fifth preference category of employment-based immigration is for immigrants seeking to invest substantial sums in a new
business in the U.S. that will create full time employment for at least ten
qualifying U.S. citizen or immigrant workers. The minimum investment is
$1 million of capital, which may be reduced to $500,000 if the investment is
made in a "targeted employment area". There
is an annual limit of 10,000 immigrant visas available to qualified individuals
seeking permanent resident status on the basis of their engagement in a new
What are the basic
requirements for the EB-5 visa?
There are three basic requirements
the individual must establish a new commercial enterprise or invest in an
existing business that was created or restructured after November 19,1990;
- Second, the alien must have invested $1 million
($500,000 in some cases) in the business; and
- Third, the business must create full-time employment
for at least 10 US workers.
in a new commercial enterprise
law requires the investor-petitioner is investing in a "new"
commercial enterprise, which must have been one established after November 29,
1990. However, contribution of capital to an "existing" business
(that was formed prior to November 29, 1990) may be acceptable in two
- First, the investor may
substantially reorganize or restructure the existing business. The mere
change in ownership, cosmetic changes to the decor of the business site,
and implementation of a new marketing strategy are insufficient changes to
constitute establishment of a new commercial enterprise. A complete
transformation of the nature of the business is likely to be considered
- Second, the investor may
expand an existing business resulting in an increase of at least 40
percent of the net worth or number of employees of the business. USCIS
requires evidence of the change in business in the form of income tax
returns, audited financial statements, and employment tax returns.
investment must be in a "commercial" enterprise. Any for-profit
entity formed for the ongoing conduct of lawful business may serve as a
commercial enterprise. This includes sole proprietorships, partnerships
(whether limited or general), holding companies, joint ventures, corporations,
business trusts, or other entities publicly or privately owned. This definition
includes a holding company and its wholly owned subsidiaries, if each
subsidiary is engaged in a for-profit activity formed for the ongoing conduct
of a lawful business. However, the term new commercial enterprise does not
include noncommercial activity such as owning and operating a personal
residence or buying stock on the stock exchange.
Engaging in a new commercial enterprise
the law requires the investor to be engaged in a new commercial enterprise, USCIS
regulations state that if the investor is a corporate officer or board member
or, in the case of a limited partnership, a limited partner, then the investor
satisfies the management criteria.
law requires an investor-petitioner to have invested in or be in the process of
investing the required capital.
amount of required capital is at least $1 million. The minimum investment is reduced
to $500,000 in cases of investment in "targeted employment areas,"
which are rural areas or areas which have experienced unemployment of at least
150 percent of the national average rate. A "rural area" is an area
not within either a metropolitan statistical area or the outer boundary of any
city or town having a population of 20,000 or more. The assessment of whether
the investment is in a targeted employment area is based on statistical
information relating to the time of investment and the location where the
enterprise is principally doing business.
"invest"info" is to contribute equity capital to the enterprise. Loans of
capital by the investor to the enterprise do not qualify as an appropriate
investment. The investor cannot receive any bond, note, or other debt
arrangement from the enterprise in exchange for the contribution of
may include cash and cash equivalents, equipment, inventory, and other tangible
property. Although capital does not include loans made by the petitioner to the
enterprise, the investor may borrow the investment money if it is secured by
assets owned by the investor, provided the investor is personally and primarily
liable for repayment of the loan, and the assets of the enterprise upon which
the petition is based are not used to secure any of the indebtedness.
requires proof that the capital invested is "at risk." USCIS focuses
on actual and intended uses of capital to confirm that it will be used for job
creation and profit-generating activity. USCIS requires more than a deposit of
funds into a business account; it also requires evidence of the actual
undertaking of business activity. USCIS has held that use of capital for
partnership expenses and reserve accounts unrelated to job creation is
and lawful source
proof is needed that capital is invested by the investor petitioner. Thus, an
investor petitioner should present evidence that traces capital from the
petitioner directly to the enterprise.
also requires that an investor petitioner provide evidence to prove that the
source of funds was procured by legal means. USCIS requires evidence of the
investor's past five years of income tax returns and financial statements to
prove the investor has sufficient lawful sources for the capital invested.
applicant may receive a gift of the funds, provided the proper gift taxes are
paid, if required by law.
