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EB-5 Visa, Direct Immigrant Investor

An immigrant can obtain a green card by investing $500,000 to $1 million in the U.S.  This investment can either be through a regional center or directly into a business. This page discusses the process of obtaining an EB-5 visa through direct investment into a U.S. business.  Our experience in business, tax, and immigration law can help you every step of the way.

I. Summary

Employment- Based Immigration: 5th Preference (EB-5) allows foreign nationals to immigrate to the United States by receiving an immigrant visa (Green Card). The EB-5 Visa for Immigrant Investors is a US visa that was created by the Immigration Act of 1990, and has continued to receive tremendous government support since then. The investor must invest USD $1 million into a new commercial enterprise (NCE), or $500,000 in a targeted employment area (TEA)1. The investor’s spouse and children, whom are (i) unmarried, and (ii) under the age of 21, may also receive conditional Green Cards. If the investor’s I-829 is successful, the conditions will be removed from the spouse and childrens’ Green Card status as well.

This guide will explain the different requirements written and enforced by U.S. Citizenship and Immigration Services (USCIS) for a Direct EC-5.2

II. Job Requirements

Understanding the EB-5 job requirements is crucial to successfully completing an EB-5. The most basic requirement is the new commercial enterprise must create at least 10 full-time jobs within 2 years, or within a reasonable period of time after 2 years.

The USCIS defines a full-time job as an employee whom works a minimum of 35 hours per week. Job-sharing is when two employees share the same position, which fulfills the job requirement as long as each employee is a full-time employee (works 35 hours per week).

The employees must also be qualified to work in the US. This means they must be US citizens, permanent residents, or persons authorized to work in the US. Qualified employees also include, conditional residents, asylees, refugees, or persons under suspension of deportation. The investor, their family members, or other persons not authorized to work in the US do not qualify for the job requirement.

If the investment goes into a troubled business, then the investment must result in the number of existing employees being maintained through two years. A troubled business is an enterprise that has (i) existed for at least 2 years and (ii) during the 12- or 24- month period before the priority date on the investor’s Form I-526 incurred a net loss of at least 20% of the troubled business’ net worth before the loss.

III. Source of Funds/Required Documents

Proving the legality of the source of funds is another area that can prove an obstacle for many investors. EB-5 investors’ applications are often rejected because of too little information. However, well-prepared documentation of source of funds will remove this obstacle. Different documents are needed depending on the source of the funds.

There are generally four sources of funding: income, gift, inheritance, and transactions. 5 years of personal income tax returns, salary reports, and personal bank statements, as well as many other documents (or a combination of them), will be helpful in proving the legality of your income.

If the source of the funding was a gift, documents proving the gift, statements about why the gift was made, tax returns, and documents about how the donor derived the funds will be necessary for having the USCIS approve the EB-5.

For funds from an inheritance, statements about the relationship between the investor and the deceased, a death certificate, and tax certificates will be necessary to prove the source of funding is legal.

There are many types of transactions, which all require specific documents. For example, funds from the sale of a business need closing statements, and bank account statements, as well as other documents. Other transactions, such as sale of real estate or stock, require other documents specific to those transactions.

As an investor it is always important to remember more is better. Providing as much documentation as possible can avoid the “lack of documentation” trap.

IV. Business Plan

As direct EB-5 investors, investors can decide what type of business they want to create. Do the investors want their business to be a corporation? An LLC? Or a limited partnership? No matter which structure is decided upon, there are two basic requirements.

First, the investments are required to be equity investments, investors must assume all the same risks as the other owners of the project business, and the money must be placed “at-risk.”

Second, Direct EB-5 requires that the investor will be actively, not passively, engaged in the management of the new commercial enterprise, either through day-to-day managerial control or through policy formation. This can be proven in one of three ways: (1) a full description of the investor’s roles and duties; (2) evidence that they are a corporate officer or on the board of directors, or (3) they are a limited partner and the limited partnership agreement provides the petitioner with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act.

