United States Code, 8 U.S.C. Section § 1153 101(b) (5) (A): Preference allocation for employment-based immigrants – Employment creation, describes the “EB-5: In General” visa category as follows:
Visas shall be made available, in a number not to exceed 7.1 percent of such worldwide level, to qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise (including a limited partnership): in which such alien has invested (after November 29, 1990) or, is actively in the process of investing, capital; and which will benefit the United States economy and create full-time employment for not fewer than 10 United States citizens or aliens lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States (other than the immigrant and the immigrant’s spouse, sons, or daughters).
The U.S. Congress created the EB-5 immigrant investor visa category in the Immigration Act of 1990 with the goal of creating jobs for American workers by attracting foreign capital to the U.S. The investor is allowed to engage in commercial enterprise, new or existing, anywhere in the US by investing at least $1 million in a new commercial enterprise which will benefit the U.S. economy.
This category is also referred to as the fifth employment-based preference (“EB-5”); it is an immigration type visa, distinct from the E-2 treaty investor non-immigrant visa category discussed in a previous article. There are 10,000 visas available for participants each year, divided almost equally between category (A) and category (B).
There are three basic requirements for this immigrant visa:
Creating a New Commercial Enterprise – this can be accomplished through any of these three mechanisms:
Amount of the Investment – the investor must invest a minimum of $1 million subject to upward or downward adjustment under certain circumstances.
Create full-time employment for at least 10 US workers- a qualified employee must work a minimum of 35 working hours per week, and can’t be an independent contractor.
The new commercial enterprise can be any for-profit entity including sole proprietorships, partnerships, corporations, holding companies with its subsidiaries, joint ventures, business trusts, etc. Non-commercial activities, such as home ownership, do not qualify.
The investment can be in the form of cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the investor. Further, the investor must prove that the funds were obtained from a lawful source and the required capital is at risk for investment purposes.
The investor is required to be actively involved in the business either through day-to-day managerial control or through policy formulation, and cannot be a passive investor. The investor must maintain the investment for at least three years and be personally and primarily liable for the enterprise activities.
Several foreign investors seeking the same status can pool their funds, each contributing the required statutory amount with the job created allocated amongst them to satisfy the third requirement.
Investors, their spouses and unmarried children under the age of 21 get green cards; all will be conditional for the first two years, and are all eligible for citizenship after 5 years of living in the U.S.
The application can be filed before making the full required investment as long as the investor can demonstrate that they are in the process of investing and enough invested capital is at risk showing strong commitment to the investment.
Of course, there is always the risk that the “EB-5” visa will be denied. But unlike the “E-2” investor visa, U.S. Embassies do not have unlimited discretion in adjudication, and a properly filed application should be easily approved by USCIS and the investor will only have to wait in line until a visa number
is available at the U.S. Embassy. Nevertheless, careful planning in the formation of the investment must be used to insure it meets all the criteria established by USCIS regulations. The documentation which must be submitted, however, is quite extensive.
“EB-5” visas are very complex, and viable alternatives do exist. However, it is a great, practical and fast venue for immigration to the U.S. We recommend seeking the advice of qualified immigration/business counsel, not only for the preparation of the immigration paperwork, but in the investment of the underlying U.S. business entity, or the purchase of an already existing U.S. business.
Our immigration law professionals are sensitive to the needs of our clients and the members of their families. Many members of our staff are themselves foreign born and have family and/or friends who have gone through the immigration process. As a result, they have a personal and unique approach in the processing of visas and for dealing with our foreign national clientele.
Immigration to the U.S. is time-consuming and complex and our staff of business immigration law professionals can clearly explain the process in Arabic, French, Urdu, Mongolian, Russian and English.
A potential EB-5 investor must sign a Non-Disclosure Agreement and complete a Questionnaire in order for our firm to make a preliminary determination if they qualify for the Program. These forms are designed to protect both our firm’s and the potential investor’s interests and to maximize everyone’s time and effort in connection with this process.
If the preliminary determination is that you are a good candidate for the Program, the next step is to identify a potential project in which you may wish to invest. Qualified Investments are summarized in the Private Placement Memorandum or Offering that is drafted on behalf of the company that is seeking to raise investment capital – known as the New Commercial Enterprise There are a wide range of potential investment opportunities (such as commercial real estate development and loans for new businesses or franchise opportunities) and having at least a general idea of the type of investment that you wish to consider will help in the review process. The information provided in the Offering is typically extensive and if the opportunity is one that you wish to pursue it is advisable to seek assistance from subject area experts such as attorneys, accountants and investment advisors.
The EB-5 investor must meet the definition of an accredited investor under Rule 501 of Regulation D, and be capable of depositing the necessary funds (either $500,000 if the investment is in a project that is being developed in a Targeted Employment Area or $1,000,000 if the project is not in a designated TEA) as required under the Offering. Typically, funds are deposited into an escrow account and may be held by the escrow agent pending the review of the potential investor’s I-526 Petition by the United States Citizenship and Immigration Services (the “USCIS”).
In addition to returning a signed subscription agreement and the capital contribution required under the Offering, the EB-5 Investor must file a I-526 Petition with the USCIS. This Petition contains detailed information about the investor, the source of funds and the qualifying investment. It is strongly recommended that an experienced immigration attorney assist with the filing. Due to the delay in processing times for I-526 Petitions (it may take well over a year for the USCIS to complete its review), many Offerings are including provisions that allow them to have access to the potential investor’s funds prior to receiving the USCIS ruling on the petition.
Ideally, the I-526 Petition will contain all of the required information at the time it is initially filed. If additional information or clarification is required, the USCIS will issue a Request for Evidence and this will cause further delay in the processing time. If the petition is ultimately approved, then the EB-5 Investors capital contribution is officially available for investment in the project. If the petition is denied, then the capital contribution is subject to return as provided for in the Offering.
Upon approval of the I-526 Petition, the EB-5 Investor must file, along with any supporting documentation, one of the following:
In order to become a lawful permanent resident, the immigrant investor must file a Form I-829 Petition by Entrepreneur to Remove Conditions, along with any necessary supporting documents. This petition must be filed within the ninety (90) day period immediately prior to the second year anniversary of the investor’s admission to the United States as a conditional permanent resident. The investor must be able to prove that the necessary jobs were created as a result of the qualifying investment in order to receive permanent residence status for the investor, as well as the investor’s spouse and any children under the age of twenty-one (21).