EB5 INVESTMENT IMMIGRATION / INVESTOR VISA

The EB5 Immigrant Investor Visa was created in 1990 to stimulate the US economy through job creation and capital investment by foreign investors. The EB5 visa provides a method for foreign nationals who invest $1 million or at least $500,000 in a Targeted Employment Area (i.e., high unemployment or rural area) in the United States of obtaining a green card.

EB5 Overview

The law allocates 10,000 EB5 immigrant visas per year for qualified individuals seeking permanent resident status on the basis of their engagement in a new commercial enterprise and employing at least 10 full-time US workers.

There are two distinct EB5 pathways for an immigrant investor to gain lawful permanent residence for themselves and their immediate family, (1) Traditional Program and (2) the Regional Center Program. Both programs require that the immigrant make a capital investment of either $500,000 or $1 million (depending on whether the investment is in a Targeted Employment Area or not) in a new commercial enterprise located within the United States.

Traditional EB5 Visa Program:

In order for applicants to qualify under the Traditional EB5 Visa program, they must meet the following three (3) requirements:

• Make an investment in a new commercial enterprise

• Make an investment of at least $1 million into that enterprise

• Create employment for at least 10 full-time US workers within 2 years

The investment may consist of various forms of capital, including cash, equipment, inventory, property, and other tangible equivalents. An investment amount of $1 million is generally the minimum.

EB5 Regional Center Pilot Program:

Of the 10,000 EB5 investor visas available annually, 3000 are set aside for those who apply under a “Pilot Program.” The pilot program provides for investments that are affiliated with an economic unit known as a “Regional Center.” This involves a passive investment of $500,000 made in a Targeted Employment Area (TEA) within a Designated Regional Center.

• A targeted employment area (TEA) is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate.

• A rural area is any area outside a metropolitan statistical area and outside the boundary of any city or town having a population of 20,000 or more.

• The Pilot Program is a program that was created by Congress in 1992 to broaden the appeal of the EB5 visa.

• A Regional Center is defined as any economic unit, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment.

The EB5 visa requires the applicant to be involved in the business policy management. This policy management requirement is minimal in that the investor can be a "limited partner" and still qualify for EB5 visa as long as the limited partners have a policy-making role. Thus, for those who are not interested in day-to-day management or running an active business, Regional Center programs offer a more acceptable inactive form of investment.

When making an investment in a new commercial enterprise affiliated with a US Citizenship and Immigration Services (USCIS)-designated regional center under the Regional Center Pilot Program, an immigrant investor may satisfy the job creation requirements through the creation of either "direct" or "indirect" jobs. Notably, an immigrant investing in a new commercial enterprise under the Traditional Program may only satisfy the job creation requirements through the creation of direct jobs. The Regional Center Program removes the employee requirement of the Traditional program and replaces it with a less restrictive "indirect employment creation," which allows the investor to qualify by proving a combination of 10 direct and/or indirect employees.

• Direct jobs are actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB5 investor has directly invested his or her capital.

• Indirect 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 EB5 investor.

Alien investors must:

1. Demonstrate that a "qualified investment" is being made in a new commercial enterprise located within an approved Regional Center; and

2. Show, using reasonable methodologies, that 10 or more jobs are actually created either directly or indirectly by the new commercial enterprise through revenues generated from increased exports, improved regional productivity, job creation, or increased domestic capital investment resulting from the pilot program.

The EB5 Regional Center Program Benefits

• A direct route to obtaining a Green Card

• No day-to-day business management

• Permanent residency in the United States for you, your spouse, and any children under 21

• Live, work, and retire anywhere in the United States

• Become eligible to apply for US citizenship after 5 years of being a green card holder

Each Regional Center program must be pre-approved by the USCIS in order to be eligible to qualify for EB5 Green Cards.

Advantages of the EB-5 Visa Program

• The EB5 Visa (Green Card) allows you and your family to live, work or retire anywhere within the United States.

• No Quota Backlogs. There are many delays and backlogs for employment and family based green card categories, but there is no backlog for the EB5 Investor Visa category.

• No Sponsor Needed. Foreign investors use their own personal funds and do not require sponsorship from either an employer or a family member.

