EB-5 IMMIGRANT INVESTOR GREEN CARD


EB-5: OBTAINING PERMANENT RESIDENCY THROUGH INVESTMENT

The Employment-Based Fifth Preference Category, known as EB-5, allows one to obtain lawful permanent residency through investment in a new, for-profit commercial enterprise. This individual receives an EB-5 category green card in Rhode Island, New York, and Boston.

The hallmark of the Rhode Island, New York, and Boston EB-5 investor green card program is the creation of jobs.  Unlike other countries investor programs, the EB-5 investment must create ten full time jobs or qualifying workers.  The focus of the EB-5 visa program is the investment of lawful funds into a for-profit entity that accordingly utilizes the funds in a project, creating jobs in accordance with the EB-5 rules and regulations.

Required EB-5 Investment Amount

The EB-5 investor must present the lawful sources of the invested funds, but not necessarily their entire net worth.   The focus is on how the investor acquired the EB-5 capital to be invested and to trace its path from its sources to the new enterprise.  The burden of proof is on the investor and as such needs to produce extensive documentation relating to investment must be included with the petition. 

The EB-5 investment visa can take the form of cash, inventory, equipment, secured indebtedness, tangible property, or cash equivalence and its valuated based on US dollar fair market value.

The minimum amount of capital required for the EB-5 visa program is $1 million dollars, which is usually a cash investment but may be reduced to $500,000 if the investment is made into a project that is located in a targeted employment area (TEA).  To qualify for a TEA designation, the EB-5 project must either be in a rural area or in an area that has high unemployment, 150% of the national unemployment rate. 

The Investment Amount Must be 'at risk'

To qualify for an EB-5 investor green card in Rhode Island, New York, or Boston, the immigrant investor’s capital must actually be placed “at risk” for the purpose of generating a return and evidenced with the EB-5 petition.  Intent and/or prospective investment arrangements entailing no present commitment will not suffice to show that the applicant is actively in the process of investing. The law does not specify what the degree of risk must be, the entire amount of capital must be at risk to some degree.

EB-5 Job Creation Requirements

USCIS requires that each EB-5 investment result in the creation of 10 full-time jobs for U.S. workers. These jobs must be created within the two year period after the investor has received their conditional permanent residency. The investor must be able to prove that their investment led to the creation of direct jobs for employees who work directly within the commercial entity that received the investment. However, the EB-5 investor may only have to prove that 10 full-time indirect jobs were created if the investment was made in a regional center. Indirect jobs are those created in businesses that supply goods or services to the EB-5 project. Induced jobs are jobs created within the greater community as a result of income being spent by EB-5 project employees.

EB-5 Business Entities 

There are several types of business entities in which an EB-5 investment visa applicant from Rhode Island, Boston, or New York can invest. In general, the applicants can invest directly in a new commercial enterprise or in a regional center. New commercial enterprises are lawful for-profit entities that can take one of many different business structures such as corporations, limited or general partnerships, sole proprietorships, business trusts, or other privately or publicly owned business structures. All new commercial enterprises must have been established after November 29, 1990.

However, older commercial enterprises may qualify if the investment leads to a 40-percent increase in the number of employees or net worth, or if an older business is restructured to such a degree that a new commercial enterprise results. In addition to individual business enterprises, EB-5 visa applicants can also invest in EB-5 Regional Centers. Regional centers administer EB-5 projects. It may be more advantageous for an investor to invest in a regional center-run project because the investor will not have to independently set up the EB-5 projects.

Regional Center Investment

The majority of EB-5 investors receive their permanent residency through an investment made in a regional center.  A regional center is focused on stimulating economic activity through EB-5 investment. Each regional center is approved by the USCIS following an application process and have to undergo annual compliance procedures.  An extensive list can be found on the USCIS’s website.

The benefit of a regional center is its ability to utilize indirect job creation by utilizing economic modeling to measure the job creation of the EB-5 project’s activities.  Unlike “Direct” EB-5 investments, the relevant Regional center entities need not hire any employees.  Accordingly, this allows for greater flexibility in the use of EB-5 funds and the ability for the regional center to aggregate larger amounts of investors, provided that total job creation is equal to or greater than 10 jobs per investor.  The economic modeling generally caps the amount of investors that may subscribe to a particular project. 

The EB-5 investor assumes a less active role when utilizing a regional center.  The investor is admitted to their respective new commercial enterprise as a limited partner or non-managing limited liability company member and retain minimal voting and advisory rights.  EB-5 funds are usually part of a larger capital stack and total job creation can be measured by examining all impacts of a project, not just EB-5 funds. 

