Initially, under the first EB-5 program, the foreign investor was required to create an entirely new commercial enterprise; however, under the Pilot Program investments can be made directly in a job-generating commercial enterprise (new, or existing – “Troubled Business]), or into a “Regional Center” – a 3rd party-managed investment vehicle (private or public), which assumes the responsibility of creating the requisite jobs. Regional Centers may charge an administration fee for managing the investor’s investment.
EB-5 Visa Requirements Summary
- $1 million capital investment, $500,000 in a TEA
- The investment must be made in a for-profit U.S. commercial entity
- The investment must create 10 full-time U.S. jobs for two years
The enterprise must be pre-approved (e.g., investment entity qualifies as a “new commercial enterprise);” the investment is in a “troubled business;” and the requisite “direct employment creation” must take place
Under the new guidelines of the program, issued in 2002, regional center investors are now required to invest the full $500,000 before submitting the I-526 petition.
An individual EB-5 petition requires proof of “full-time employment” as direct employees (not independent contractors) of ten U.S. workers. 8 C.F.R. § 204.6 (j)(4). Although technically the requisite employment does not have to have been created at the time of approval of the I-526 petition, adjudication history reveals great difficulty in getting individual EB-5 petitions approved based upon business plans showing that the requisite employment will be created within the two year period before the necessity of filing a condition removal petition.
As part of the pre-approval process, the regional center had to satisfy USCIS that the investors would be engaged in the “management” of the enterprise as opposed to maintaining a “purely passive role.” 8 C.F.R. § 204.6 (j)(5). This must be proven on a case-by-case basis by the individual EB-5 petitioner.
Most I-526 petitions are approved within three to six months of filing. Since the quota is current for this category of immigrants, within three to six months of filing of the I-526, the investor and his or her family who are in the U.S. are able to file applications for permanent residence, employment authorization and advance parole travel documents. For investors and families outside of the U.S., the procedure for issuance of immigrant visas generally averages 5 to 9 months.
REGIONAL CENTER V. INDIVIDUAL EB-5
The profiles of the individual EB-5 investor and the regional center EB-5 investor are generally rather different. The individual EB-5 investor generally has the following characteristics:
- He or she actually wants to start and/or manage a business.
- His or her business will be creating employment up front.
- The investment is the driving force behind his or her wanting to come to the US.
- He or she wants to have control over his or her investment.
- He or she wants to maximize profits from his or her investment.
On the other hand, the regional center often meets the needs of investors with a different set of characteristics:
- He or she is not interested in starting a business.
- He or she may be a retiree.
- Although he or she may want to start a business, it will not create sufficient employment for an individual EB-5.
- He or she wants to be geographically mobile.
- He or she wants to spend a significant amount of his or her time outside of the US.
- Immigration – – rather than US business – – is the driving force behind his or her investment.
EB-5 Business Entities
There are several types of business entities in which an EB-5 visa applicant 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 business structures include 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.
The investor must qualify as an accredited investor.
The USCIS wants investors to be sophisticated enough to understand the sometimes complex issues involved with this type of investment. Therefore the investors must meet the requirements as set forth for defining an accredited investor. An “accredited” investor, as that term is defined by Regulation D of the Securities Act, which means any investor meeting at least one of the following conditions:
The USCIS wants investors to be sophisticated enough to understand the complex issues involved with this type of investment. Therefore, the investors must meet the requirements defining an accredited investor. An “accredited” investor, as that term is defined by Regulation D of the Securities Act, means any investor meeting at least one of the following conditions:
1) any natural person whose individual net worth (or joint net worth with that person’s spouse, if applicable) at the time of purchase exceeds $1,000,000; or
2) any natural person who had an individual income in excess of $200,000 or joint income with that person’s spouse in excess of $300,000 in each of the two most recent years and who reasonably expects an income in excess of $300,000 in the current year; or
3) any other “accredited investor” as that term is defined in Regulation D as adopted by the Securities and Exchange Commission; or
4) Has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in the Units, and of making an informed investment decision, and does not require the use of a Purchaser Representative.
There are other requirements for the EB-5 investor program that deal with the filing and what must be presented to the USCIS. Every immigrant investor will hire an attorney who will work with the Regional Center to insure these regulations are followed in the submission of the investor’s EB-5 application.
For more information please contact our office now to set up an appointment with attorney Daniel Lenghea to determine the best cause of action.