Investment Based

EB-5 Visa

Overview

In 1990 U.S. Congress created new category called employment-based preference (EB-5) immigrant visa for immigrants seeking to enter to engage in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs. 5th Preference allows for conditional residency for persons who, after Nov. 29, 1990, invest $1,000,000 in a new commercial enterprise that employs 10 United States citizens or authorized immigrant workers full time and engage in the business through day-to-day management or policy formation. However that amount is reduced to $500,000 if the investment is in a “targeted employment area” (high unemployment area or rural region).

Requirements

The Regular Program
To qualify under the EB-5 category, the new enterprise must: (1) be one in which the person has invested or in the process of investing at least one million dollars (or at least $ 500,000 in high unemployment area or rural region) after November 29, 1990; (2) benefit the U.S. economy; and (3) create full-time employment for at least 10 U.S. workers. Moreover the, investor must has at least a policy-making role in the enterprise.

The Regional Center Program
Congress created a pilot program in 1992. The pilot program has been renewed several times. This program does not require that the Immigrant investor’s enterprise itself employ 10 U.S. workers. Instead it is enough if 10 or more jobs will be created directly or indirectly as result of the investment. It permits private and governmental agencies to be certified as regional centers if they meet certain criteria. There are currently over 800 regional centers in the United States. Click here to view regional center information.

Authorized Immigrant workers
To qualify for EB-5 status, an investor normally must create full-time employment for at least 10 U.S. Citizens, lawful permanent residents or other lawfully authorized to be employed in the United States. Neither investor nor the investor’s spouse and children count towards the 10-employee minimum. Nonimmigrants are also excluded from the count. But conditional residents, temporary residents, asylees, refugees and recipients of suspension of deportation or cancellation of removal may all be considered employees for EB-5 purpose.

Person must invest in a new commercial enterprise
Commercial enterprise includes a broad spectrum of business relationships including limited partnerships, holding companies and their wholly-owned subsidiaries, provided they are all for profit business operation.

An investor no longer has to “establish” the commercial enterprise. He satisfies the statute if he “invests” in new commercial enterprise. Although INS took the position that the participation in a partnership that was already in existence at the time of the partner’s participation is not a new commercial enterprise because the investor did not “establish” the new enterprise. However Congress abolished the “establishment” requirement and now a person who invests in a new commercial enterprise can apply EB-5 even if he did not establish the business.

A new commercial enterprise includes:

  1. A company formed after Nov 29, 1990 – The investor is not required to “establish” a new commercial enterprise but the enterprise to be “new” the investment must be in a company that was formed after Nov 29, 1990.
  2. A company formed before Nov 29, 1990 – A commercial enterprise in existence prior to Nov 29, 1990 will be considered “new” for purpose of the law if: (a) it has been restructured or reorganized so that new commercial enterprise results; or (b) it has been expanded so that a substantial change in the net worth or number of employees has occurred.
    1. The mere change in décor and implementation of new business plan is not sufficient re-structuring to result in a new commercial enterprise.
    2. Substantial change means a 40% increase in either the net worth or the number of employees.

Investment (Amount)

The statute requires an EB-5 petitioner to have invested or be in the process of investing. Although the statute explicitly states that an EB-5 petitioner may be “in process” of investing the required capital, USCIS effectively requires the entire capital amount to be already invested and at risk in the commercial enterprise at the time the I-526 petition is filed. This interpretation appears to contravene the statute. Investment can be cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the entrepreneur, provided that the entrepreneur is personally and primarily liable and the assets of the new commercial enterprise are not used to secure any of the indebtedness. A loan to the commercial enterprise does not constitute an investment. All capital is valued in U.S. dollars and at fair market value. Investment can come from joint accounts owned by petitioner and spouse. This does not extend to joint accounts by other family members.

Investment (At Risk)

Promissory Notes

  1. An unsecured promissory note is not an investment of capital. A petitioner must demonstrate that the note is secured by his or her property. The fair market value of the promissory note and not the face value govern the amount of the investment. Fair marked value determined from the time of filing through the period of conditional residency.
  2. Petitioner must “substantially complete” his payments on a signed valid promissory note prior to the end of 2-year conditional residency period.

Debt arrangements are extremely complicated. A prudent practitioner must do careful research and analysis to determine current USCIS positions and policies on this issue.

Source of Funds
Petitioner must show the source of funds and that they are legitimate

Pooling arrangements
The regulations specifically allow immigrant to pool their investment with other seekers EB-5 status. Each investor must invest the applicable statutory amount. All of new jobs created by the new commercial enterprise will be allocated among those within the pool seeking permanent investor visa.

Employment Creation
Petitioner must create full time employment for at least 10 qualifying USC or immigrant workers within 2-years CR period. Independent contractors are not considered employees.

Evidence Required

  1. Regarding the enterprise:
    1. Articles of incorporation or business organization documents; or
    2. Authorization to do business in state or municipality.
  2. Regarding the Investment
    1. Documents evidencing investment which may include bank statements, evidence of purchased assets; evidence of property transferred from abroad; stock certificates given for investment; or loan or mortgage agreements
  3. Regarding obtaining the capital through lawful means
    1. Foreign business registration records;
    2. Corporate, partnership and personal tax returns filed within 5 years;
    3. Evidence identifying other sources of capital; or
    4. Certified copies of any judgments or evidence of all pending government civil or criminal actions, administrative actions, and any private civil actions involving monetary judgments within the past 15 years.
    5. Where source of funds are from sale of house or business, investor needs to provide sales contracts or deeds
    6. Petitioner’s level of income during the previous years
  4. Job creations
    1. I-9s, tax records if employees already hired, including proof that they are working full time; or
    2. A copy of a comprehensive business plan demonstrating where the 10 employees will be hired and giving approximate dates within the next 2 years
    3. If the enterprise is a “trouble business” (having lost 20% of its net worth) it must provide a comprehensive business plan and proof that the existing employees will be retained.
    4. Job must be created in the targeted employment area if petitioner is relying on the reduced $500,000 investment.
  5. Petitioner must be engaging in business on day-to-day basis or through policy formation.
    1. Title and description of his/her duties;
    2. Evidence that s/he is corporate officer or director; or
    3. If partnership, the partners management or policy making activities consistent with rights, power and duties normally granted limited partners under the Uniform Limited Partnership
  6. Targeted Employment Area (where applicable)
    1. Evidence of statistical area;
    2. Letter meeting requirements from state agency that area is high unemployment.