Regional centers have staff and legal counsel that charged with creating specific project offering documents that are mostly uniform across investors.  As such, regional centers charge an administrative fee of 10-15% of the investment amount to cover their overhead expenses.  

Direct EB-5 Investments

A small percentage of EB-5 investors opt for a direct investment.  Direct EB-5 investments may present an option for the more entrepreneurial immigrant.  Any lawful for profit business can be utilized for EB-5, provided that all regulatory requirements are met.  A direct EB-5 investment must be made in a new commercial enterprise that hires W-2 employees directly or through a wholly owned subsidiary.  The employees that result from the direct investment must have the requisite immigration status and work full time, 35 hours a week or more.  It is common for entrepreneurs opening smaller businesses or restauranteurs to utilize EB-5 for a direct investment.  Furthermore, some foreign nationals may also be able to qualify for an E-1 or E-2 nonimmigrant visa in conjunction with pursuing the EB-5 Green Card.

Lastly, some projects are offered on the marketplace as pooled direct investments.  These investments seek to aggregate EB-5 investors and admit them in relatively limited roles.  This model is common for franchise and manufacturing which require relatively larger direct hiring.  The requisite job creation of 10 full time jobs per investment must be met.  

Benefits and Risks of Investment Options

Benefit of Investing $500,000

New Venture 

  • Reduced exposure of capital risk as opposed to investing $1mm

  • Investor has more control over day to day operations

Distressed Business

  • Reduced exposure of capital risk as opposed to investing $1mm
  • Investors do not need to create 10 jobs, but maintain 10 already existing jobs

  • Business is already in distress, investor can negotiate a better purchase price

  • Investor has more control over day to day operations.

Regional Center

  • Reduced exposure of capital risk as opposed to investing $1mm
  • Removes the 10 employee requirement, allowing the investor to qualify without directly hiring 10 people
  • Investor is not required to participate in the day-to-day management, nor does it require investors to live in the place of the investment
  • Congress gives regional centers top priority, which could mean a quicker path to approval of Form I-526
  • Investors do not need to create 10 direct jobs, but the investment should create either 10 direct or indirect jobs
  • Regional Centers are already established and have undergone an approval process by USCIS

Risk of Investing $500,000

New Venture 

  • If business faults with 2 years, investor could lose all invested capital and may not be able to get a a green card 
  • The investor needs to prove that the investment created 10 jobs or possibly more than 10 jobs if expanding an existing business 
  • Very risky because business is located in a targeted employment area
  • Investor usually has to live in the location of the venture

Distressed Business 

  • If business faults with 2 years, investor could lose all invested capital and may not be able to get a a green card
  • The investment needs to maintain 10 existing positions for a period of 2 years
  • Given its location in a targeted employment area, the business is already distressed
  • Investor usually lives in the location of the business

Regional Center

  • If business faults with 2 years, investor could lose all invested capital and may not be able to get a a green card
  • Investor needs to provide evidence that the investment created either 10 direct or indirect jobs
  • Very risky because the project is located in a targeted employment area 
  • Investor offered a position as a Limited Liability Partner, as such investor has no control over day to day operations. Additionally, the general partners of the regional center company usually benefit from investors’ investments.

Benefits of Investing $1mm

New Venture 

  • Investor has a greater flexibility with regards to investment because they can invest in any venture anywhere in the U.S.
  • Reduced risk because the venture is not located in a targeted employment area
  • Investor has more control in day to day operation 

Distressed Business

  • Investment does not need to create 10 new jobs but must maintain 10 existing jobs
  • Since business is in distress, investor can negotiate terms 
  • Investor has more control of day to day operations 

Regional Center

  • Removes the 10 employee requirement, allowing the investor to qualify without directly hiring 10 people
  • Investor does not need to participate in day-to-day management, nor does it require investors to live in the place of investment
  • Congress gives regional centers top priority, which could mean a quicker path to approval of Form I-526
  • Investors themselves do not need to create 10 direct jobs, but the investment must create either 10 direct or indirect jobs
  • Regional Centers are already established and have undergone an approval process by the USCIS

Risks of Investment of $1mm

New Venture

  • Increased capital risk as opposed to investing $500,000
  • If business fails with 2 years, investor could lose all invested capital and may not be able to get a a green card
  • The investor needs to prove that the investment created 10 jobs or possibly more than 10 jobs if expanding an existing business
  • Investor usually lives in the location of the venture

