What is the EB-5 visa program and what are the requirements?

Prior to this program, foreign investors often did not qualify for a green card because under the old “job offer” preferences, individuals with an ownership interest in the petitioning company could not obtain a permanent labor certification.

General Overview

Are you an immigrant looking to invest in, or create a business in the United States, and hoping to eventually become a US Citizen? Well, the EB-5 program may be a great option for you! The EB-5 program is an employment-based immigrant visa that was created by Congress in the Immigration Act of 1990 to stimulate the U.S. economy through job creation and capital investment through immigration. The program provides visas for immigrants who invest in, or create U.S. businesses, that ultimately create jobs for U.S. workers.

Prior to this program, foreign investors often did not qualify for a green card because under the old “job offer” preferences, individuals with an ownership interest in the petitioning company could not obtain a permanent labor certification.

Each year USCIS authorizes 10,000 EB-5 visas for immigrant investors; though the 10,000 visa quota has never been met. Generally, in order to qualify for the EB-5 visa program, the applicant must satisfy:

  1. the capital investment requirement,
  2. job creation requirements; as well as,
  3.  ensure that the business created with, or receiving the investment, qualifies for the EB-5 program. If all of these requirements are successfully met, and approved by USCIS, EB-5 applicants, their spouse and their children [if unmarried and under 21], can obtain legal permanent resident status.

Capital Investment

In order to satisfy the EB-5 investor visa requirements, first, the investment of capital must place the applicant’s capital “at risk.” If, for example, the immigrant investor is guaranteed the return of a portion of his/her investment, or is guaranteed a rate of return on a portion of his/her investment, then that portion of the capital is not at risk. However, an investment may be held in escrow until the investor has obtained conditional LPR status. Additionally, any assets acquired by unlawful means [such as criminal activity], either directly or indirectly, is not considered capital for the purposes of this program.

Further, investors do not need to pay the entire minimum amount up front; they only need to be “actively in the process of investing” that amount. In the past, investors have used a variety of methods, including secured promissory notes, balloon payments, options to sell, and pooled investments.

The required minimum investment amount is either $500,000 or $1,000,000 dollars, depending on where the project the applicant invests in is located, or where the applicant chooses to start their new business.

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Targeted Employment Area Programs

For investments in “targeted employment areas,” the minimum investment amount is lowered to $500,000. INA 203(B)(5)(b)(ii); 203(b)(5)(C)(ii). Targeted employment areas are defined as  rural areas, or an urban area which has experienced high unemployment (of at least 150 percent of the national average rate), at the time of investment.

Rural areas are defined as any area other than an area within a metropolitan statistical area [defined by the US Census], or within the outer boundary of any city or town having a population of 20,000 or more (based on the most recent census). A map of the metropolitan statistical areas can be found, here.

Job Creation

The second requirement for the EB-5 investor visa is job creation. Here, each applicant must establish that his/her investment resulted in the creation of at least ten full-time positions for qualifying employees. These employees may be US citizens, permanent residents, or other immigrants authorized to work in the US. This includes conditional residents, temporary residents, asylees, refugees, or a person residing in the US under suspension of deportation. Further, these full-time positions must be directly created by the new commercial enterprise; and, within two years from the time the investor received his/her conditional permanent residency. Applicants who invest through regional centers need only show that 10 full-time “indirect” or “induced” jobs were created from the investment.

Direct jobs are those that are full-time and created by the business itself, such as on-site staff or employees.

Indirect jobs, on the other hand, are created by suppliers and vendors in the process of business dealings. These types of jobs can include independent contractors, suppliers, consultants, or “induced” jobs; jobs created in the economy based on the increased expenditures of your commercial enterprise and the regional center. Induced jobs may be counted towards the indirect jobs requirement. Indirect jobs need not be proven directly; but rather, can be estimated by an expert economist using “reasonable methodologies,” which means the use of an input/output model.

For more information about regional centers, as well as more information about indirect and induced jobs, please see our article on regional centers, available here.

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Qualifying Business

The third major requirement is that the EB-5 investor must invest in a qualifying business. Applicants may invest in a regional center, or directly in a new commercial enterprise. Here, we will focus on “direct investments” which is where an investor directly invests in a business as opposed to a regional resource center – which we discuss in this article.

An immigrant looking to directly invest, in order to qualify for EB-5 status, must first find or create a new commercial enterprise in the United States. A “new commercial enterprise” includes the creation of any lawful, for-profit activity. These may include corporations, limited or general partnerships, sole proprietorships, business trusts, or other privately or publicly owned business structures. Popular examples include restaurants, hotels, agricultural developments, entertainment venues, real estate ventures, and office buildings. Additionally, the applicant must be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial responsibility, or through policy formulation.

With that said, investors need not “establish” a new commercial enterprise; it is enough that the applicant “invest” in it. Older commercial enterprises may qualify so long as the investment leads to a 40 percent increase in employees, or the business’ net-worth; or, if the older business is restructured to such an extent that a new commercial enterprise results.

Additionally, the applicant may invest in a “troubled business.” This means a business that has been in existence for two years, has incurred a net loss for accounting purposes during the twelve or twenty-four month period–prior to the priority date of the investor’s I-526 form, and the loss is at least equal to twenty percent of the troubled business’ net worth; prior to such loss. 8 C.F.R. 204.6(e). In determining whether or not the troubled business has been in existence for two years, the successors in interest (transferees) to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

In Conclusion

So there you have it. These are the most basic attributes of the complex, EB-5 Investor program. In reality, satisfying the EB-5 program requirements in order to obtain a Green Card, is a very difficult and a complex legal maize for any immigrant investor. The stakes are also very high, because the success of your Green Card depends on not only you satisfying the requirements, but also sufficiently documenting that you have met them. Don’t apply for an EB-5 Investor Visa alone! An experienced Immigration Attorney can greatly increase your odds of successfully obtaining a Green Card via this immigration option.  For some information on the basic application process, please see our article: How do you apply for an EB-5 visa? Good luck!

 

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