-term goals for managing the team, the operating budget, and the resources needed to expedite the business plan. This could include using a marketing strategy to promote your project on XYZ platforms.
- Assessing and determining long-term goals that you plan to achieve.
Common Mistakes to Avoid When Creating a Matter of Ho Business Plan
Creating a business plan is not easy, and creating one that will be scrutinized by a government agency and other potential investors is even more overwhelming. Many people put together a business plan that looks eye-catching but doesn’t consider the standards set by the USCIS. This is the primary reason behind the existence of Matter of Ho
Before you file your I-526, carefully screen your business plan for the following mistakes.
Lack of Substance
The most common issue with EB-5 business plans is the incorrect use of space. A complete business plan that includes all the documents can run up to approximately 100 pages or above, so make sure to make each word count.
Remember that no stylish writing can make up for a business lacking in the essential details. Prioritize highlighting the credibility of your business, its fulfilment of the USCIS standards, and your long-term plans.
Not Showing Capital Risk
As mentioned above, investors must highlight their capital risk when financing the EB-5 project, besides demonstrating that their investment is in real danger and that the funding sources are legal. If you fail to offer either, your application will be instantly rejected.
Invalid Funds
You will be required to prove the validity of funds as part of the I-526 petition. However, USCIS will still assess the funds mentioned in your EB-5 business plan. Be sure to carefully review your business plan for consistency and see if the information provided on both platforms matches. It is a good idea to add the following to your document:
- Wages or salaries paid
- Money made from the sale of stocks or real estate
- Gifts or inheritances
- Loans, considering that you are the only one liable for them. Moreover, loans must be taken against collateral, and you cannot use your EB-5 enterprise as loan collateral.
Furthermore, it is always a good idea to add copies of documents if there is room for ambiguity. USCIS generally accepts proposals based on insufficient funds-related documents, but they may state an inquiry instead. This can be tedious and time-consuming and can delay your application process.
Selecting the Wrong Regional Center
When you choose an EB-5 Regional Center for an investment, they usually provide you with an employment report and documents that should be added to the business plan.
There are specific issues of fraud associated with EB-5 Regional Centres, but there are also ways to prevent them.
First, do a detailed search on the Center before investing with them. Discuss with financial advisors or an immigration attorney for the best advice. Second, thoroughly check the validity and authenticity of the documents provided by the Regional Center. Your lawyer will be better able to help you detect any obvious and hidden issues.
Final Thoughts – Matter of Ho
Creating a Matter of Ho business plan may be time-consuming, but it can be enriching if you follow the USCIS standards closely and do your due diligence. Remember that the process is challenging and takes a lot to stand out and not get rejected. Ultimately, the Matter of Ho provides all the necessary guidelines to create a successful business plan. Use the information above to ease the process significantly and ensure you land lucrative EB-5 investors.
Looking for an EB-5 business plan for your commercial enterprise? Contact us to book a call with one of our senior consultants. At Synvest Capital we have helped more than 500+ companies achieve their immigration goals.