Distressed Business

  • Increased capital risk as opposed to investing $500,000
  • If business fails with 2 years, investor could lose all invested capital and may not be able to get a green card
  • Investor needs to maintain 10 existing jobs for 2 years 
  • Business is in distress 
  • Investor usually lives in the location of the business

Regional Center

  • Investor may have difficulty procuring $1mm and increased capital risk.  Most investors choose to invest $500,000 with a regional center
  • If business fails with 2 years, investor could lose all invested capital and may not be able to get a green card
  • Investor needs to provide evidence that the investment created either 10 direct or indirect jobs
  • Investors offered a position as a Limited Liability Partner, as such investor has no control over day to day operations. Additionally, the general partners of the regional center company usually benefit from investors’ investments

Process

The EB-5 investor green card program in Rhode Island, Boston, and New York requires a three-step process to securing an unconditional 10 year Green Card.

Step 1 – Form I-526:  The investor needs to present information that they are in the process of investing the required capital in an EB-5 project that meets the regulations.  An EB-5 green card compliant business plan and supporting documentation substantiating that qualifying job creation is more likely than not to occur.  Furthermore, the investor will need to present the lawful source of the capital investment.  The I-526 is then submitted for approval, once approved the second step is commenced.

Step 2- Adjustment of Status or application for an immigrant visa:  Once the I-526 is approved, an investor, spouse, and unmarried children under the age of 21 may pursue permanent residency.  Depending upon the investor’s status, this may be done in the United States through a process called adjustment of status or abroad through a process called consular processing.

If the investor is in lawful nonimmigrant status in the US and EB-5 visas are available, then they may file Form I-485 to adjust status to a lawful permanent resident.  Upon filing, the applicant is granted authorized stay in the U.S.  The applicant can also apply for work or travel authorization. 

If the investor is abroad, then they may pursue a Consular Processing.  The USCIS will send the investor’s file to the Department of State following approval of the I-526.  The investor must complete a comprehensive online Immigration visa application, form DS-260, and submit supporting documentation through the National Visa Center.  Once a visa is available, all applicants must appear at a consulate abroad for an interview.  The consulate will then print immigrant visas in each person’s passport.  The applicants then enter the US during the validity period of the visa and pay a fee for the Green Card.  Lawful permanent residency is achieved but the Green Cards themselves may take months to receive. 

EB-5 Green Cards are conditioned upon a third step in the process.  The Conditional Permanent Residence is where a petition to remove the conditions must be filed before expiry.

Step 3- Form I-829:  Within 90 days of the expiration of the Conditional Green Card, an investor and family members must file Form I-829 to remove conditions.  In this petition, the investor must present that:

1.      A new commercial enterprise was established;

2.      The investor invested or was in the process of investing the required capital;

3.      That the enterprise and capital investment was sustained during the period of conditional residency, and;

4.      That the requisite jobs were created or can be expected to be created within a reasonable time. 

The petition process requires submission of tax and business documentation, evidence that the business plan was executed, and proof that the economic model was sufficiently met or the requisite hires were made.  Following form I-829, the investor and family members are issued permanent, 10 year Green Cards.  At this time the investments may be redeemed in accordance with the offering documents governing the EB-5 project.  The investors may also optionally pursue US citizenship once they qualify. 

Hiring an Immigration Attorney to Assist with an EB-5 Visa

It is usually very difficult for United States visa applicants in foreign countries to understand the nuances of United States immigration law. This is especially true when it comes to seeking an EB-5 Visa.

If you or someone you know is seeking an EB-5 Visa, it is important that they retain the services of an immigration attorney to assist them. Providence and Boston immigration attorney George Barsom of the Barsom Law Group can assist in obtaining an EB-5 visa.  Furthermore, because immigration law is federal law, he can handle an EB-5 visa in any state, not merely the State of Rhode Island and Massachusetts. 

Mr. Barsom is fluent in Arabic and the Barsom Law Group has access to attorneys who are fluent in Spanish, Italian, and Portuguese. 

The Barsom Law Group can give you and your family members peace of mind in undertaking this difficult and potentially frustrating and time-consuming task. Once hired, the Barsom Law Group will take over the application process from beginning to end, keeping clients informed, and taking the stress out of the process. If you need assistance handling a EB-5 visa, contact the Barsom Law Group.

 

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