EB-5 Immigrant Investor Program Visa
The Immigration Act of 1990 ("IMMACT 90") created the Immigrant Investor Program as the fifth preference category for employment-based immigration, also known as EB-5. This was the first time a category specifically facilitated the admission of immigrant investors as lawful permanent residents and currently remains the only such category to do so. The EB-5 Immigrant Investor Program is available to those immigrants who have invested, or are in the process of investing, at least $1 million in a new commercial enterprise employing at least 10 full-time U.S. workers. Individuals who invest in a “targeted employment area” (TEA), however, are only required to invest a minimum of $500,000.In addition, immigrant investors can invest $500,000 in a qualified and approved Regional Center.In direct investments & investments through a Regional Center, the investor must show that they created at least 10 direct or indirect jobs within two years of an approved I-526 application.
The purpose of the EB-5 program is to stimulate the U.S. economy through job creation and capital investment by offering immigrant investors the benefits of permanent residency in the United States.
Approximately 10,000 visa numbers are allocated annually to EB-5 investors. USCIS reserves 3,000 EB-5 visas for aliens who invest in TEAs and 3,000 for aliens who invest in commercial enterprises affiliated with Regional Centers, as described below.
The purpose of the Immigrant Investor Pilot Program is to attract more foreign investors to fund businesses and projects in specific “regional centers” that would otherwise find it difficult to attract domestic investment based on current geographical market trends. By bringing such investment into areas of economic hardship and high unemployment, Congress hopes to stimulate job expansion, improve regional productivity, invest in infrastructure, and promote the growth of innovative new businesses. Congress has made the Immigrant Investor Pilot program particularly attractive to foreign investors by lowering the investment minimum to $800,000 (for a business in a designated regional center or TEA) as opposed to $1,050,000, and by allowing a less restrictive job creation requirement based upon the creation of “indirect” and “direct” jobs and not requiring the day to day management of the business. The Immigrant Investor Pilot Program has been extended several times, and was recently extended through September 30, 2015.
The EB-5 visa essentially offers a good immigration solution for those who have the financial resources to qualify and a tolerance for high risk investments. It does not require an employment offer from a U.S. employer as other employment-based immigration categories do, nor does it require a labor certificate. With the current economic downturn, USCIS has relaxed its requirements for the EB-5 program as a means to bring in more foreign investment. Most importantly, because the annual quota in the past consistently exceeds the number of applicants, those who qualify for EB-5 status do not typically have to wait long for a visa as there is currently no visa quota backlog for the EB-5 investor category. This is likely to change in 2014, due to increased demand.
Specific Requirements Regarding EB-5 Investment and Employment
Funds Requirement
I. Minimum Amount Requirement
Generally speaking, the minimum investment required to qualify for EB-5 status is $1,050,000 per immigrant investor. However, the limit is reduced to $800,000 in cases of investment in “targeted employment areas.” Such qualifying areas must have an unemployment rate 150% of the national average. A rural area refers to a municipal area with a population less than 20,000.
Please note that if there is a redemption clause in a commercial enterprise’s agreement that guarantees the return of a petitioner’s investment, such assets will not be deemed as “at risk”; a petitioner must infuse the full amount of at risk capital into an enterprise.
II. Legitimate Source of Funds
Assets acquired directly or indirectly by unlawful means such as criminal activities are not acceptable forms of capital. In practice, USCIS is very strict about reviewing the legitimacy of funds.
III. Acceptable Types of Property as Investment
Cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the investor are all acceptable investments for EB-5 purposes. A loan to the company or any other debt between the company and investor does not constitute an investment because such a monetary transfer does not bear any investment risk (some exceptions apply, see below). All capital shall be valued at a fair market price in U.S. dollars. The investor need not commit his/her entire capital immediately, but the investment must substantially complete prior to the end of the 2-year conditional residency period.
Evidence required for an investment from your lawful income:
Evidence required for investment funds from a gift:
There are several factors investors should pay attention to when investing in a new enterprise:
An enterprise is considered “new” if it was established after November 29, 1990. Enterprises established before November 29, 1990, can also be considered new enterprises if they have gone through re-organization or substantial change.
Any for-profit entity of lawful business is considered a commercial enterprise. This does not include non-profit organizations.
The EB-5 program has no requirement for the type of invested enterprise. Corporations, limited liability companies and limited partnerships are all acceptable. However, the choice of business type is very important for tax and management reasons. For more information about business types, please read below.