• Regional Center Investment Programs. Many of the approved EB5 regional centers allow foreign investors to invest in prearranged programs for only $500,000 plus administrative fees.

• Permanent Residency. Foreign investors may enter a limited partnership with few or no day-to-day management responsibilities for their investment program. This allows foreign investors to live and work in the United States in any capacity.

Eligibility Criteria for Permanent Residence

You may be eligible to receive permanent residence based on investment if:

1. You have an approved Form I-526, Immigrant Petition by Alien Entrepreneur;

2. You are admissible to the United States; and

3. An immigrant visa is immediately available.

Eligibility Criteria for EB5 Visa

Permanent resident status based on EB5 eligibility is available to investors, either alone or coming with their spouse and unmarried children under 21. Eligible foreign nationals are those who have invested, or are actively in the process of investing, the required amount of capital into a new commercial enterprise that they have established. They must further demonstrate that this investment will benefit the US economy and create the requisite number of full-time jobs for qualified persons within the US.

You may be eligible for EB-5 immigrant visa:

1. If you establish a new commercial enterprise by:

• Creating an original business;

• Purchasing an existing business and simultaneously or subsequently restructuring or reorganizing the business such as that a new commercial enterprise results; or

• Expanding an existing business by 140 percent of the pre-investment number of jobs or net worth, or retaining all existing jobs in a troubled business that has lost 20 percent of its net worth over the past 12 to 24 months;

2. If you have invested, or are actively in the process of investing, in a new commercial enterprise:

• At least $1 million; or

• At least $500,000 where the investment is being made in a “targeted employment area,” which is an area that has experienced unemployment of at least 150 percent of the national average rate or a rural area; and

3. If your engagement in a new commercial enterprise will benefit the U.S. economy to:

• Create full-time employment for at least ten qualified individuals; or

• Maintain the number of existing employees at no less than the pre-investment level for a period of at least two years, where the capital investment is being made in a ‘troubled business’, which is a business that has been in existence for at least two years and that has lost 20 percent of its net worth over the past 12 to 24 months.

You May be Eligible to Receive Conditional Permanent Residence

The EB5 investor and his or her derivative family members are eligible for conditional permanent residence for a 2-year period upon the approval of the I-485 adjustment of application or upon entry into the United States with an EB5 immigrant visa.

You Are Eligible to Become a Permanent Residence

After 2 years, the entrepreneur is eligible to apply for removal of the conditional status. To do that, the entrepreneur must have continuously maintained the investment during the conditional residency period. The entrepreneur's residence may be terminated if it is found the business was not established or was established solely to evade immigration laws. The USCIS will examine the business at the end of the 2-year period to determine whether or not the individual has complied with all of the EB5 visa's requirements.

In order to become a lawful permanent resident, eligible investors must file I-829, Petition by Entrepreneur to Remove Conditions. The I-829 petition must be filed within 90 days before the second anniversary of the Investor’s admission to the United States as a conditional resident. The petition will be granted if the investor has fulfilled the EB5 requirements in accordance with the business plan in the approved I-526 petition. Failure to file I-829 petition will result in automatic termination of the conditional resident’s status and will initiate deportation proceedings.

Immigrant investors remain in “valid” status while their I-829 petition is pending. Their status is supposed to be extended automatically in one year increments until USCIS adjudicates the petition. During that time, investors are authorized to travel and work in the United States.

Once conditions have been removed, a full green card is granted for indefinite permanent resident status in the US. After 5 years of permanent residency (including the two conditional years), an investor may apply for US citizenship.

Dependents

Your spouse and unmarried children under the age of 21 may be admitted to the US with you on a 2-year conditional period. If your I-829 petition to remove conditions is approved, the conditions will be removed from your spouse and children’s Green Card status. As lawful permanent residents (Green Card holders) your spouse and children will be authorized to work or attend school in the US.

EB5 Requirements

Capital Investment Requirements:

Types of Capital: Cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur 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.

All capital shall be valued at fair-market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act.

Source of Capital

• Capital does not include loans made by the investor to the venture, however the investor may borrow the investment money if it is secured by assets owned by the investor, provided the investor is personally liable for repayment of the loan.

