What foreign investors need to know about the EB-5 Visa

The EB-5 Immigrant Investor Program provides significant economic benefits to the U.S. economy, especially to areas that are desperate for economic stimulus. It qualifies the EB-5 visa petitioner, his/her spouse, and all unmarried children up to 21 years of age for a U.S. green card. In exchange, the EB-5 investor must invest a minimum $1 million in the U.S. economy, unless the investment project is located in a “Targeted Employment Area”, which allows a reduced investment of $500,000. The EB-5 investor must also meet certain specified job creation requirements. I. What is the EB-5 Visa? The U.S. Congress initially created the EB-5 immigrant visa category in the Immigration Act of 1990. In 1993, Congress amended the program by allowing for “regional centers” located in a Targeted Employment Area (TEA) to promote “economic growth” through the creation of jobs and “increasing domestic capital investment.” Presently, the program allocates 10,000 EB-5 immigrant visas each fiscal year, with 3,000 visas reserved for EB-5 immigrants investing through regional center projects. The investors themselves and their family members do not count towards this number. Since 2009, investors from China substantially outnumber investors from all other countries. II. Are you qualified for the EB-5 Visa? An EB-5 investor must meet three basic qualifying requirements: 1) The investment must be “at risk” investment of capital into a “new commercial enterprise” which:
  • A company established after Nov. 29, 1990, or
  • A company established on or before Nov. 29, 1990, that:
    • Is an existing business which has been restructured or reorganized in such a way that a new commercial enterprise results, or
    • A troubled business expanded through the investment resulting in a 40% increase in the net assets or the number of employees.
A commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business. This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, if each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. However, this definition does not include noncommercial activity such as owning and operating a personal residence. A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss of at least 20% during the 12- or 24-month period prior to the priority date of the immigrant investor’s Form I-526. 2) Capital investment requirement:
  • In general, the minimum qualifying investment in the United States is $1 million, or
  • Reduced investment of $500,000 in Targeted Employment Area (TEA):
A TEA is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 1.5 times the national average rate. A Rural Area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more according to the decennial census. Capital means cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. Each investor must provide documentation of a lawful source of investment funds and make the funds unequivocally available for the intended investment purposes. 3) Job Creation Requirements:
  • New Enterprise Direct Investment: Must create or preserve at least 10 full-time jobs for qualified U.S. workers within two years (or under certain circumstances, within a reasonable time after the two-year period) of the immigrant investor’s admission to the United States as a conditional permanent resident, or
  • Regional Center Investment: Create or preserve either direct or indirect jobs associated with the investment project. However, investors may be credited only with preserving jobs in a troubled business.
A qualified employee is a U.S. citizen, permanent resident or other immigrant authorized to work in the United States. This definition does not include the immigrant investor, his or her spouse, or child. A full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 hours per week. A job-sharing arrangement whereby two or more qualified employees share a full-time position will count as full-time employment provided the hourly requirement per week is met. Additionally, the investor may be found ineligible for an EB-5 visa if deportable based on the criminal, health or national security grounds, and/or is a national of such restricted countries as Afghanistan, Iran, and North Korea. III. What is a Regional Center? “Regional Center" is the designation granted by USCIS to entities, organizations, companies, or agencies that focus on a specific geographic area within the United States in order to promote economic growth within that area. The regions are usually located in targeted employment areas (TEAs). Regional Centers work to increase export sales, improve regional productivity, create new jobs, and increase domestic capital investment.
  • Benefits of choosing a Regional Center project:
  1. Capital investment amount is lowered to $500,000 per investor;
  2. An investor is not directly involved in the daily management of the commercial enterprise (which provides the investor with freedom and mobility).
  3. The job creation requirement is easier to satisfy;
  4. As a money controlling entity, the regional center and not the investor must prepare and submit an EB-5-compliant business plan to the USCIS. All EB-5 business plans, whether for regional center or direct investment projects, must meet the requirements as set forth in Matter of Ho.
  • Disadvantages of choosing a Regional Center project:
  1. The investor has no control over management of the business and no control over the investment capital, thus no opportunity to maximize business profits;
  2. The Regional Center usually charges the administrative and management fees, thus decreasing the investor’s daily share of profits and sales and increasing the cost of the EB-5 visa;
  3. Once the Regional Center is selected and the EB-5 application is in progress, the investor is fully dependent on the regional center’ project outcome;
IV. What are the steps in obtaining a Green Card through EB-5 investment?
  1. Investor selects an investment project for EB-5 purposes. Attorney reviews the documents and business plan for the proposed investment for legal compliance with the EB-5 visa requirements. The investor signs an investment agreement and transfers funds to an escrow account or directly to an enterprise;
  2. Attorney prepares the EB-5 package (I-526 petition supported by a Matter of Ho compliant business plan, and other necessary documents). Attorney conducts required due diligence and files the EB-5 visa package with the USCIS;
  3. Upon approval of I-526 petition:
If EB-5 investor is living outside the United States, s/he can become a conditional permanent resident through consular processing at the place of residence of the entrepreneur.
  • It is accomplished by filing Form DS-230, Application for Immigrant Visa and Alien Registration with the Department of State to obtain an EB-5 visa for admission to the United States, or
If EB-5 investor is living in the United States, s/he can become a conditional permanent resident through adjustment of status process when an immigrant visa number is available.
  • It is accomplished by filing Form I-485, Application to Register Permanent Residence or Adjust Status, at the regional USCIS office. Investor then can wait for the decision without having to leave the United States.
Investor’s spouse and unmarried children under the age of 21, (known as derivatives) may be included on I-485 immigration petition. If they are residing in the US, they will each need to file a separate Form I-485. They are counted towards the annual cap of 10,000 visas. While I-485 application is pending, it is possible to apply for authorization to work in the United States and to seek advance parole (advance permission to travel and be admitted to the U.S. upon return). Upon approval of the I-485 application or upon entry into the United States with an EB-5 immigrant visa, the EB-5 investor (and his or her derivative family members) are granted conditional permanent residence for two years. 4. Within 90 days of the two-year anniversary, an attorney prepares and files Form I-829, Petition by Entrepreneur to Remove Conditions, with supporting documents. The EB-5 investor is required to demonstrate that s/he “…has invested or is actively in the process of investing lawfully obtained capital in a new commercial enterprise in the United States which will create full-time positions for not fewer than 10 qualifying employees. …” 8 CFR § 204.6(j). Upon I-829 petition approval, a new unconditional green card is issued for an additional ten years. 5. An EB-5 investor green card holder is eligible to apply for U.S. Citizenship 5 years after the conditional green card is issued, and upon satisfying residency and other requirements. Conclusion The impact from each new wave of immigrant investors coming to the United States each year result in a new and distinct economic event. The economic effects of the EB-5 immigrant investor are indeed quite large, resulting in even greater economic contributions to the U.S. economy than other categories of immigrant visas.

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