EB-5 Immigrant Investor Program
This visa category is also referred to as the fifth employment-based preference (“EB-5 visa”) category. Ten-thousand (10,000) EB-5 visas per year are available for immigrants seeking to enter the United States for the purpose of investing at least $1 million in a new commercial enterprise. However, the minimum qualified investment in areas of high unemployment or rural areas in the United States is reduced to $500,000. Each immigrant’s qualified investment must benefit the US economy and create or save at least 10 full-time jobs for American citizens, lawful permanent residents, or other employment-authorized aliens. The EB-5 visa is an immigrant visa and, if approved, shall directly lead to a US Green Card. Unlike other visa categories, the EB-5 visa does not require any specific education, job offer, family ties, or English language ability. This immigrant category should be distinguished from the Treaty Investor E-2 visa, which is a nonimmigrant category.
In 1990, the US Congress established the EB-5 Immigrant Investor Visa to help grow the economy through foreign investment and job creation. The minimum required investment amount is set at $1 million. In 1992, in an effort to increase interest in the visa, Congress authorized the EB-5 pilot program, allowing for a reduced investment of $500,000 for businesses located in Targeted Employment Areas (“TEA”).
Today, the EB-5 visa is best categorized as having two distinct investment paths. The most popular choice among EB-5 investors is the reduced $500,000 investment in a Regional Center project. Regional Centers must apply and be approved for designation through USCIS. Once approved, EB-5 projects located in Regional Centers may take advantage of certain benefits not available to direct EB-5 investors.
Immigrants wishing to take a more active role in their venture may choose the direct EB-5 investment path. Direct investors are typically involved in the day-to-day management of their business. However, certain projects do allow for the investor to participate in the business through a policy-making role instead of active management. As direct EB-5 investments are not located in TEAs, the investor must put forth at least $1 million. Since the majority of direct EB-5 projects require the investor take on a larger role in the company, this option is best reserved for business savvy immigrants and those with prior experience running a business in the United States.
EB-5 Regional Center Investment
The EB-5 Regional Center (“RC”) Program was established in 1992 to encourage foreign investment into the United States. Unlike the Direct EB-5 scheme, the RC path is authorized to include both “direct” and “indirect” jobs to meet the job creation requirement.
It is important to emphasize that RCs currently allow for the reduced investment amount of $500,000, making it an attractive option for prospective immigrants seeking permanent resident status in the US.
Choosing an EB-5 RC investment does not require the investor manage the day-to-day operations of the business. This option provides the immigrant freedom to live and work anywhere in the United States, regardless of where their investment is located.
This option is ideal for the majority of prospective EB-5 investors, as the immigrant is not directly responsible for maintaining EB-5 immigration compliance. Further, running a business in the United States may not operate the same as in the immigrant’s home country – allowing for avoidance of any US business cultural misinterpretations.
To learn more about the EB-5 Regional Center Investment process, please visit our dedicated EB-5 website by clicking HERE.
EB-5 Direct Investment
The Direct EB-5 investment is the original EB-5 program created by Congress in 1990. This option is suited for immigrants wishing to invest a minimum of $1 million and take a more active role in the investment.
While many potential immigrants choosing the Direct EB-5 path create their own business in the United States, some invest in “turn-key” projects seeking a foreign investor. The options are vast and returns vary depending on the individual project or business.
Investors not utilizing a turn-key project and opting to create their own business are recommended to have previous experience managing a business, preferably in the United States. One advantage of a Direct EB-5 investment is the long-term income generating potential depending on the success of your business. Turn-key projects are also significantly smaller than Regional Center investments, and often include only one immigrant investor. Moreover, the immigrant will have a policy making role in the business, allowing them to influence the direction and goals of the company.
To learn more about the Direct EB-5 Investment process, please visit our dedicated EB-5 website by clicking HERE.
EB-5 Visa Process
Ortega-Medina & Associates offers a free initial telephonic consultation for potential clients interested in the EB-5 Investor Visa. Once an investor decides to retain our firm, we then guide them through the entire visa process. The following outlines the typical timeline for an EB-5 Investment. Please note, each individual investor’s case is unique, and processing times may vary depending on the USCIS.