• The investor may receive a gift of funds, if all applicable taxes required by law have been paid.

Required minimum investments

• The minimum qualifying investment in the United States is $1 million.

• Targeted Employment Area (High Unemployment or Rural Area). The minimum qualifying investment either within a high-unemployment area or rural area in the United States is $500,000.

Verification of lawful source

Proof that the capital has been invested by the actual investor is required. Assets acquired directly or indirectly by unlawful means such as criminal activities are not acceptable capital. In practice, USCIS is very strict about reviewing the legitimacy of funds.

The documentation should trace the capital from the investor directly to the investment. The USCIS also requires that the investor provide documentation that proves the source of their investment funds was obtained legally. Proof of documentation is provided through previous tax returns and financial statements. Income tax records should be submitted, preferably for a period beyond the five years required by the regulations. Also provide savings and personal investment records to prove that even if a petitioner has not earned a substantial annual income, there is a credible claim that the necessary funds were accumulated over time.

A petitioner cannot establish the lawful source of funds merely by submitting bank letters or statements documenting the deposit of funds. Without documentation of the path of the funds, the petitioner cannot meet his burden of establishing that the funds are his own funds. Simply stating without supporting documentary evidence is not sufficient for the purpose of meeting the burden of proof.

An investor may receive a gift of funds however in that case the USCIS will require information and track the source of the funds from the person who gave the gift.

When Proving the Source of Funds obtained by loan

Clearly, it is difficult enough to prove that one's own funds are, indeed, one's own. When the funds are obtained by loan, there may be even greater scrutiny. The regulations expressly prohibit using loan money for EB5 Visa purposes if the loan is obtained by using the new commercial enterprise as security. It does not matter if the loan is from a third party lender or the enterprise itself. In either case the petition will be denied if the loan is secured by the new commercial enterprise.

New Commercial Enterprise:

Evidence is required to show that you have invested in a “for profit” new commercial enterprise, which is a commercial enterprise:

• Established after Nov. 29, 1990, or

• Established on or before Nov. 29, 1990, that is:

1. Purchased and the existing business is 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

Evidence, if applicable, that your new commercial enterprise has been established and is principally doing business in a targeted employment area (TEA).

Managing the New Commercial Enterprise:

Evidence is required to show that you will be actively involved in the management of the new commercial enterprise (day-to-day or through policy).

Job Creation Requirements:

Each foreign national EB5 Visa Investor must create at least 10 full time US based jobs as a result of their investment. You will need to submit a comprehensive business plan showing that, due to the nature and projected size of the new commercial enterprise, the need for not fewer than 10 employees will result. Include approximate dates, within the next two years, and when each employee will be hired.

In Designated Regional Centers, the job creation requirement can utilize both direct and indirect job creation to prove they have met the USCIS requirement. If the investment is not in an approved regional center the jobs must be directly created by the entity the investor is investing in.

* Note: Regional center-affiliated cases must show that the capital investment was made in accordance with the regional center’s business plan in order to be credited with the creation of indirect jobs.

Requirements of Removing Conditions:

You must submit the I-829 petition within the 90-day period immediately before the second year anniversary of your admission to the US as a conditional permanent resident.

Supporting Documents:

• Evidence that you in fact invested in a new commercial enterprise. This evidence may include, but is not limited to, copies of the business’ organizational documents and federal tax returns.

• Evidence that you have invested or are actively in the process of investing the total amount of required funds.

• Evidence that you have sustained your investment in the new commercial enterprise throughout your two-year period of conditional permanent residence. This evidence may include, but is not limited to, the following:

-Business invoices and receipts

-Bank statements

-Contracts

-Business licenses

-Audited or reviewed financial statements.

-Complete copies of federal or state income tax returns or quarterly tax statements

• Evidence that you created or will create within a reasonable time 10 full-time jobs for qualifying employees. Such evidence may include, but is not limited to:

-Business payroll records

-Relevant tax documents

-Employee Forms I-9

• The same documentary requirements for job creation mentioned above, except that the investor must show that he or she has maintained (not created) the number of existing employees at no less than the pre-investment level for the period following his or her admission as a conditional permanent resident.

