EB-5 INVESTOR VISAS

The EB-5 investor program enables you to obtain permanent residency in the U.S. in an expedited manner if you invest:

• $500,000 in a government approved Regional Center
• $1 million in a commercial enterprise that will create 10 full-time jobs for US workers
• $500,000 in targeted rural or high unemployment areas

The four basic requirements for the EB-5 visa detailed below are: :

1. The individual must establish a business or invest in an existing business that was created or restructured after November 19, 1990;
2. The individual must have invested $1 million or $500,000 if the investor invests in certain designated Target Employment Areas or an approved Regional Center  (Virtually all of the regional centers are in geographical areas where $500,000 is the required amount of investment);
   
3. The business must create full time employment of at least 10 U.S. workers; and,
4. The EB-5 investor must be sufficiently engaged in the management of enterprise either through day-to-day managerial control, limited partnership, or  policy formation.  A purely passive role is not permitted.  Most Regional Centers offer limited partnerships, use of which effectively exempt an investor from having to commit a specific amount of time or engage in any day-to-day management,.

The investor is approved for permanent resident status on a conditional basis.  Two years after being granted conditional residency, the investor files a petition to show the investment proceeds have not been withdrawn and the requisite jobs have been created.  Upon this successful showing, the residence is made permanent.  Five years after the initial grant of conditional residence, the foreign national can apply for naturalization. 

EB-5 success has grown with reputable private sector marketing companies, investment of capital in government-designated Regional Centers, and the less stringent job creation requirements applicable for these regional centers.   Knowledgeable immigration lawyers and wisely educated investors are realizing that the EB-5 program can be a viable route to the green card. 

For people wishing to live, work or retire anywhere in the U.S. who can afford to invest $500,000 for at least five years, the EB-5 visa is an option worth considering.

• He or she actually wants to start and/or manage a business.
• His or her business will be creating employment up front.
• The business  investment is the driving force behind his or her wanting to come to the US.
• He or she wants to have control over his or her investment.
• He or she wants to maximize profits from his or her investment.

• He or she is not interested in starting a business.
• He or she may be a retiree.
• Although he or she may want to start a business, it will not create sufficient employment for an individual EB-5.
• He or she wants to be geographically mobile.
• He or she wants to spend most of his or her time outside of the US.
• Permanent residence rather than US business is the driving force behind his or her investment.

• The USCIS has pre-approved the qualifying amount of the investment; 
• If a specific project has been pre-approved, the job creation requirement is pre-approved; 
• Indirect employment creation is allowable;
• There is presently no quota waiting list;
• The government generally expedites adjudication of the investor petition;
• The foreign national can work anywhere he or she wants; or not work, as he or she pleases;
• The foreign national’s children may stay in the U.S. and study in the U.S.; and,
• The foreign national can travel in and out of the U.S. as frequently as he or she desires.

Supporting Evidence:  New Commercial Enterprise

The commercial enterprise may be any type of business organization as long as the entity is engaged in for profit commercial activity. The investment must be in only one commercial enterprise and not multiple businesses. 

There are 3 types of qualifying business enterprises for EB-5 purposes.  They include:  

1. An original business (a new commercial enterprise);,
   
2. An existing business that is simultaneously or subsequently restructured or reorganized so that a new enterprise results, or
   
3. Expansion of an existing business created after November 1990 resulting in a forty percent increase either in the net worth or number of employees of the enterprise.  

Any for-profit business entity that conducts lawful business may serve as a qualifying business enterprise. The business can be a sole proprietorship, partnership, holding company, joint venture, corporation, etc. A holding company with its subsidiaries would also qualify if each subsidiary is engaged in the active conduct of business. Passive investments do not qualify.

Supporting Evidence:  Required Investment Capital

The EB-5 investor is required to invest a reduced amount of $1,000,000 [or $500,000 in some Targeted Employment Areas (TEA)], which are rural or high unemployment areas.  Rural areas are defined as being not within a metropolitan area or within a city or two of more than 20,000.  High unemployment areas are defined as experiencing unemployment 150% of the national average unemployment statistic. This investment must be in a new commercial enterprise, defined to include certain purchases and expansions of existing businesses that will create at least ten full time U.S. jobs. 

Supporting Evidence:  Funds Acquired by Lawful Means

Our firm works with the foreign investor to ensure adequately documentation and demonstration that the $500,000 EB-5 Visa investment capital is acquired from a legal source.  The regulations prohibit the use of assets acquired, directly or indirectly, by unlawful means (such as criminal activities). A petitioner cannot establish the lawful source of funds merely by submitting bank letters or statements documenting the deposit of funds.  Without documentation of the source and path of the funds, the petitioner cannot meet his burden of establishing that the funds are his own funds. Simply stating without supporting documentary evidence is not sufficient for the purpose of meeting the burden of proof.