Except in a regional center company case, investors are required to participate in the operational management of the invested enterprise; in practice, this can be satisfied by taking a managing position, participating in the decision-making process or being a limited partner in a LLP. In some cases, the participation requirement can be waived.
USCIS excludes corporate and other non-individuals as an investor from the EB-5 category. However, it is perfectly acceptable for multiple investors seeking EB-5 status to join together as long as each investor infuses the requisite amount of capital into an enterprise and each investment creates at least 10 full-time positions.
Business Types
Businesses can take many different forms under U.S. law. There are many different factors that influence a business’s decision to take on a particular form. The organizational structure of a business can affect its success.
There are three types of business entities commonly associated with EB-5 petitions:
Age
USCIS has not defined any age requirements for EB-5 immigrant investors. Age restrictions may be dictated by the state where the enterprise will be located, as some states require people to be of a certain age to enter into certain contracts. However, many EB-5 Regional Center projects welcome investors of all ages.
Source: Provided by Z. Associates
The Immigration Act of 1990 ("IMMACT 90") created the Immigrant Investor Program as the fifth preference category for employment-based immigration, also known as EB-5. This was the first time a category specifically facilitated the admission of immigrant investors as lawful permanent residents and currently remains the only such category to do so. The EB-5 Immigrant Investor Program is available to those immigrants who have invested, or are in the process of investing, at least $1 million in a new commercial enterprise employing at least 10 full-time U.S. workers. Individuals who invest in a “targeted employment area” (TEA), however, are only required to invest a minimum of $500,000.In addition, immigrant investors can invest $500,000 in a qualified and approved Regional Center.In direct investments & investments through a Regional Center, the investor must show that they created at least 10 direct or indirect jobs within two years of an approved I-526 application.
The purpose of the EB-5 program is to stimulate the U.S. economy through job creation and capital investment by offering immigrant investors the benefits of permanent residency in the United States.
Approximately 10,000 visa numbers are allocated annually to EB-5 investors. USCIS reserves 3,000 EB-5 visas for aliens who invest in TEAs and 3,000 for aliens who invest in commercial enterprises affiliated with Regional Centers, as described below.
The purpose of the Immigrant Investor Pilot Program is to attract more foreign investors to fund businesses and projects in specific “regional centers” that would otherwise find it difficult to attract domestic investment based on current geographical market trends. By bringing such investment into areas of economic hardship and high unemployment, Congress hopes to stimulate job expansion, improve regional productivity, invest in infrastructure, and promote the growth of innovative new businesses. Congress has made the Immigrant Investor Pilot program particularly attractive to foreign investors by lowering the investment minimum to $800,000 (for a business in a designated regional center or TEA) as opposed to $1,050,000, and by allowing a less restrictive job creation requirement based upon the creation of “indirect” and “direct” jobs and not requiring the day to day management of the business. The Immigrant Investor Pilot Program has been extended several times, and was recently extended through September 30, 2015.
The EB-5 visa essentially offers a good immigration solution for those who have the financial resources to qualify and a tolerance for high risk investments. It does not require an employment offer from a U.S. employer as other employment-based immigration categories do, nor does it require a labor certificate. With the current economic downturn, USCIS has relaxed its requirements for the EB-5 program as a means to bring in more foreign investment. Most importantly, because the annual quota in the past consistently exceeds the number of applicants, those who qualify for EB-5 status do not typically have to wait long for a visa as there is currently no visa quota backlog for the EB-5 investor category. This is likely to change in 2014, due to increased demand.
Specific Requirements Regarding EB-5 Investment and Employment
Funds Requirement
I. Minimum Amount Requirement
Generally speaking, the minimum investment required to qualify for EB-5 status is $1,050,000 per immigrant investor. However, the limit is reduced to $800,000 in cases of investment in “targeted employment areas.” Such qualifying areas must have an unemployment rate 150% of the national average. A rural area refers to a municipal area with a population less than 20,000.
Please note that if there is a redemption clause in a commercial enterprise’s agreement that guarantees the return of a petitioner’s investment, such assets will not be deemed as “at risk”; a petitioner must infuse the full amount of at risk capital into an enterprise.
II. Legitimate Source of Funds
Assets acquired directly or indirectly by unlawful means such as criminal activities are not acceptable forms of capital. In practice, USCIS is very strict about reviewing the legitimacy of funds.