*Note: To be approvable, at least 10 jobs must be maintained.

*Note: Regional center-affiliated cases must show that the capital investment was made in accordance with the regional center’s business plan in order to be credited with the preservation of indirect jobs.

Regional Centers

A Regional Center is defined as any economic unit, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment.

In more simple terms, a Regional Center is an area designated by the USCIS as eligible to receive immigrant investor capital. A Regional Center obtains its designation by submitting a detailed application to U.S. Citizenship and Immigration Services (USCIS).

The organizers of a regional center seeking the regional center designation from USCIS must submit a proposal showing:

1. How the regional center plans to focus on a geographical region within the United States, and must explain how the regional center will achieve economic growth within this regional area;

2. That the regional center’s business plan can be relied upon as a viable business model stating market conditions, project costs, and activity timelines;

3. How in verifiable detail (using economic models in some instances) jobs will be created directly or indirectly through capital investments made in accordance with the regional center’s business plan;

4. The amount and source of capital committed to the project and the promotional efforts made and planned for the business project.

*Current USCIS List of Designated EB5 Regional Centers:

Application Process Overview

The EB-5 visa is a three step self-petitioning process consisting of Immigrant Petition by Alien Entrepreneur (I-526), Conditional Permanent Residence by Adjustment of Status (I-485)/Consular Processing, and Removal of Conditional Residency (I-829).

Seek Status as an Immigrant Investor

In order to seek status as an immigrant investor, you must file CIS Form I-526, Immigrant Petition by Alien Entrepreneur. The Form I-526 must be filed with supporting documentation which clearly demonstrates that the individual’s investment meets all requirements, such as:

1. Establishing a new commercial enterprise,

2. Investing the requisite capital amount,

3. Proving the investment comes from a lawful source of funds,
creating the requisite number of jobs,

4. Demonstrating that the investor is actively participating in the business; and, where applicable,

5. Creating employment within a targeted employment area.

Obtain Status as a Conditional Resident

Once the I-526 petition is approved, immigrant investors may obtain status as a conditional resident by:

1. Filing USCIS I-485, Application to Register Permanent Residence or Adjust Status, if residing within the United States; or

2. Applying for immigrant visa at a US Embassy or Consulate abroad, if residing outside the United States.

Filing for Removal of Conditional Residency (I-829)

Within 90 days of the 2-year conditional green card’s expiration date, the investor must file I-829, Petition by Entrepreneur to Remove the Conditions, to request removal of conditional permanent residency. This must be filed with the California Service Center. Determination of whether to remove conditions on the green card will be made within 90 days of filing or interview, whichever is later.

An overview of the EB5 procedure is as follows:

1. Select a suitable US immigration attorney and then the Regional Center EB55 project. Many relevant documents concerning the Regional Center and the particular EB5 project must be reviewed. Most EB5 potential investors do not even know which documents should be reviewed with more attention, and this is where an experienced EB5 attorney can help.

2. Sign standard documents, such as a Retainer Agreement with the selected US immigration attorney, Subscription Agreement to participate in a particular Regional Center EB5 project.

3. Start preparing necessary documents for the submission of I-526 immigrant petition, and then get the requisite funds ready to be deposited into a designated escrow account.

4. After placing the requisite funds in the designated escrow bank, submit the I-526 petition with the USCIS. I-526 receipt notice is usually sent within 2 weeks after the submission of I-526 petition.

5. After the I-526 petition is approved, either consular process via National Visa Center and the American Embassy located at your country of residence, or if you are legally in the United States, file I-485 adjustment application with the USCIS for conditional green card.

6. Wire the requisite funds in the escrow account to the Limited Partnership bank account in the United States. The Limited Partnership has been created specifically for each EB5 Regional Center project.

7. Enter the United States as Intending Immigrant and acquire Conditional Permanent Resident status as of the initial entry date as Intending Immigrant.

8. Between 21 to 25 months after the CPR acquisition date, apply for I-829 conditions removal application with the appropriate documents, including evidence of job-creation (directly, indirectly or a combination).

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