V. Process

A. Form I-526 Petition for an Alien Entrepreneur

1. Timeline

1. The investor’s funds are either invested into the company or is placed into an escrow account for purchase of the business conditioned solely on approval of the I-526.

2. The USCIS approval process of an I-526 petition typically takes about 4 to 6 months. Upon approval, overseas investors must interview at their local U.S. consulate or embassy.  Alternatively, immigrant investors in the U.S. may file an I-485 petition to adjust their status to lawful residency.

In either case, processing time from making the investment to issuance of the conditional visa (green card) will typically take 8 to 12 months.

Upon receiving the conditional visa, the principal applicant and family member(s) must enter the U.S. within 180 days. The two-year conditional period starts the day the applicant enters the U.S.

3. I-526 approval and either receive the green card and start running business or money shifts from escrow account into the business and the business is purchased. The conditional green card expires two years from the date issued.

 

2. New Commercial Enterprise

Investors must provide evidence that they have invested in a new3 and for profit commercial enterprise. However, it is possible to invest in an enterprise that is not “new,” if, (i) the enterprise is substantially restructured resulting in a new commercial enterprise, or (ii) the investment expands the enterprise resulting in a 40% increase in the net worth or number of employees. If the enterprise is established, and mainly conducts business in, a targeted employment area (TEA), evidence must be shown.

3. NCE Management

Investors must demonstrate they are actively involved with either day-to-day management or policy creation for the new commercial enterprise.

4. Investment

Investors will first put the funds in their personal bank account and then wire the funds into an escrow account or the NCE’s bank account.

Investors need to be able to prove that they already invested, or are in the process of investing, the required amount.4 They also need to show they acquired the investment funds legally. The investors will need foreign business registration records, tax returns for the past 5 years, documents identifying the source of the funds, or other related documents to do this.

5. Job Creation

Investors will be required to submit a business plan that will project job creation. The business plan needs to demonstrate how the NCE will provide jobs to qualified employees.5 It is helpful to include approximate dates for when the NCE will create each position and hire the employee.
6. Job Preservation (Troubled Business)

The aforementioned requirements under “Job Creation” apply to job preservation, however instead of proving 10 jobs will be created, the investor must show that the level of the number of jobs prior to the investment will be maintained for at least 2 years. In order to do this, Forms I-9 (Employment Eligibility Verification), tax records, and related documents are needed.
B. Form I-829 Petition by Entrepreneur to Remove Conditions

1. Timeline

The I-829 must be filed within the 90-day period by the investor or his/her Immigration Attorney files I-829 application to USCIS for removal of conditions (21- 24 months after receiving conditional Green Card)

2. New Commercial Enterprise

Investors need to show the USCIS evidence that they invested, or are in the process of investing, in a NCE. They also need to prove the required funds are already invested, or are being invested, into the NCE. The necessary evidence includes, but is not limited to, business invoices, bank statements, audited financial statements, and the NCE’s organizational documents.

3. Job Creation

The USCIS requires investors to provide evidence that they met the job creation requirements by having already created at least 10 jobs, or planning to do so in a reasonable time. Documents that can prove this are payroll records, tax documents, and employee Form I-9.

4. Job Preservation (Troubled Business)

The abovementioned requirements (under Job Creation) apply to job preservation, however instead of creating jobs, the investor must prove they maintained the number of previous employees at no less than the level prior to the investment following the investor’s admission to the US as a conditional permanent resident.6

1 TEA is defined as an area where the unemployment rate is 150% over the national average, or an area outside a metropolitan statistical area or outside the border of any city with a population of 20,000 or more.

2 Also called “Individual EB-5.” Note, it is called individual because you go through the process as the main actor (instead of through a Regional Center). It also is not because only the investor can immigrate (leaving their family behind).

3 The USCIS defines “new” as established after November 29, 1990.

4 The minimum is USD $1 million, or USD $500,000 in a TEA.

5 Qualified employees are those whom are authorized to work in the US and the investor’s family does not count.

6 The USCIS requires at least 10 jobs to be maintained.