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) 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 United States’ intricate and complicated set of immigration laws and policies require a competent strategist that will articulate legal arguments clearly. Navigating the particulars requires an intimate understanding of the law, and the impact of every action or inaction an immigrant might take in the legal journey required to become a Legal Permanent Resident in the United States. Discerning these nuances is what allows CMA to provide responsible risk management to EB5 Investor Immigrants.
Frequently Asked Questions about EB-5 Investor Green Card:
1. What procedures are involved for applying to become an EB-5 Investor?
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.
2. What types of EB-5 Investment applications are available for selection?
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.
3. What are the basic requirements for an EB-5 Investor?
1). MONEY MUST BE FROM LEGITIMATE SOURCES - The investor must be able to show the legal source of investment capital.
2). 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.
3) 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.
4) 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.
5) 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.
6) ACTIVE PARTICIPATION IN THE OPERATIONS OF THE BUSINESS - 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.
7) 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.
4. What is a “Regional Center”? What are the differences between the Individual Program and the “Regional Center” Program?
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:
1) Indirect job creation is allowable
2) 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.
3) 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.
5. What types of capital qualifying for EB-5 Investment?
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.
6. How long will it take to apply for an EB-5 green card?
Basic EB-5 procedure involves two steps. The first is to obtain approval of an I-526 conditional immigrant petition. If filing through a designated “Regional Center”, the current average processing time is 12-15 months. It will take longer if the EB-5 application is through the individual program, taking about 14-18 months. The second step is for an immigrant visa application. When the investor lives outside the U.S., this process will be completed at the U.S. Embassy at the investor’s country of residence. It usually takes approximately 4-5 months. If the investor was within the U.S. with legal non-immigrant status, the process will be completed through an adjustment of status, which takes between 4-5 months.
7. What is the total cost for an EB-5 investor?
If through the “Regional Center” program, in addition to the basic $500,000 investment, there will be an administrative fee charged by each “Regional Center” ranging from $50,000 to $60,000, plus an immigration attorney fee and government filing fee. For the individual program, there are no administrative fees, but there will be an additional cost affiliated with the expert services required for preparing a detailed business plan and proposals.
8. Is there any risk for EB-5 investment, and when and how can the investor withdraw his/her EB-5 investment?
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, 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.
9. How many “Regional Centers” received the CIS designation, and are these “Regional Centers” all the same?
In recent years, the applications for designation as an EB-5 “Regional Center” have been numerous. Currently, there are approximately 900 designated Regional Centers and the number continues to grow yearly. Of those approved Regional Centers, some of them have long and well-established track records; others are newly established and relatively untested; some Regional Centers have become inactive since original designation and some have not been recertified by the USCIS. Because of the importance of the Regional Center’s continued existence throughout the condition removal process, and the importance of the predicted job creation, indirect or direct actually occurring in order to accomplish condition removal, it is vitally important for the investor to choose the optimal Regional Center both from immigration standpoints and for purposes of addressing individual investment desires.
It is also noted, however, to be a USCIS designated Regional Center, does not mean that every Regional Center is the same. As a matter of fact, while sharing some common features, such as a lower investment amount requirement, and an option of redemption of the investment upon condition removal in 5-6 years; each Regional Center can differ significantly in many other aspects, such as their investment structure (debt based or equity based, secured or non-secured), cost and fee schedule (ranging from $50,000 to $60,000), refund policy (in the event of I-526 denial, full refund or partial refund), past track records in EB-5 approvals, years of experience of the management in Regional Center investor programs, form of future redemption of the investment upon condition removal, and so forth.
10. What does the CMA law firm offer in Representing EB-5 Investors and EB-5 Regional Centers?
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.
11. FOR EB-5 INVESTORS, Why Should You Retain the CMA Law Firm Before You Start Your EB-5 Application?
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.
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