The EB-5 Immigrant Investor Program Visa, which was created by the Immigration Act of 1990 to stimulate the U.S. economy, enables eligible international investors who have invested, or intend to invest at least either $0.5 million in a regional center or $1 million in a new commercial enterprise that directly or indirectly remains or creates at least 10 job opportunities for U.S. workers within two years following the investment, and their immediate family to obtain lawful permanent residence in the United States. After initial two-year period when the conditional green cards are granted, investors and their immediate family members would be left with unrestricted green card.
The U.S. Congress imposes a numerical quota limitation on the EB-5 Immigrant Investor Program Visa, which is 10,000 visas per year. Such limitation includes both the investors and their dependents (spouses and children under the age of 21). In addition, 3,000 of the 10,000 visas are reserved by the U.S. Congress for qualified EB-5 investors who invest in the new commercial enterprises located in the targeted employment areas.
To qualify for EB-5 Direct Investment Program, the investor must demonstrate that:
The Direct Investment Program allows the investors to contribute at least $1 million in capital to a new commercial enterprise, which creates at least ten full-time jobs for the U.S. workers without having to be pre-approved by USCIS.
To qualify for EB-5 Direct Investment Program, the investor need to make an investment or be in the process of making investment of $1 million in a new commercial enterprise.
The fund may be diversified into a portfolio of wholly-owned business, provided all fund is placed through a single commercial enterprise and all jobs are created directly within it or through the portfolio of businesses that received the investment through that commercial enterprise.
Besides the minimum amount required to be wholly committed, the investment must be at risk to ascertain that the investment is an actual investment, which creates job opportunities and meets the central goal of the EB-5 Immigrant Investor Program, rather than merely a vehicle for investors to obtain their Green Cards with guaranteed loan or personal transaction pursuant to the statutory provision and relevant interpretation. As long as the fund is fully committed without guaranteed return or redemption and the investors therefore face a risk of loss and a chance to make profit, it would be deemed at risk.
Legitimate fund resource and path are strictly reviewed under the EB-5 Immigrant Investor Program. Investors must submit evidence clarifying the legal resource and path of funds moving from the original lawful source to the new commercial enterprise.
With respect to the form of capital, which is broadly defined in the regulations, cash, cash equivalent, inventory, equipment, other tangible property, and indebtedness secured by investor-owned assets, provided the immigrant investor 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 are all acceptable to make contribution to the business. Capital in the form other than cash would be valued at fair-market price in the U.S. dollars.
It is noted that the investors do not have to commit the full amount of investment immediately but by the end of their two-year conditional Green Card period.
Last, investors may direct investment in a troubled business, which has been in existence for at least two years that has incurred a net loss during the 12- or 24-month period prior to the priority date of the immigrant investor’s Form I-526 and the loss is at least equal to 20% of the troubled business’s net worth prior to the loss, to lessen the burden to meet the job creation requirement.
EB-5 investors must actively invest by engaging in the operation of new commercial enterprise. To meet such requirement, investors may either manage the business through day-to-day management (e.g. director) or through policy formation (e.g. limited partner) pursuant to USCIS's flexible adjudication. Merely being a purely passive shareholder or investor is not qualifies as an active investment.
New Commercial Enterprise
As part of elements, the so-called “new commercial enterprise” consists of two requirements— the entity must constitute a “commercial enterprise” under the definition and must be "new". To illustrate, the enterprise, as long as it engages in activities for profit, may take any business form to meet the former requirement, including but not limited to sole proprietorship, partnership (limited or general), joint venture, corporation, holding company, limited liability company, business trust or other publicly or privately owned entity. However, since the organizational structure of a business would critically influence its success, investors take many factors into consideration seriously, such as their business plans, market demands, management and taxation. On the other hand, new entity refers to a business that is established after November 29,1990, or one is established on or before November 29, 1990 and is either purchased and subsequently thoroughly restructured or reorganized to a new commercial enterprise, or expanded by the investment to increase at least 40% in the net worth or number of employees.
Direct Job Creation
The main policy goal of the EB-5 Immigrant Investor Program aims to increase both foreign investments and economic growth in the United States, the Direct Investment Program thus requires direct creation of ten full-time jobs by the new commercial enterprise. That is, a direct employer-employee relationship has to be built up between the new commercial enterprise (or its wholly owned subsidiaries) and the employee. In practice, a comprehensive business plan plays a critical role in the review of EB-5 application.
