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EB-5 Immigrant Investor Program Visa

The EB-5 Immigrant Investor Program is available to those immigrants who have invested, or are in the process of investing, at least $1 million in a new commercial enterprise employing at least 10 full-time U.S. workers. Individuals who invest in a “targeted employment area” (TEA), however, are only required to invest a minimum of $500,000.In addition, immigrant investors can invest $500,000 in a qualified and approved Regional Center. In direct investments & investments through a Regional Center, the investor must show that they created at least 10 direct or indirect jobs within two years of an approved application. 

The purpose of the EB-5 program is to stimulate the U.S. economy through job creation and capital investment by offering immigrant investors the benefits of permanent residency in the United States.  

The purpose of the Immigrant Investor Pilot Program is to attract more foreign investors to fund businesses and projects in specific “regional centers” that would otherwise find it difficult to attract domestic investment based on current geographical market trends. By bringing such investment into areas of economic hardship and high unemployment, Congress hopes to stimulate job expansion, improve regional productivity, invest in infrastructure, and promote the growth of innovative new businesses. Congress has made the Immigrant Investor Pilot program particularly attractive to foreign investors by lowering the investment minimum to $500,000 (for a business in a designated regional center or TEA) as opposed to $1,000,000, and by allowing a less restrictive job creation requirement based upon the creation of “indirect” and “direct” jobs and not requiring the day to day management of the business. The Immigrant Investor Pilot Program has been extended several times, and was recently extended through September 30, 2015. 

Approval for the EB-5 applications is high. In 2009, USCIS received 1,028 submissions, of these, 966 were approved and 163 were denied. Likewise, in 2013, USCIS received 6,517 applications, of these, 82.6% were approved. Most denials occurred because investors failed to demonstrate their investment funds were lawfully acquired.

The EB-5 visa essentially offers a good immigration solution for those who have the financial resources to qualify and a tolerance for high risk investments. It does not require an employment offer from a U.S. employer as other employment-based immigration categories do, nor does it require a labor certificate. With the current economic downturn, USCIS has relaxed its requirements for the EB-5 program as a means to bring in more foreign investment. Most importantly, because the annual quota in the past consistently exceeds the number of applicants, those who qualify for EB-5 status do not typically have to wait long for a visa as there is currently no visa quota backlog for the EB-5 investor category.

 

Specific Requirements Regarding EB-5 Investment and Employment

Funds Requirement

  • I. Minimum Amount Requirement

    Generally speaking, the minimum investment required to qualify for EB-5 status is $1,000,000 per immigrant investor. However, the limit is reduced to $500,000 in cases of investment in “targeted employment areas.” Such qualifying areas must have an unemployment rate 150% of the national average. A rural area refers to a municipal area with a population less than 20,000. 

    Please note that if there is a redemption clause in a commercial enterprise’s agreement that guarantees the return of a petitioner’s investment, such assets will not be deemed as “at risk”; a petitioner must infuse the full amount of at risk capital into an enterprise. 

  • II. Legitimate Source of Funds

    Assets acquired directly or indirectly by unlawful means such as criminal activities are not acceptable forms of capital. In practice, USCIS is very strict about reviewing the legitimacy of funds. 

  • III. Acceptable Types of Property as Investment

    Cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the investor are all acceptable investments for EB-5 purposes. A loan to the company or any other debt between the company and investor does not constitute an investment because such a monetary transfer does not bear any investment risk (some exceptions apply). All capital shall be valued at a fair market price in U.S. dollars. The investor need not commit his/her entire capital immediately, but the investment must substantially complete prior to the end of the 2-year conditional residency period. 

Enterprise Requirement

There are several factors investors should pay attention to when investing in a new enterprise: 
An enterprise is considered “new” if it was established after November 29, 1990. Enterprises established before November 29, 1990, can also be considered new enterprises if they have gone through re-organization or substantial change.

Any for-profit entity of lawful business is considered a commercial enterprise. This does not include non-profit organizations. 

The EB-5 program has no requirement for the type of invested enterprise. Corporations, limited liability companies and limited partnerships are all acceptable. However, the choice of business type is very important for tax and management reasons.

Except in a regional center company case, investors are required to participate in the operational management of the invested enterprise; in practice, this can be satisfied by taking a managing position, participating in the decision-making process or being a limited partner in a LLP. In some cases, the participation requirement can be waived. 