III. Acceptable Types of Property as Investment
Cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the investor are all acceptable investments for EB-5 purposes. A loan to the company or any other debt between the company and investor does not constitute an investment because such a monetary transfer does not bear any investment risk (some exceptions apply, see below). All capital shall be valued at a fair market price in U.S. dollars. The investor need not commit his/her entire capital immediately, but the investment must substantially complete prior to the end of the 2-year conditional residency period.
Evidence required for an investment from your lawful income:
- Five years of personal income tax returns
- Personal bank account statements for the past couple of years
- Salary reports
- Salary verification letter from previous employers
- Five years of business income tax returns if income was generated from the operation of your business
- Business registration documents and ownership if funding is from the operation of your own business
- Articles of incorporation, share certificates and other similardocumentation if funding is from the operation of your business
- Business bank account reports for the past couple of years if funds are from the operation of your business
Evidence required for investment funds from a gift:
- Documentation proving funds from the donor to the investor
- Statement explaining the surrounding circumstances of the gift and why the gift was made
- Gift tax return, if any
- Documentation such as personal/business income tax return and ownership of business proving the donor’s financial background to demonstrate how he/she derived the funds that were gifted
- Statement of the relationship between the investor and the deceased
- A death certificate
- Documentation of the investor’s receipt of inherited funds
- Certification of payment of inheritance tax, if any
- If there is a lack of documentation tracing funds from the deceased’s estate to the investor, a statement of thorough explanation of the relationship, the amount inherited, and other circumstances concerning the inheritance is required
- Sale of business
- Deeds
- Closing statements
- Bank account statements
- Documentation tracing funds from the closing of the transaction to the investor’s individual account
- Copy of the business registration before the sale and immediately after the sale
- Letter from the accounting firm that represented the investor in the sale, indicating the sale, sale price, and the identity of the buyer
- Business financial information such as an evaluation from a certified accountant proving the value of the business
- Sale of real estate
- Purchase agreement
- Final settlement statement
- Receipt of funds from the buyer to the investor
- Payment of real estate tax obligations
- Title transfer evidence
- Past five years personal income tax returns proving funds in the purchase of the real estate that sold
- Sale of stock
- Company’s incorporation documents or other company registration documents
- The share purchase agreement
- Evidence of the transfer of proceeds of the stock sale from the brokerage company to the investor’s account
- Payment of tax obligations of the proceeds of stock sale
- Stock transaction record
- Investment funds from a loan. (Only a loan secured by your assets as opposed to property of the commercial enterprise that you invested in is eligible.)
- Terms of the loan agreement
- Documentation proving that the loan transferred from the lender to you
- Lender’s business registration record, business income tax returns if the lender is a business or personal income tax return if the lender is an individual.
There are several factors investors should pay attention to when investing in a new enterprise:
An enterprise is considered “new” if it was established after November 29, 1990. Enterprises established before November 29, 1990, can also be considered new enterprises if they have gone through re-organization or substantial change.
Any for-profit entity of lawful business is considered a commercial enterprise. This does not include non-profit organizations.
The EB-5 program has no requirement for the type of invested enterprise. Corporations, limited liability companies and limited partnerships are all acceptable. However, the choice of business type is very important for tax and management reasons. For more information about business types, please read below.
Except in a regional center company case, investors are required to participate in the operational management of the invested enterprise; in practice, this can be satisfied by taking a managing position, participating in the decision-making process or being a limited partner in a LLP. In some cases, the participation requirement can be waived.
USCIS excludes corporate and other non-individuals as an investor from the EB-5 category. However, it is perfectly acceptable for multiple investors seeking EB-5 status to join together as long as each investor infuses the requisite amount of capital into an enterprise and each investment creates at least 10 full-time positions.
Business Types
Businesses can take many different forms under U.S. law. There are many different factors that influence a business’s decision to take on a particular form. The organizational structure of a business can affect its success.
There are three types of business entities commonly associated with EB-5 petitions:
- Corporations
- Limited Liability Companies
- Limited Partnership
Age
USCIS has not defined any age requirements for EB-5 immigrant investors. Age restrictions may be dictated by the state where the enterprise will be located, as some states require people to be of a certain age to enter into certain contracts. However, many EB-5 Regional Center projects welcome investors of all ages.
Source: Provided by Z. Associates