*Note: Effective on November 21, 2019, USCIS has issued new regulation which increased the minimum investment amount from $1MM USD to $1.8M USD (or in some cases from $500,000 to $900,000 in a targeted employment area). All investment amount discussed in the following passages should be changed accordingly.
The U.S. immigrant investor program was created by Congress in 1990, to attract immigrant investors to the United States to invest capital, create jobs and stimulate the economy. This category is also referred to as the fifth employment-based preference (“EB-5”). 10,000 visas per year are available under this category for immigrants seeking to enter the United States for the purpose of investing at least $1MM USD (or in some cases $500,000 in a targeted employment area (see *Note above) in a new commercial enterprise which will benefit the U.S. economy and create at least 10 full-time jobs for U.S. citizens, lawful permanent residents or other employment-authorized aliens. There are other provisions such as the investment must be maintained, that the investment creates regional productivity, and others. However the main requirement is the creation of ten American jobs.
The EB-5 investor green card program is divided into two distinct phases. In the first phase the immigrant investor is granted a conditional green card, valid for two years. If after two years the investor has created the requisite jobs and maintained the investment the permanent residence is made unconditional and permanent.
Due to recent regulatory changes and development in CIS’ EB-5 policy and processing, foreign investors now have two ways to pursue EB-5 permanent resident applications: through an individual program or through an investment into a federally approved Regional Center.
MONEY MUST BE FROM LEGITIMATE SOURCES – The investor must be able to show the legal source of investment capital.
REQUIRED INVESTMENT – The investment required to be made in a commercial enterprise varies depending on where the commercial enterprise is located and the unemployment rate in the geographic area. In most areas a qualifying investment is US$1 million. A qualifying investment in “targeted employment areas” is only $500,000. In virtually all Regional Centers, the investment amount is US$500,000 (see *Note above)
MUST CREATE 10 FULL-TIME JOBS – The jobs may be held by any non-immediate family member including U.S. citizens, permanent residents, or other lawfully authorized workers to be employed in the United States.
MONEY MUST BE PUT AT RISK – The investor must irrevocably commit his/her assets to the enterprise. May not design an arrangement in which the full amount is not put toward the investment or not at risk. “Capital” is defined by the INS as cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien, provided the alien is personally and primarily liable.
THE INVESTOR MUST QUALIFY AS AN ACCREDITED INVESTOR – An “accredited” investor, as that term is defined by Regulation D of the Securities Act, means any investor meeting at least one of the following conditions: 1) any natural person whose individual net worth (or joint net worth with that person’s spouse, if applicable) at the time of purchase exceeds $1,000,000; or 2) any natural person who had an individual income in excess of $200,000 or joint income with that person’s spouse in excess of $300,000 in each of the two most recent years and who reasonably expects an income in excess of $300,000 in the current year; or 3) any other “accredited investor” as that term is defined in Regulation D as adopted by the Securities and Exchange Commission; or 4) Has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in the Units, and of making an informed investment decision, and does not require the use of a Purchaser Representative.
ACTIVE PARTICIPATION IN THE OPERATIONS OF THE BUSINESS – 6)The alien must be actively involved in the management of the business, either through the exercise of day-to-day managerial control, or through policy formulation.
MUST BE ACTIVE ENTERPRISE – A commercial enterprise is any for profit activity formed for the ongoing conduct of lawful business. It may be a sole proprietorship, a partnership (limited or general), a holding company, a joint venture, a corporation, a business trust, or other entity that may be publicly or privately owned. A commercial enterprise does not include a non-commercial activity such as owning and operating a personal residence.
Special rules apply where the investment is made within an approved “Regional Center”, which is defined by the regulations as “any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity. The EB-5 Regional Center Program sets aside 3,000 green cards each year for foreign investors who invest in designated Regional Centers.
In comparison with the individual program, the major difference in documentation and thus the advantage and benefit for the EB-5 Regional Center program are as follows:
Indirect job creation is allowable
The investment in the Regional Center has been pre-approved by the USCIS with respect to the qualifying amount of the investment and with respect to the job creation requirement. This eliminates the need to deal with the many complicated issues involved in an individual EB-5 petition for which the investment enterprise has not been pre-approved. As a result, the government generally expedites adjudication of this type of investor petition.
Investors are not required to manage their investment on a daily basis so they may pursue other professional and personal ventures. There is no minimum education requirement and no business or management experience requirement.
For the Individual program, EB-5 “Capital” may include cash and cash equivalents, equipment, inventory and other tangible property. Investor’s contribution of cash proceeds from a loan may be considered capital, provided assets of commercial enterprise are not used to secure repayment by investor.
For the “Regional Center” programs, almost all of them require cash investment, including investor’s contribution of cash proceeds from a loan that was secured by investor’s personal property.
The law requires that the EB-5 investment must be “at risk”, and that the investor must irrevocably commit his/her assets to the enterprise; may not design an arrangement in which the full amount is not put toward the investment or not at risk. Further, not to jeopardize the investor’s green card status, the investment must be maintained at the job-creation enterprise for at least two years when the investor was holding the two-year conditional green card, and could only be withdrawn until after the investor was granted permanent green card.
With respect of the risk and return of the EB-5 investment, for individual program, it all depends on the specifics of each project. For a “Regional Center” program, the investor is usually required to commit the investment of $500,000, (see *Note above) for 5 to 6 years; during which time, investor may be entitled for annual dividend distribution, if any. At the end of 5-6 years, depending on the “Regional Center”, there will be an exit strategy set for the investor to redeem his/or her investment in different forms, such as cash redemption, or ownership of real estate, or company stock.
With a 100% approval rate, our immigration attorneys have developed an acute and particular expertise in representing individual investors towards obtaining EB-5 immigrant visas through Regional Center projects and through investments in their own individual project. We also represent developers, private equity and organizations in successful applications for designation of EB-5 Regional Centers, and have served as lead designated immigration counsel to established Regional Centers and their investors in processing I-526 and I-829 visa petitions.
U.S. Immigration Law is ever changing and complex. Qualifying a person for EB-5 status is one of the most complicated subspecialties in immigration law. A sophisticated knowledge of corporate, tax, investment, securities and immigration law are all required.
Regional Centers compete strongly for foreign national investment funds. It is Critical that Investors retain a knowledgeable Law Firm to represent THEM when analyzing the Regional Center Options.
Please Contact our Office. You will receive assistance and consultation from Lawyers familiar with the Investment programs. Take advantage of our FREE on-line case evaluation service: