THE EB-5 PROGRAM
The EB-5 immigrant investor category commonly known as the EB-5 program is a program through which individuals can obtain U.S. green card by the means of investment.
Three crucial requirements should be met for an individual to acquire a green card through investment:
- A certain amount should be invested.
- Investment should create certain number of jobs.
- Investment should be at risk.
Under the current law, the required amount of investment is $500,000 or 1,000.000. The investment amount necessary for the EB-5 program depends on the location where investment is made.
10 full-time job positions should be created at minimum for an investment to fulfill the EB-5 program’s requirements. 10 Full-time positions are job positions calculated by the minimum requirement of 35 hours of work per week. Combining part-time positions will not qualify as a full-time position.
The most important requirement of the EB-5 program is probably that the investment should be subject to risk. Companies may use different approaches to give investors the assurance of capital return, a matter devised to attract investors to the EB-5 program. However, even if an individual may be able to guarantee the return of capital, this could result in applicant’s case denial.
As stated above, the issue as to participate in the EB-5 investment program by investing $500,000 instead of $1,000.000 depends on the area where the investment is made. These areas are commonly known as the TEA or Targeted Employment Area. The TEA includes to categories: 1-Rural areas and 2- metropolitan areas experiencing unemployment of at least 150 percent of the national average rate.
An individual applying for a green card through this program, may enter the United States approximately 3 years after applying and will receive conditional green card. Investors are required to apply for a permanent green card after two years of entry into the United States. No difference exists between the conditional and permanent green card in terms of their application and the issue as to whether the investor has spent the required amount of time for U.S. citizenship would be counted from the date he/she receives a conditional green card.
In general, participation in the EB-5 program is feasible through two main methods:
- Regional centers
- Direct investment
Regional centers are companies which are authorized to develop a specific area. These companies aggregate investors’ funds and allocate them to their projects. Should investors manage to acquire a permanent green card, these companies will return investors’ investment funds in cash or by offering them share ownership in the company, an issue which hinges on the terms of the agreement.
In the direct investment method, investors launch a business, whether alone or together with fellow-investors and will thrive to comply with the EB-5 requirements including investment of sufficient funds and creation of required job positions. Individuals initially transfer their funds to their business account in the United States and thereafter, the investment capital will be devoted to their own business.
To conclude, the most important element of the EB-5 program is the necessity of $500,000 (at minimum) being at risk. Applying for a green card through investment is impossible in less than 3 years taking the USCIS processing time information into consideration, regardless of what strategy and investment method a person uses.
The USCIS explanation and interpretation of the EB-5 program:
USCIS administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth.
All EB-5 investors must invest in a new commercial enterprise, which is a commercial enterprise:
- Established after Nov. 29, 1990, or
- Established on or before Nov. 29, 1990 that is:
- Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or
- Expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs.
Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to:
- A sole proprietorship
- Partnership (whether limited or general)
- Holding company
- Joint venture
- Business trust or other entity, which may be publicly or privately owned.
This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.
Note: This definition does not include noncommercial activity such as owning and operating a personal residence.
Job Creation Requirements
- Create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years (or under certain circumstances, within a reasonable time after the two-year period) of the immigrant investor’s admission to the United States as a Conditional Permanent Resident.
- Create or preserve either direct or indirect jobs:
- Direct jobs are actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB-5 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 EB-5 investor. A foreign investor may only use the indirect job calculation if affiliated with a regional center.
Note: Investors may only be credited with preserving jobs in a troubled business.
A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to the priority date on the immigrant investor’s Form I-526. The loss for this period must be at least 20 percent of the troubled business’ net worth prior to the loss.
A qualified employee is a U.S. citizen, permanent resident or other immigrant authorized to work in the United States. The individual may be a conditional resident, an asylee, a refugee, or a person residing in the United States under suspension of deportation. This definition does not include the immigrant investor; his or her spouse, sons, or daughters; or any foreign national in any nonimmigrant status (such as an H-1B visa holder) or who is not authorized to work in the United States.
Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. In the case of the Immigrant Investor Program, “full-time employment” also means employment of a qualifying employee in a position that has been created indirectly from investments associated with the Program.
A job-sharing arrangement whereby two or more qualifying employees share a full-time position will count as full-time employment provided the hourly requirement per week is met. This definition does not include combinations of part-time positions or full-time equivalents even if, when combined, the positions meet the hourly requirement per week. The position must be permanent, full-time and constant. The two qualified employees sharing the job must be permanent and share the associated benefits normally related to any permanent, full-time position, including payment of both workman’s compensation and unemployment premiums for the position by the employer.
Required minimum investments are:
- General. 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.
A targeted employment area: 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 (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more according to the decennial census.