EB-5 visas are commonly thought of as being a route to permanent residency in the United States (a “Green Card”) in consideration for a high-end investment. However, they are best thought of as job creation visas.
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EB-5 Visa Requirements (with major changes from November 21, 2019)
EB-5 visa eligibility is, among other things, based on an irrevocable investment of at least $1.8 million into either a new business, or in expanding an existing business by at least 40%, and in both instances, creating (or in limited circumstances, preserving) no fewer than ten full-time jobs for U.S. citizens and/or permanent residents, not including the investor or their family.
In the event the business is located in a “Targeted Employment Area”, which is either a rural area, or one with high unemployment, the minimum investment amount is reduced to $900,000.
EB-5 ‘Pilot Program’
Additionally, there is a ‘pilot program’, whereby an investor irrevocably pools his investment of at least $900,000 into an approved regional center, which indirectly creates at least 10 full-time jobs for U.S. citizens and/or permanent residents. The US Securities and Exchange Commission (SEC) and Citizenship and Immigration Service (USCIS) issued a joint advisory alerting potential investors to known risks relating to some aspects of the pilot program.
The investment is not limited to cash, but can consist of equipment, inventory, tangible property, cash equivalents and debt secured personally by assets owned by the foreign investor. However, the assets of the enterprise may not be used to secure the debt incurred to make the investment. All money, property, equipment and inventory are valued and measured in U.S. Dollars (USD).
The investment, whether cash or assets, must be legitimately under your control, irrevocably committed to the business, and at risk in a commercial sense. Uncommitted funds in a bank account are not considered an active investment.
Unlike the E-2 investor visa, there is a bright line amount which must be invested to meet the EB-5 criteria. The minimum qualifying investment for an EB-5 visa is $1.8 million dollars (USD). However, if the investor injects the investment into a “Targeted Employment Area”, the investment minimum is decreased to $900,000, while the job creation standard remains the same.
As noted above, the EB-5 visa is better thought of as a job creation visa. It is not enough that the applicant invests funds into the business; the new business must, within two years, directly create at least ten full-time jobs, that is, jobs which require a minimum of 35 working hours per week, for U.S. citizens and/or permanent residents, not including the investor or their family.
It is important to note that the requirement of a least ten full-time positions cannot be filled by a combination of part-time positions. As well, jobs which are intermittent, temporary, seasonal, or transient in nature do not qualify for EB-5 purposes.
Preserving Jobs in a Troubled Business
There is a concession within the EB-5 program that allows for the preservation of at least ten full-time existing jobs in lieu of direct job creation for troubled businesses, which have existed at least two years, and incurred at least a 20% net loss within the 12-24 month period directly prior to the EB-5 application.
It is important to underscore that this concession, while allowing job preservation in lieu of job creation, does not decrease the numeric job standard which the EB-5 program requires. In the case of a troubled business, ten jobs must be preserved, created, or some combination of the two for at least two years, and the existing number of employees in the troubled business must be maintained at no less than the pre-investment level for a period of at least two years.
The business in which the individual is investing must be a for-profit commercial enterprise in the U.S., such as a corporation or limited liability company, among others. The entity must have been established, e.g. incorporated or organized, after November 29, 1990.
If the investment entity was established before November 29, 1990, the business must be restructured into a new commercial enterprise, and it must be expanded to meet statutory thresholds – typically a 40% increase in either net worth or number of employees
Targeted Employment Area (TEA)
As stated above, investors who are willing to start a new business located in a “Targeted Employment Area”, which is either a rural area, or one with high unemployment, need only invest $900,000, in addition to creating or preserving at least ten (10) full-time jobs, as appropriate. The new enterprise must though be principally doing business in the TEA.
Our attorneys offer written TEA opinions on specific locations to determine whether a location meets the criteria, for a fixed fee.
EB-5 permanent residency is conditional for a period of two years after approval. The residency is contingent upon continuing to meet all of the requirements, and without material changes or deviations from the original application and business plan. Our attorneys represent EB-5 investors in removal of condition applications.
EB-5 Visa Business Plans
Writing a comprehensive EB-5 business plan, demonstrating your EB-5 investment meets all of the requirements, often causes unnecessary anxiety. Seasoned investors, entrepreneurs, and business school graduates are used to writing business plans, but for very different audiences, and do not usually understand what a consular or immigration officer wants to see.
At Greenwood Hanlon Kendrick, we offer an unrivaled service. A well prepared and compliant business plan can make all the difference to your case. See our EB-5 visa business plan preparation service for details.
The spouse and dependent children (those under 21 and unmarried) of an EB-5 visa holder may be admitted for a two (2) year conditional period, during which time the spouse is eligible to work and the minor child eligible to attend school. Thereafter, upon the removal of the principal EB-5 visa holder’s conditions, the dependents become unconditional permanent residents.
All investments involve risk.
The attorneys of Greenwood Hanlon Kendrick do not render any accounting, brokering, financial, or tax advice, and investors are strongly encouraged to consult with their accountants, financial and tax advisers regarding their particular circumstances.
The scope of our legal representation, in respect of EB-5 matters, is solely limited to U.S. immigration law, as it relates to the EB-5 immigrant investor program.
The US Securities and Exchange Commission (SEC) and Citizenship and Immigration Service (USCIS) issued a joint advisory, alerting potential investors to known risks relating to some aspects of the pilot program.
Greenwood Hanlon Kendrick act as immigration counsel for high net-worth individuals, and offers partner level access, providing bespoke advice, as well as strategy, to meet your objectives. Contact us now for more information.