- Retain Ortega-Medina & Associates
- Selection of EB-5 Visa Project
- Collection of Source of Funds Documentation/Evidence
- Preparation of I-526 Petition and Supporting Evidence
- Adjudication with the USCIS (13.8 Months as of 16 November 2015)
- Once approved, if investor is in the United States, preparation and filing of Adjustment of Status
- Once approved, if investor is abroad, preparation and filing for Consular Processing
- Upon arrival in the US, investor receives Conditional Permanent Resident Card (“Green Card”)
- Between 21 and 24 months, retain Ortega-Medina & Associates to prepare and file Petition to Remove Conditions (15.5 Months as of 16 November 2015)
- Once approved, investor receives full-fledged renewable Permanent Resident Card (“Green Card”)
EB-5 Source of Funds & Investment Guarantee
One main aspect of the EB-5 Immigrant Investor Visa is the requirement to prove the invested money was lawfully obtained. If an investor fails to prove their money came from a lawful source, the petition may be denied. Unlike the nonimmigrant E-2 Investor Visa, the source of funds threshold for an EB-5 Visa is much greater.
USCIS requires an investor to trace the invested funds from their origin, through to the investment in their selected EB-5 project. The specific documentation and evidence required depends greatly on where the individual investor obtained their funds. For example, if the investor obtained their investment funds through the sale of property, depending on how long ago the investor obtained the property, documents required with the EB-5 Visa may include: original purchase contract, sales contract, investor bank records attesting to funds received, investor bank records attesting to transfer to the EB-5 project, and personal income tax returns (if applicable).
As such, preparation of the EB-5 filing package requires significant involvement from the immigrant investor. Once a determination is made regarding the most suitable path for the source of funds, Ortega-Medina & Associates will provide the investor with a list of required documents. It is essential the EB-5 investor provide the firm with all requested evidence to ensure a timely and proper filing.
Along with proving a lawful source of investment funds, the EB-5 project or venture may not be guaranteed. The money used for the investment must be considered ‘At Risk’ and cannot simply be placed in a business bank account while the petition is being adjudicated. Ortega-Medina & Associates advises clients to be cautious when dealing with EB-5 projects that “promise” or guarantee an investor will receive their full investment amount back in a specific time frame. While reputable EB-5 projects make every effort to pay investors back, like any other investment, there is an element of risk involved.
Frequently Asked Questions
Please click HERE to visit our dedicated EB-5 site with common frequently asked questions.
Definition of Capital
The EB-5 visa investor must establish the business and have invested, or be in the process of investing, the required capital after 29 November 1990. The term “capital” is defined in the regulations as cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien provided that he or she is personally and primarily liable and the assets of the new commercial enterprise are not used to secure any of the indebtedness. The definition specifically excludes capital acquired by unlawful means.
Although not specifically referred to in the Immigration and Nationality Act (“INA”), §204.6(e) of Title 8 of the Code of Federal Regulations (“8 CFR”) states that indebtedness secured by assets owned by the alien entrepreneur may also be considered capital. The Department of State (“DOS”) also takes the position that “investment” includes the investment of debt, provided that the EB-5 visa investor is personally and primarily liable for the debts and that the assets of the EB-5 visa enterprise are not used to secure any of the indebtedness.
Amount of the EB-5 Visa Investment
The basic EB-5 visa investment amount is $1 million. The Attorney General has the authority to increase, by regulation, the required investment up to $3 million for a business established in a “high employment area”. “High employment area” means part of a metropolitan statistical area that at the time of the investment is not a targeted employment area and is an area with an unemployment rate significantly below the national average. However, the required EB-5 visa investment in such cases is still currently $1 million.
The Attorney General also has the authority to reduce the required EB-5 visa investment to as low as $500,000.00 for a business established in a “targeted employment area”. Targeted employment areas include:
- rural areas, defined as any area other than one within a metropolitan statistical area or within the boundary of a city or town with a population of 20,000 or more; and
- areas having an unemployment rate that is at least 150% of the national average.
The current regulations set the required EB-5 visa investment for a targeted employment area at $500,000.00.
EB-5 visa qualifying investments may be pooled with investments of others seeking permanent investor EB-5 visas. However, each EB-5 visa investor is required to invest the applicable statutory amount.
Job Creation in EB-5 Visa Cases
As mentioned above, the EB-5 visa qualifying investment must create at least 10 full-time jobs for American citizens, lawful permanent residents or other immigrants lawfully authorized to be employed in the United States. This includes conditional residents, temporary residents, asylees, refugees, and recipients of suspension of deportation.
The 10 positions must be full time. This means employment of a qualified employee in a position that requires a minimum of 35 working hours per week. Although two employees may share a full-time position, part-time employment is specifically excluded. Therefore, a combination of two or more part-time positions will not qualify for EB-5 visa purposes, even if they collectively meet the 35 hour per week requirement.
