Investor Green Card: EB-5

Families and individuals who seek to move to the United States on a permanent basis can apply for the EB-5 Immigrant Investor Program.

The United States Citizenship and Immigration Services (U.S.C.I.S.) set out various requirements to obtain permanent residency through the EB-5 visa program. The requirements can be summarized as:

  1. The investor must meet capital investment amount requirements; it is typically required to make either a $500,000 or $1 million capital investment amount into a U.S. commercial enterprise,
  2.  Job creation requirements, and
  3. Ensure that the business receiving the investment qualifies for the EB-5 program.

EB-5 visa applicants, their spouse, and their children under 21 will obtain Permanent Residency in the U.S. (a.k.a. a “Green card”) once all requirements have been successfully met and approved by USCIS.

Required EB-5 Investment Amount

The EB-5 investment can take the form of cash, inventory, equipment, secured indebtedness, tangible property, or cash equivalents and it is valuated based on U.S. dollar fair-market value.

The minimum amount of capital required for the EB-5 visa program may be decreased from $1 million to $500,000 if the investment is made in a commercial entity that is located in a targeted employment area (TEA). To qualify for the TEA designation, the EB-5 project must either be in a rural area or in an area that has high unemployment.

High unemployment areas are geographic locations with an unemployment rate that is at least 150 percent of the national unemployment rate at the time of the EB-5 investment. Rural areas are geographic regions that are outside of a city with a population of 20,000 or more. Rural areas can also be geographic regions that are outside of what the U.S. Office of Management and Budget has designated as metropolitan statistical areas.

The Investment Amount Must be ‘at risk.’

In order to qualify as an investment in the EB-5 Program, the immigrant investor’s capital must actually be placed “at risk” for the purpose of generating a return and evidence of such risk must accompany the EB-5 petition. The mere intent to invest is not sufficient and prospective investment arrangements entailing no present commitment will not suffice to show that the applicant is actively in the process of investing. While the law does not specify what the degree of risk must be, the entire amount of capital must be at risk to some degree. According to Matter of Izummi, a decision issued by U.S.C.I.S.’ Administrative Appeals Office (AAO), if the immigrant investor is guaranteed the return of a portion of his or her investment or is guaranteed a rate of return on a portion of his or her investment, then the portion of the capital is not at risk. For the capital to be considered “at risk” there must be a risk of loss and a chance for gain. In Matter of Izummi, the immigrant investor’s capital was deemed not to be “at risk” because the investment included a redemption agreement that protected against the risk of loss of the capital and constituted an impermissible debt arrangement under 8 C.F.R. § 204.6(e). This was because the assumed risk was no different from the risk any business creditor incurs.

EB-5 Job Creation Requirements

USCIS requires that EB-5 investments result in the creation of 10 full-time jobs for U.S. workers. These jobs must be created within the two year period after the investor has received their conditional permanent residency. In some cases, -the investor must be able to prove that their investment led to the creation of direct jobs for employees who work directly within the commercial entity that received the investment. However, the EB-5 investor may only have to show that 10 full-time indirect or induced jobs were created if the investment was made in a regional center. Indirect jobs are those created in businesses that supply goods or services to the EB-5 project. Induced jobs are jobs created within the greater community as a result of income being spent by EB-5 project employees.

EB-5 Business Entities

There are several types of business entities in which an EB-5 visa applicant can invest. In general, the applicants can invest directly in a new commercial enterprise or in a regional center. New commercial enterprises are lawful for-profit entities that can take one of many different business structures. Such business structures include corporations, limited or general partnerships, sole proprietorships, business trusts, or other privately or publicly owned business structures. All new commercial enterprises must have been established after November 29, 1990.

However, older commercial enterprises may qualify if the investment leads to a 40-percent increase in the number of employees or net worth, or if an older business is restructured to such a degree that a new commercial enterprise results. In addition to individual business enterprises, EB-5 visa applicants can also invest in EB-5 Regional Centers. Regional centers administer EB-5 projects. It may be more advantageous for an investor to invest in a regional center-run project because the investor will not have to independently set up the EB-5 projects.