Multiple investors may establish a
new commercial enterprise which can be the basis for the EB-5
classification. However, each
investor applying for the classification must meet the requirements for the
EB-5 classification separately. For example, each investor must create 10 jobs
for US workers.
or saving jobs
investor must create full-time employment for at least 10 U.S. citizens, lawful
permanent residents or other immigrants lawfully authorized to be employed in
the U.S. The investor and his or her spouse and children do not count toward
the 10-employee minimum. Note that non-immigrants (i.e., those with E, H, L, and other temporary worker
visas) are also excluded from the 10-employee requirement. An
"employee" is an individual who provides services or labor for the
new commercial enterprise and receives wages or other remuneration directly
from the new commercial enterprise. Independent contractors are excluded under
jobs created must be full-time, i.e.,
positions that require a minimum of 35 working hours per week. Part-time jobs
do not count. However, job-sharing arrangements where two or more qualifying
employees share one full-time position will be counted.
jobs must exist
petitioner may base the petition on proof that the required jobs have been
created or on proof that the required jobs will be created before the end of
the two-year period of conditional residence. In the latter case the investor
must support the petition with a comprehensive business plan demonstrating a
need for at least 10 employees before the end of the conditional residence
rules govern investments in "troubled" businesses. A troubled
business is one that has been in existence for at least two years, has incurred
a net loss for accounting purposes during the 12 or 24 month period before the
petition was filed, and the loss for such period is equal to at least 20
percent of the business’s net worth before the loss. If the petition is based
on investment in a troubled business, the investor is not required to create 10
new jobs. Instead, the petition may be based on proof that the business will
maintain the number of existing employees during the conditional status period.
encourage immigration through investment, and to concentrate investment in
specific regions, Congress created a temporary Pilot Program in 1993, directing
USCIS to set aside visas for people who invest in a designated "Regional
Center." The Pilot Program does not require that the immigrant investor
enterprise employ 10 U.S. workers as long as the investor can reasonably
demonstrate that the investment in the Regional Center has indirectly created
10 or more jobs and has resulted in improved regional productivity. The USCIS
has designated a number of Regional Centers located throughout the country.
Investor’s managerial responsibilities
An EB-5 investor must be engaged
in the management of enterprise either through day-to-day managerial control or
through policy formulation. A
purely passive role is not permitted.
An EB-5 should submit documentation verifying such a role which may
include the following:
- A statement of position or title and a description of
- Evidence EB-5 investor is a corporate officer or
member of the board of corporate officers
- Evidence demonstrating management role of EB-5
investor if qualifying enterprise is a partnership
When to file
is currently taking about eight to twelve months for USCIS to process an EB-5
petition. Prior to filing the petition, time is required to conduct due
diligence, make the investment, and prepare the documentation in support of the
petition. If an individual is in lawful status upon approval of the EB-5
petition, he/she can apply for Adjustment of Status
to conditional permanent resident without departing the U.S. This application
can take six months or longer to be decided. If not in the U.S., he/she will
apply for an Immigrant Visa at a U.S. Consulate which typically takes six
months or longer depending on the country.
An investor must file Form I-526, Immigrant
Petition by Alien Entrepreneur with USCIS Regional Service Center having
jurisdiction over the area in which the new commercial enterprise will
principally be doing business. The Form I-526 must be filed with filing fee and supporting documentation which
clearly demonstrates that the individual’s investment meets all requirements,
- Establishing a new commercial enterprise;
- Investing the requisite capital amount;
- Proving the investment comes from a lawful source of
- Creating the requisite number of jobs;
- Demonstrating that the investor is actively
participating in the business; and, where applicable,
- Creating employment within a targeted employment area.
What evidence is required for
an application for the EB-5 investor investing in a new enterprise?
The EB-5 investor should provide
evidence of creation of a new enterprise, or investment in an existing enterprise
including, but not limited to the following:
- Articles of incorporation,
partnership agreements, organizational documents
- Evidence of lease agreements
for the qualifying enterprise
- State business licenses
- Evidence that the required
amount of capital has been transferred
- Evidence that investment has
resulted in the substantial increase of net worth
- Documentation of sources of
- Documentation of intent to
invest or actual commitment to invest capital
- Documentation of assets
purchased or transferred from abroad for the qualifying enterprise
approval of the petition, the investor and immediate family (spouse plus single
children under 21 years of age) may apply for an Immigrant Visa at a U.S.
consulate or apply for Adjustment of Status
with the appropriate USCIS Regional Service Center.
initial resident status is "conditional" for two years. In order to
become a lawful permanent resident, eligible investors must file Form I-829,
Petition by Entrepreneur to Remove Conditions, with the appropriate USCIS Regional
Service Center. Form I-829 must be filed within 90 days before the second
anniversary of being admitted to the U.S. as a conditional permanent resident.
The petition should be granted if the investor demonstrates that he/she
invested or was actively in the process of investing the requisite capital;
maintained the investment throughout the two-year period of conditional
residence; and the investment created the requisite employment.
Separately, the use of a promissory note payable by
the investor to the enterprise – as a present commitment to contribute
cash to the enterprise in the future – may be considered capital in
limited circumstances where the promissory note is secured by the assets of the
petitioner, the obligation is a perfected security interest, and the promissory
note is valued in fair market U.S. dollars at the time it is contributed to the
enterprise. Valuation of the promissory note requires consideration of the
value of the assets securing the note, the amenability of the assets to
seizure, and the expenses of enforcing a foreign judgment if necessary. An
investor also may use a schedule of payments or a promissory note as evidence
of being "in the process of investing" the required capital; however,
USCIS requires that payments of the minimum-required capital must be
substantially completed before the end of the two-year Conditional Residence
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