EB-5 Investor Visa Information & Requirements
Qualified Applicant Requirements For EB-5 Investor Green Card
As of November 21, 2019, the regulations regarding the EB-5 Investor Green Card category have changed significantly. The EB-5 investment amount per immigrant applicant must be at least $900,000 in a "Targeted Employment Area" (TEA) - an area of sufficiently high unemployment determined by the Department of Homeland Security - or $1.8 million for all other investments. A single new commercial enterprise may be used for investor/employment-creation classification by more than one investor, provided that: (1) each investor has invested (or is actively in the process of investing) the required amount and (2) each investment results in the creation of at least ten full- time positions for qualifying employees. A new commercial enterprise may be used for investor/employment-creation classification even though there are several owners of the enterprise, including persons not seeking classification, if: (1) the sources of all capital invested are identified and (2) all invested capital has been derived by lawful means.
In TEAs, investors may choose either to directly invest $900,000 in an enterprise or invest through a Regional Center ( an organization designed by USCIS to facilitate EB-5 investments.) Investing through a Regional Center allows for indirect employment creation and passive investment. A direct EB-5 investment, whether in the amount of $900,000 in a TEA or $1.8 million anywhere else, requires direct job creation and the investor(s) to take an active managerial or policymaking role in the enterprise. Please note: Savitz Law Offices only provides legal services for direct EB-5 investments. Our office does not assist individuals who wish to pursue an EB-5 Green Card through a Regional Center.
Actively in the Process of Investing Capital
Invest means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the investor and the new commercial enterprise does not constitute a contribution of capital, and will not constitute an investment.
The regulations define capital as cash and cash equivalents, equipment, inventory, and other tangible property. Retained earnings cannot count as capital. Capital does not include loans by the applicant or other parties. Indebtedness secured by assets owned by the investor may be considered capital, provided the investor is personally and primarily liable for the debts and the assets of the enterprise upon which the application is based are not used to secure any of the indebtedness.
Indebtedness may consist of a promissory note signed by the applicant that specifies a payment schedule for the new commercial enterprise. Absent fraud, a signed promissory note that is secured by the applicant's personal assets constitutes a contribution of capital by the applicant. The issuer of the promissory note, i.e., the investor, is considered to be at risk if he or she is clearly obligated to make all the required payments on the note and there are no escape clauses. The investor cannot receive any bond, note, or other debt arrangement from the enterprise for the capital contributed to it. This includes any stock redeemable at the holder's request. All capital is valued at fair market value in U.S. dollars at the time it is given.
Nature of the Investment; At-Risk Requirement; Source of Funds
Investment means placing the capital at risk for the purpose of generating a profit. Merely putting cash into the corporate account of a business does not show that the capital is at risk for the purpose of generating a return. The full amount of the required capital must be expended by the enterprise directly toward job creation; otherwise that capital is not at risk of loss. The money must be invested in the business most closely responsible for actually creating the jobs, not some intermediary company.
The Immigration Service will not consider the capital at risk for EB-5 purposes where there is no evidence of negotiations with potential suppliers, customers, or utility providers and no showing that the enterprise had actually undertaken any business activity. The investor is required to submit a comprehensive and credible business plan that describes the enterprise, its products and/or services, and its objectives; analyzes the market in detail, including potential customers and competition; outlines a marketing strategy; projects its sales, costs, and income and shows the basis for those projections; and presents its organizational structure, including job descriptions and a staffing timetable.
The assets should be legally and effectively the applicant's; how they came to the applicant is immaterial as long as the means and source were legal. The immigration agency requires documentation to show that the capital invested is indeed the applicant's and was legally obtained and not drug money.
The regulations require filing the following types of documentation to establish that capital used in the new enterprise was acquired by legitimate means: (1) foreign business registration records; (2) personal and business tax returns, or other tax returns of any kind filed anywhere in the world within the previous five years; (3) documents identifying any other source of money; or (4) certified copies of all pending governmental civil or criminal actions and proceedings, or any private civil actions involving money judgments against the investor within the past fifteen years.
Funds received by or on behalf of the applicant as a gift may be considered a proper, qualifying investment, but the applicant must show the lawful source of the gifter's funds. The regulations require detailed documentation of the source and transfer of assets actively in the process of investment and of their being committed and at risk, giving great latitude as to the type of capital, tangible or intangible. Qualifying capital includes indebtedness secured by the applicant's own assets, provided that the applicant is personally and primarily liable and that the assets of the new commercial enterprise on which the application is based are not used to secure any of the indebtedness. Capital does not include loans by the applicant or other parties.
The regulations specifically allow immigrant investors to pool their investments with others seeking EB-5 status, as well as those who have no interest in immigration status. Each EB-5 investor must invest the applicable statutory amount. All of the new jobs created by the new commercial enterprise will be allocated among those within the pool seeking permanent investor Green Cards.
Job Creation; Ten Full-Time Positions
The jobs created must be permanent full-time positions for qualifying employees, defined as U.S. citizens, lawful permanent residents, and certain other immigrants with valid work authorization. Full-time employment for EB-5 purposes means a position that requires at least thirty-five hours a week at any time, regardless of who fills the position. Job-sharing arrangements, where two or more qualifying employees share a full-time position, will also serve as full-time employment if the hourly requirement per week is met. Job-sharing does not include combinations of part-time positions even if such positions meet the hourly requirement per week when combined. Seasonal positions also do not qualify.
As an alternative to evidence that the ten employees have already been hired, the regulations allow for the submission of a comprehensive business plan showing that the nature and size of the enterprise will require at least ten employees within two years and providing the timetable for their hire. It is reasonable to assume that when an employee quits, a short lapse in filling the job would not be disqualifying, as the job-creation requirement relates to positions and not to the individuals filling them.
Nature of Enterprise
The enterprise may be established through virtually any form of entity. A commercial enterprise may include a limited partnership. Similarly, two or more immigrants, each investing $900,000 or $1.8 million, may join in establishing a qualified business. In such a case, ten jobs would have to be created per immigrant. It is also possible to make a qualifying investment in a commercial enterprise of which there are other owners not seeking the benefits of this provision.
Applicant's Managerial or Policymaking Role
An applicant may not qualify as a passive investor. The investor must show that he or she will be engaged in a management role by day-to-day managerial control or as a policy maker. This requirement is met by showing that the applicant is a corporate officer or board member, or is a limited partner with the rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act (ULPA); holding such a position, an applicant need not describe his or her management activities. Merely calling the investor a limited partner, however, does not automatically mean that the person is involved in the management of the new commercial enterprise.
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