On the other hand, if investors place capital in a new commercial enterprise which is a troubled business, the ten full-time job creation requirement may be met by job preservation, that is, the number of existing employees in the troubled business has been or will be maintained at no less than the pre-investment level for a period of at least two years.
The qualifying U.S. employee refers to the U.S. citizen, lawful permanent resident or other immigrant authorized to work in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or a person residing in the United States under suspension of deportation. However, the immigrant investor; his or her spouse, sons, or daughters; or any foreign national in any nonimmigrant status (such as an H-1B nonimmigrant) or who is not authorized to work in the United States do not qualify.
Last but not least, although non-individuals do not qualify for being the EB-5 investors, a joint investment in a new commercial enterprise consists of multiple investors is allowed, provided each individual respectively meet the qualification (i.e. investment which meets the minimum investment amount and creates job opportunities required).
To qualify for EB-5 Regional Center Program, the investor must demonstrate that:
The Regional Center Program allows the investors to contribute at least $0.5 million in capital to in targeted employment areas or USCIS-approved regional center, which creates at least ten full-time jobs for the U.S. workers. It specifically set aside 3,000 out of 10,000 annual EB-5 Immigrant Investor Program Visa cap to encourage investment in designated regional centers located in specified geographic area.
Generally, the minimum amount invested is $1 million while if the investment is made in a commercial entity located in a targeted employment areas— rural or otherwise high-unemployment areas— where almost all regional centers are located, the minimum investment amount would be lower to $0.5 million.
Like Direct Investment Program, such investment is subject to the requirements to be at risk, from legitimate fund resource and through legitimate path and two-year time constraint.
However, it is noted that the form of capital under the Regional Center Program, unlike the Direct Investment Program where more variety of capital is invested, is limited to cash or cash proceeds of indebtedness since the establishment of joint commercial enterprise needs a combined loan in cash.
Under the Regional Center Program, investors invest in the Regional centers, which are management companies vetted by USCIC to execute the EB-5 projects in any number of industries, rather than their own new commercial enterprise. Since investors do not have to serve any managerial or policy forming role, it is ideal for those whose primary goal is U.S. residency invest and have no desire to closely engage in management of business and tie to where the commercial enterprise is located.
Targeted Employment Areas and Regional Centers
The targeted employment areas refer to the geographic regions in the United States which is either rural (defined as areas other than the metropolitan statistical areas or with a population less than 20,000) or areas in a county or metropolitan statistical location that has a population of 20,000 residents or more but with high unemployment rates at or exceeding 150 % national average.
Regional centers, almost all of which are in the targeted employment areas (with lower required investment amount), are publicly or privately run business entities with USCIS approved purposes of promoting economic growth, creating jobs, improving regional productivity and increasing capital investment to operate the EB-5 projects. Regional centers would either acts under equity model to direct their projects through investment as equity, operate as a general partner with investors as limited partners, or acts under loan model to pool the investment and loan money to the third party’s projects. It is noted that since regional centers are pre-approved by USCIC, they would ensure to meet the requirements of visa petition such as job creation, management and new commercial enterprise and investors thus need not to further prove and face less risk of losing investment.
Direct or Indirect Job Creation
The Regional Center Program offers a less strict job creation requirement. Besides jobs directly created between the enterprise and employee, those ancillary job opportunities indirectly created as a result of the enterprise and induced ones which are job opportunities created within the greater community where the commercial enterprise is located in and created as a result of income being spent by EB-5 project employees also count.
The investors’ spouses and children under the age of 21 are eligible to receive permanent residency under the EB-5 Immigrant Investor Program to accompany or follow the investors, so long as the investors and their spouses are married at the time when the investors firstly admit to the United States with a conditional permanent resident status or at the end of two year probationary period. However, the Common Law marriage is not acceptable and a derivative beneficiary relationship would not be recognized accordingly.
It is noted that considering the length of processing time under the EB-5 Immigrant Investor Program, the Child Status Protection Act allows the time a visa petition was pending to be subtracted from the biological age of an applicant for permanent residence so that the applicant is not penalized for the time in which USCIS did not adjudicate the petition. Pursuant to which investors’ unmarried children under age 21 at the time of the I-526 filing while reach age 21 during the processing period still qualify as a derivative beneficiary of petition.