Should an immigrant invest through a designated EB-5 Regional Center, they may count indirect jobs to meet the 10 position requirement. The Regional Center investment provides a significant advantage by allowing this indirect job count.
In calculating the required number of employment positions created, an EB-5 visa investor may count family members who are employed in a new enterprise. However, the investor and his immediate family are excluded.
The term “employee” is defined as an individual who: (a) provides services or labor for the new commercial enterprise, and (b) receives wages or other remuneration directly from the new commercial enterprise. Accordingly, independent contractors will not qualify as employees for the purposes of the EB-5 visa investor category.
A new commercial enterprise established through an EB-5 visa qualifying investment in a “troubled business”, as defined in the regulations, will also qualify if the number of existing employees is being or will be maintained at no less than the pre-investment level for at least two years. The term “troubled business” means a business that has been in existence for at least two years, has incurred a net loss for accounting purposes during the twelve-month or twenty-four month period prior to the priority date on the alien’s petition and the loss for such period is at least equal to 20% of the troubled business’ net worth prior to such loss.
Where the alien’s EB-5 qualifying investment amount is pooled with investments of other aliens seeking EB-5 visas, all of the new jobs created by the new commercial enterprise will be allocated among those aliens.
Creating an EB-5 Qualifying New Commercial Enterprise
The regulations permit three methods of establishing an EB-5 visa qualifying new commercial enterprise:
- the creation of an original business;
- the purchase of an existing business and simultaneous restructuring or reorganization such that a new commercial organization results; or
- expansion of an existing business through the investment of the required amount, so that a substantial change in the net worth or number of employees results from the investment of capital. The term “substantial change” is defined to mean a 40% increase in either the net worth or number of employees so that the new net worth or number of employees equals at least 140% of the business’ pre-expansion net worth or number of employees.
According to the INA, the EB-5 investor must have made the investment after 29 November 1990. Any for-profit entity formed for the ongoing conduct of lawful business may serve as a commercial enterprise, including sole proprietorships, partnerships, holding companies, joint ventures, corporations, business trusts, etc. However, the term “new commercial enterprise” does not include noncommercial activities, such as owning and operating a personal residence.
The EB-5 Visa Alien’s Role in the Business
An EB-5 investment within a USCIS designated Regional Center allows the immigrant investor to make a passive investment while still qualifying for a Green Card. Should an immigrant wish to make a direct EB-5 investment, it must be established that the alien investor will either have day-to-day management control of the business or act as a policy maker. Pursuant to 8 CFR §204.6(j)(5), if the investor holds a position as a corporate officer of board member or, in the case of a limited partnership, is a limited partner under the provisions of the Uniform Limited Partnership Act (“ULPA”), this will satisfy the EB-5 visa management requirement.
Conditional Permanent Residence for EB-5 Visa Holders
To deter fraud, EB-5 investors, their spouses and dependent children are subject to conditional permanent residence for a two-year period. The EB-5 alien must file a petition to remove the conditions during a 90 day period prior to the second anniversary of the alien’s lawful admission as a permanent resident. US Citizenship and Immigration Service (“USCIS”) will examine the business at the end of the two year period to determine whether or not the alien has complied with all of the requirements.
The EB-5 alien must also show that he or she “sustained the actions required for removal of the conditions” during his or her residence in the United States. An EB-5 entrepreneur will have met this requirement if he or she has “substantially met” the capital investment requirement and has continuously maintained this investment during the conditional residence period. The EB-5 entrepreneur’s residence may be terminated at the end of the two-year period or earlier if it is found that the EB-5 business was not established, or was established solely to evade immigration laws or that the requirements were otherwise violated.
All-Inclusive Legal Services for the EB-5 Immigrant Entrepreneur
In addition to representing international investors and expansionists before the US government, Ortega-Medina & Associates’ all-inclusive fee structure can include identifying an appropriate EB-5 project based on the immigration guidelines, escrow negotiations, incorporating the new US enterprise, obtaining a Federal Employer ID number, locating a temporary or permanent business address for the company (including telephone and fax number), obtaining the appropriate business licenses, and a complimentary one-hour, post-visa consultation with our firm’s business and employment law expert.
Ortega-Medina & Associates has over ten years experience dealing with similar business visa cases. We have experienced success in many cases that were considered hopeless by other law firms. If we decide to take on a case, it is because we feel it stands a good chance of succeeding. If your EB-5 visa is denied, for any reason other than a determination that you are inadmissible for reasons of criminality or fraud, we will attempt to troubleshoot your case at no additional cost to you. Please contact us so that we can help you determine whether you are an appropriate candidate for the EB-5 visa category