The EB-5 Investor can also show a "pattern of income" to justify the EB-5 investment.  Income tax records should be submitted, preferably for a period beyond the five years required by the regulations.  Also provide savings and personal investment records to prove that even if a petitioner has not earned a substantial annual income, there is a credible claim that the necessary funds were accumulated over time.

An investor may receive a gift of funds. It is important to note that the USCIS will require information and track the source of the funds from the person who gave the gift.

Proving the Source of Funds obtained by loan.    Clearly, it is difficult enough to prove that one's own funds are, indeed, one's own. When the funds are obtained by loan, there may be even greater scrutiny. The regulations expressly prohibit using loan money for EB-5 Visa purposes if the loan is obtained by using the new commercial enterprise as security. It does not matter if the loan is from a third party lender or the enterprise itself. In either case the petition will be denied if the loan is secured by the new commercial enterprise.

Foreign laws prohibiting export of capital.  Wealthy aliens may wish to invest heavily in a U.S. enterprise in order to remove capital from another country they perceive to be in, or approaching financial decline or political chaos.  However, if the country from which the funds originate prohibits anything but the very minimal export of capital, that capital removed in violation of such laws will not be considered to have a lawful origin for this visa category. 

Supporting Evidence:  The EB-5 Investment must be at risk

The EB-5 Visa applicant’s capital investment must be truly’ at risk’ as per federal guidelines and not simply a loan.  There can be no mention of redemption rights or guarantees. Guarantees of return of any capital are strictly prohibited, and if given negate the ‘at risk’ requirement of the EB-5 law and the investors petition will be denied. The entire capital must be at risk and therefore reserve accounts are also not allowed. 

An investor can show the capitalization of the enterprise by making an investment in the form of cash, supplies, equipment, inventory, tangible property, cash equivalents and indebtedness secured by assets owned by the investor provided that the investor is personally and primarily liable for the debts and assets and the assets of the new commercial enterprise are not used to secure any of the indebtedness.

Supporting Evidence:  Management by Investor

The alien must be engaged in management of the enterprise as opposed to maintaining a purely passive role, but the management may be policymaking such as a member of the board of directors, or even a limited partner with normal rights under the Uniform Limited partnership Act, which by nature are quite passive. The alien must have been granted all of the rights, powers, and duties granted to the other limited partners in the partnership in order to be considered sufficiently engaged in the business.”  Most enterprises attracting EB-5 investors have provided opportunity for input, such as through semi-annual meetings, without providing any control.  An advisory opinion was issued that interprets EB-5 regulations, which recognize limited partnership roles, as sufficient if they allow the limited partner. 

Multiple Investors

If more than one investor is involved, whether an alien or not and whether a natural person or not, the investors may allocate the number of jobs created among one or more alien investors seeking permanent residence, as long as each of the petitioning aliens has personally invested the required capital.  In the case of a business expansion, the requirement of a 40% expansion of the net worth or number of employees need only be satisfied by all the investors as a group including non-alien investors, not by alien investors individually or as a sub-group.

Supporting Evidence:   Ten Full-Time Positions for Qualifying Employees

Each foreign national EB-5 Visa Investor must show that the investment has created, or at least has a reasonable prospect of creating, at least 10 full time, year-round U.S. based jobs.  The regulations specify the qualifying kinds of jobs, kinds of workers, and time of job creation.

For investments in Designated Regional Centers, the job creation requirement can utilize both direct and indirect job creation to prove they have met the USCIS requirement.  Otherwise, the jobs must be directly created by the entity the investor is investing in.

An exception is made for troubled businesses, defined as at least two-year old businesses with net losses of at least twenty percent of net worth during the twelve or twenty four month period leading up to the alien’s investor visa petition.  An alien establishing a new enterprise through reorganization or expansion of a troubled business may satisfy the ten-job requirement but not necessarily the new commercial enterprise by showing that the number of existing employees is being, or will be, maintained at no less than pre-investment levels for at least two years.  The USCIS maintains that each investor must account for 10 separate jobs that are created or saved. 

Pilot Program for Indirect Employment Creation

The job creation requirement is modified for Designated Regional Centers inasmuch as the job creation may include indirect or induced employment rather than direct employment. 

What is a Regional Center?

The legal definition is any economic unit, public or private, engaged in the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment.  The investment must be made in a commercial enterprise that focuses on a geographical region within the United States. The commercial enterprise must be formed for the ongoing conduct of lawful business, including sole proprietorships, partnerships (both limited and general), holding companies, joint venture, corporations, business trusts, and other entities publicly or privately owned.

What to expect with a Regional Center

Each Regional Center structure will vary as well as each project.  Wise investors will pursue low-risk opportunities, a solid business plan for economic growth, an economic analysis that fulfills the job creation requirement, and an exit strategy wherein the Regional Center demonstrates how it intends to return the investment in 5 or 6 years.