USCIS excludes corporate and other non-individuals as an investor from the EB-5 category. However, it is perfectly acceptable for multiple investors seeking EB-5 status to join together as long as each investor infuses the requisite amount of capital into an enterprise and each investment creates at least 10 full-time positions. 

EB-5 Investment Options

The EB-5 Investment Visa provides flexible options to obtain a permanent resident visa. Foreign investors can invest in any type of for-profit lawful business entity. The structures of the business entity can be any of the following for-profit business categories: 

New Business Enterprise

Any for-profit lawful business entity is considered a commercial enterprise. There are four types of sub avenues classified as new business enterprises.  

Creating a new business:
The EB-5 program defines a ‘new’ enterprise as one that was “established after November 29, 1990.” Immigrant investors can invest the required amount of capital in a commercial enterprise that was established after November 29, 1990, provided that other criteria are met.  Based on a 1998 precedent, an EB-5 investor was required to be present at the creation of an enterprise. However, this was problematic for businesses created under a partnership model. A partnership is typically formed first among the main partners and then other limited partners are sought afterwards. Because of the 1998 precedent, such limited partners could not qualify for an EB-5. In 2002, Congress overruled this decision, only requiring a petitioner to show that he or she has invested the required amount.

Buying an existing business that is restructured or reorganized:
An EB-5 investor can restructure an existing business. USCIS does not consider merely changing the legal structure of an enterprise sufficient. USCIS gives the examples of a restaurant that is converted into a nightclub or a plan that adds substantial crop production of an existing livestock farm as two examples of adequate restructured or reorganized commercial enterprises.

Expanding an existing business:
An EB-5 investor can also create a “new” business by expanding an existing one. Through this avenue, an EB-5 investor must either expand the net worth of an existing business or the number of employees by 40%. If an investor chooses to increase the number of employees, he/she could be required to create more than 10 jobs; the larger the number of existing employees, the more of a burden this becomes.

Pooling:
Multiple EB-5 investors can combine their money to invest in an enterprise. All investors must infuse the required amount into an enterprise and create at least 10 jobs each. All jobs created by a pooling arrangement will be distributed evenly among investors. For example, if there are 3 investors and only 21 jobs are created, this does not mean that 2 of the investors created 10 jobs each and the third investor only created one job. It means that all three investors created 7 jobs a piece.

General Requirements for Investing in a New Commercial Enterprise

  • Invest in or currently be in the process of investing at least $1,000,000. If this investment is made in a company located in a targeted employment area, the minimum investment is lowered to $500,000.
  • Must provide benefit to the U.S. economy in the form of goods and/or services.
  • Must create 10 full-time employment positions. If an investor chooses to expand an existing business’s workforce, he/she could be required to create more than 10 jobs.
  • Must be involved in the daily management of the company. Acceptable positions include acting as a corporate officer, board member, etc.

Troubled Business

The definition of a troubled business is one that has existed for a minimum of 2 years. Furthermore, this business must have incurred a net loss for the 12 to 24 month period before you file.

This loss must be equal to at least 20 percent of the business’s total net worth.

General Requirements for Investing in Troubled Businesses

  • Invest in or currently be in the process of investing $1,000,000, or $500,000 if the business is located in a TEA.
  • Maintain at least 10 jobs before you invested money for at least 2 years. This means that the investor must show that the number of existing employees in the troubled business is being or will be maintained at no less than the pre-investment level for a period of at least 2 years. This regulatory provision, while allowing job preservation in place of job creation, does not decrease the statutory numeric requirement. Ten jobs must be preserved, created or some combination of the two. For example, an investment in a troubled business that creates six qualifying jobs and preserves all four pre-investment jobs would satisfy the statutory and regulatory requirements.
  • Must be involved in the daily management of the company. Acceptable positions include acting as a corporate officer, board member, etc.

Regional Center Pilot Program

To encourage immigration through investment and to concentrate investment in specific regions, Congress directed USCIS to set aside 3,000 visas for people who invest in a designated “Regional Center Program.” A “Regional Center” is a designation granted by USCIS on the basis of a proposal for economic growth in the particular geographic area.

General Requirements

  • Invest at least $1,000,000 in a regional center or $500,000 if the Regional Center is located in a Targeted Employment Area. The area of the regional centered must be clearly defined.
  • Create 10 new full-time jobs directly or indirectly.
  • A detailed description of how the investment within the specified area will create jobs directly or indirectly.
  • A detailed administrative structure of the regional center which explains how it will promote more investment, assess investor projects, oversee all investment activities, and structure its own investment capital.
EB-5 Visa
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