LEARN FROM A BOARD CERTIFIED SPECIALIST HOW TO OBTAIN A GREEN CARD WITH AN EB-5 VISA, OR HOW A U.S. BUSINESS CAN RAISE EB-5 CAPITAL.
Investment Immigration today is more popular than it has ever been over the last two decades. Administered by U.S. Citizenship and Immigration Services or USCIS, the Immigrant Investor Program and the EB-5 Visa were created by the U.S. Congress in 1990 in order to stimulate the U.S. economy through job creation and capital investment by foreign investors. The visa category was originally labeled under the title of “Employment Creation” by the Immigration Act of 1990, or IMMACT90. The EB-5 program initially allowed the Immigration and Naturalization Service (“INS”) to lower the minimum investment from $1 million to $500,000 in targeted areas such as a rural area (where less than 20,000 people reside outside of an MSA as defined by the U.S. Census) or an area which has experienced high unemployment (of at least 150 percent of the national average rate). These targeted areas are known as Targeted Employment Areas or TEA’s. Today, due to changes in the regulations, the authorized minimum investment amount is $800,000 in TEA and infrastructure designated areas, and $1.05 million in other areas.
Not satisfied with the success of the program, in 1992 the U.S. Congress created a pilot program in order to allow for the establishment of private enterprises known as “regional centers.” Based on the revised U.S. law in 1992, Regional Centers would be allowed to promote economic growth and job creation in specific geographic and industrial areas. Uniquely, the Regional Center Program provided that private enterprises could count the required job creation based on indirect and induced effects in the economy. This opened the door for reasonable economic studies to be created to scientifically prove what economic impact a business could have.
Initially called the Regional Center Pilot Program, Congress continued to reauthorize the program for many years. Since Congress typically renewed the EB-5 Regional Center Program, in 2012 Congress even changed the name of the “pilot” program to the Regional Center Program, removing the word “pilot” from its title. The EB-5 Regional Center Program also created a set-aside of 3,000 visas for EB-5 investments made in Regional Centers designated by USCIS. The belief was that the U.S. Congress wanted to encourage investors to invest in regional centers in the event the “basic” Direct EB-5 part of the program was overused. In essence, in the 20 years since the regional center program was created, it has undergone many administrative policy changes, making it more accessible to investors.
While the EB-5 program has evolved over time, its core mission has not changed. The EB-5 visa can benefit businesses and developers who are in search of capital for their projects, as well as the individual investors who can seek a green card based on a $800,000 to $1.05 million investment. (The investment amount was previously $500,000 to $1 million, but has since been increased.) The EB-5 Visa program for developers and businesses allows them to pool foreign investment capital contributions for use in commercial projects. Individual investors also have options, depending on whether they would prefer to be directly involved in their own commercial enterprise and oversee the necessary job creation on a daily basis, or whether the investor prefers to pool their capital with other investors in a USCIS-designated Regional Center project.
At our law firm, we have unique perspective and experience because we have represented both large commercial businesses seeking foreign capital and individual investors applying for EB-5 visas. With nearly 15 years of experience in the complex business and economic structuring needed to qualify a U.S. business for the EB-5 program—as well as for individual investors in the documentation of their lawful source of funds—our team and managing partner, Michael A. Harris, has the experience to bring your plans to success. Mr. Harris has served as counsel for complex EB-5 commercial real estate and industrial development projects seeking to raise hundreds of millions of dollars. He has been a member of the Invest In the USA (IIUSA), which is a national trade association for the EB-5 Regional Center Program. Please read through our site for additional information about the EB-5 program, or contact our team for an initial review of your EB-5 plans.
Summary of the EB-5 Visa Program
Whether in the regional center program or as an individual investor, all EB-5 Visa investors are required to invest in a new commercial enterprise that was:
- Established after November 29, 1990, or
- Established on or before November 29, 1990, that is either:
- 1. Purchased by the EB-5 investor and then results in the existing business being restructured or reorganized in such a way that a new commercial enterprise results; or
- 2. Expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs.
The type of business required by USCIS involves a business activity which generates a profit and created as either a:
- Sole proprietorship
- Partnership (whether limited or general)
- Holding company
- Joint venture
- Business trust or other entity, which may be publicly or privately owned
Job Creation Requirements
One of the fundamental aspects of the EB-5 Visa Program is job creation. This means that jobs are created or preserved for at least 10 full-time jobs for qualifying U.S. workers within two years (or under limited circumstances, within a reasonable time after the two-year period) of the EB-5 investor’s admission to the U.S. as a Conditional Permanent Resident. Each EB-5 investor’s funds must lead to either direct job creation, or indirect/induced job creation (if the investment is affiliated with a USCIS approved regional center). Direct jobs are actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB-5 investor has directly invested his or her capital. Indirect/induced jobs are those jobs shown to have been created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor.
As an exception under the traditional direct or indirect job creation, EB-5 investors may also seek to be credited with preserving jobs in a troubled business. This is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to date of investment (or filing) by the EB-5 investor. The loss for this period must be no less than 20 percent of the business’ net worth prior to the loss.
Capital Investment Requirements
The EB-5 Visa Program also mandates that capital be invested into the commercial enterprise. This means cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the EB-5 investor (but not the EB-5 investment property). It is important to note that investments secured by debt require that the EB-5 investor be personally and primarily liable for the indebtedness. All capital shall be valued at fair-market value in United States dollars. Further, USCIS will require that all funds or assets acquired for the investment be proven to be obtained through lawful means. Most investors will invest cash into their EB-5 projects.
Each investor must invest the minimum qualifying amount in the United States. The amount required is $1.05 million unless the business where the investment is being made is in an Infrastructure project or Targeted Employment Area (High Unemployment or Rural Area) or TEA. As such, if the investment is in a TEA, then the minimum qualifying investment is $800,000.