Benefits and Risks of Each Investment Option

  New Enterprise Troubled Business Regional Center
Benefits of Investing $500,000 Infusion of $500,000 as opposed to $1,000,000 is not as cumbersome.   

 

Investor has more control over day to day operations.

Infusion of $500,000 as opposed to $1,000,000 is not as cumbersome.   

 

Investors do not need to create 10 jobs, but maintain 10 already existing positions.

 

Business is already distressed; thus, the investor may bargain for a better deal.

 

Investor has more control over day to day operations.

Infusion of $500,000 as opposed to $1,000,000 is not as cumbersome.   

 

Removes the 10 employee requirement, allowing the investor to qualify without directly hiring 10 people.

 

Does not require the investor's day-to-day management, nor does it require investors to live in the place of investment.

 

Congress gives regional centers top priority, which could mean a quicker path to approval for Form I-526. However, USCIS has yet to officially implement this.

 

Investors do not need to create 10 direct jobs, but his/her investment should create either 10 direct or indirect jobs. 

 

Regional Centers are already established.

Drawbacks of Investing $500,000 If business folds within two year period, investor could lose all invested capital.   

 

The investor needs to show the creation of 10 jobs or possibly more than 10 jobs if expanding an existing business.

 

Risky because business is located in a TEA.

 

Must usually live in the same location as the enterprise.

If business folds within two year period, investor could lose all invested capital.   

 

The investor needs to maintain 10 already existing employees for a period of at least 2 years.

 

Compounded by its location in a TEA, this business is already in distress.

 

Must usually live in the same location as the enterprise.

If business folds within two year period, investor could lose all invested capital.   

 

Investor needs to show that his/her investment creates either 10 direct or indirect jobs.

 

Risky because business is located in a TEA.

 

Usually offered a position as a Limited Liability Partner, so investor has no control over day to day operations. Moreover, the general partners of the regional center company usually benefit from investors’ investments.

       
Benefits of Investing $1,000,000 Investor has the option of investing in any type of enterprise anywhere in the U.S.   

 

May not be as risky because investment is not made in an area of high unemployment or distress.

 

Investor has more control over day to day operations.

Investors do not need to create 10 jobs, but must instead maintain 10 already existing positions.   

 

Business is already distressed; thus, the investor may bargain for a better deal.

 

Investor has more control over day to day operations.

Removes the 10 employee requirement, allowing the investor to qualify without directly hiring 10 people.   

 

Does not require the investor's day-to-day management, nor does it require investors to live in the place of investment.

 

Congress gives regional centers top priority, which could mean a quicker path to approval for Form I-526. However, USCIS has yet to officially implement this.

 

Investors do not need to create 10 direct jobs, but their investment should create either 10 direct or indirect jobs. 

 

Regional Centers are already established.

Drawbacks of Investing $1,000,000 Investors may find infusion of $1,000,000 extremely cumbersome and risky.   

 

If business folds within two year period, investor could lose all invested capital.

 

The investor needs to show the creation of 10 jobs or possibly more than 10 jobs if expanding an existing business.

 

Must usually live in the same location as the enterprise.

Investors may find infusion of $1,000,000 extremely cumbersome and risky.   

 

If business folds within two year period, investor could lose all invested capital.

 

The investor needs to maintain 10 already existing employees for a period of at least 2 years.

 

The business is already in distress.

 

Must usually live in the same location as the enterprise.

Investors may find infusion of $1,000,000 extremely cumbersome and risky. If an investor likes to invest in a regional center company, it may be better to invest in one that only needs $500,000 in investment.   

 

If business folds within two year period, investor could lose all invested capital.

 

Investor needs to show that his/her investment creates either 10 direct or indirect jobs.

 

Usually offered a position as a Limited Liability Partner, so investor has no control over day to day operations. Moreover, the general partners of the regional center company usually benefit from investors’ investments.

For more information about EB-5 visas and Regional Centers, visit our EB-5 dedicated website www.eb5globalventures.com or contact Immigration Solutions LLC.

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