The EB-5 Investor’s Immigrant Visa

This immigrant visa is available to investors who pump a significant amount of money into a business in the United States to help grow the U.S. economy and the work force. This is the EB-5 immigrant visa. This is another visa for which you can self-petition.

The Immigration Nationality Act (INA) allows the USCIS to grant up to 10,000 visas per fiscal year to foreign investors who have or plan to invest a certain amount of money into a new commercial enterprise. Spouses and minor children are included in the number of designated visas along with the investor. Three thousand (3000) of the 10,000 visas are for those who invest in certain designated regional centers, which require a minimum investment of $500,000. The rest of the visas are for individuals who invest a minimum of $1,000,000 into a new enterprise that creates a certain number of jobs for U.S persons. Once approved via adjustment of status or the immigrant visa, the investor and their immediate family members will receive a two (2) year conditional permanent residence. Once the investor proves the investment is complete and has accomplished the required results, the conditions will be removed and the investor will receive the ten year permanent residence (green card).

Eligibility for the EB-5 Visa

In order to qualify for the EB-5 visa, you must meet three main criteria:

  1. You must invest capital with the U.S. fair market value of $1,000,000  ($500,000 for a regional service center or TEA);
  2. In a new commercial enterprise; and
  3. At least 10 new jobs must be created because of this investment in the new commercial enterprise.

It is best to explain what each criteria means and what it will take to meet it. I know it appears to be obvious that the investment of capital means cash. However, the investment does not have to include only cash. Capital has a broad definition which includes cash, equipment,inventory, a cash equivalent, tangible property and even a loan or promissory note (which must be securely backed by assets you own). However you must be personally and primarily responsible for repayment of the debt and the debt must not be in taken out by the enterprise. Any assets valued must be in U.S. dollars at the fair market value.

Investment of Capital

  1. The investment

To invest capital means to contribute your own capital into the business. The way in which this capital is provided to the business is very important here. The capital must be invested in the company in the form of a contribution. For instance, if you loan the new commercial enterprise funds in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between you and the new commercial enterprise, then it is not a capital investment.

You must show that you have skin in the game by making a capital investment that is at risk. This means you stand to lose if you don’t get returns after your contribution or if the business fails. Other ways in which one may think of investing may not qualify either. For example, buying shares without any other conditions will not qualify as a capital investment. It is important to note that the present value of the investment is what matters during the petitioning period and within the two (2) year conditional residency. The value of the investment in the past or in the future will not count. Only the present fair market value of the investment. Therefore, any guaranteed returns from the investment or the profits after the investment will not count as part of the value of the investment.

The structure of the agreement is pivotal to the approval process. Any indication of a redemption provision or condition in the agreement that would allow for you to exit the agreement once permanent residence is granted will be categorized as an “impermissible debt” arrangement. Other such arrangements include mandatory redemptions, options exercisable by the investor. Such provisions will disqualify the business contribution and cannot be remedied by other contingencies like conditioning the repurchase of the investor’s securities on the availability of funds or the delay of the repurchase in the future.

2. The Capital

You must invest at least $1,000,000 in capital in a new commercial enterprise that creates at least 10 jobs for U.S. workers. However, if you invest in a new commercial enterprise that is principally doing business in and creates jobs in a targeted employment area (TEA) you must invest at least $500,000 in capital.

One aspect of capital that the officer pays attention to is the source of such capital. All capital must be personally owned by you and must come from a legal source. The USCIS will not consider capital that directly or indirectly comes from an illegal source. Therefore, it is very important to not only show your legal ownership but also show a trail of the source of your capital. Such evidence may include:

  • Foreign business registration records;
  • Entity documents and personal tax returns, including income, franchise, property or any other tax returns of any kind filed within 5 years with any taxing jurisdiction in or outside the United States;
  • Other evidence showing the source(s) of capital;or
  • Certified copies of any judgments or evidence of all pending governmental civil or criminal actions, governmental administrative proceedings, and any private civil actions (pending or otherwise) involving monetary judgments against the immigrant investor from any court in or outside the United States within the past 15 years.

Other evidence showing the source of capital include:

  • corporate, partnership, or other business entity annual reports, Audited financial statements;
  • Evidence of any loan or mortgage agreement, promissory note, security agreement, or other evidence of borrowing which is secured by the immigrant investor’s own assets, for which the immigrant investor is personally and primarily liable;
  • Evidence of income such as earnings statements or official correspondence from current or prior employers stating when the immigrant investor worked for the company and how much income the immigrant investor received during employment;
  • Gift instrument(s) documenting gifts to the immigrant investor;
  • Evidence, other than tax returns, of payment of individual income tax, such as an individual income tax report or payment certificate, on the following:
  • Wages and salaries;
  • Income from labor and service or business activities;
  • Income or royalties from published books, articles, photographs, or other sources;
  • Royalties or income from patents or special rights;
  • Interest, dividends, and bonuses;
  • Rental income;
  • Income from property transfers;
  • Any incidental income or other taxable income determined by the relevant financial department;
  • Evidence of property ownership, including property purchase or sale documentation; or
  • Evidence identifying any other source of capital.

3. Other valid forms of capital include:

  • A promissory note showing primary and personal responsibility for payment on the note, with immigrant assets as security.The promissory note must meet certain requirements as well. The promissory note must not include assets of the enterprise or company in which the immigrant is investing; the assets must be specifically identified as securing the promissory note; and the U.S. note holder must be able to seize such assets. In addition the promissory note must be valued in the present time and must not have a value from past or future time. Further, the amount on the promissory note must be repaid within 2 years, without any provisions for extensions.
  • Proceeds from a loan. A loan may qualify as capital. However just as the promise to pay (promissory note) must meet certain conditions, the same applies to loan proceeds. For the loan to qualify as a capital investment, the immigrant investor must be personally and primarily responsible for repayment of the debt; the loan must be secured by assets owned by the immigrant investor; and the assets of the new commercial enterprise are not to be used to secure the debt. The collateral (assets) must be valued enough to cover the amount of the loan at the fair market value in U.S. dollars.

4. Execution of the Capital Investment

Proving required ownership, value and investment of capital is one aspect of this process. You must  also show that the investment resulted in business activity within the new commercial enterprise. Establishing a bank account, and signing a lease is not enough to prove there is business activity within the new commercial enterprise. In addition, the full amount of the capital must be available to the enterprise responsible for creating the new jobs. While the capital can be held in escrow until the conditional permanent residence in granted, the capital cannot be held in your personal bank account. The capital must be held in a business bank account and should not be under your control. However, if held in an escrow it is better for the capital to be held in U.S. escrow rather than a foreign escrow to avoid further requests for evidence. For instance, if the capital is in foreign escrow, you must show that it is more likely than not that the minimum required capital investment will be transferred to the enterprise after you obtain conditional residence.

5. The Job Creation Requirement

As mentioned above, the investment must be at risk. The job creation requirement is related to whether or not the investment will be considered at risk and whether this at risk investment will create the required ten (10) or more jobs. You can show that the investment created these jobs either directly or indirectly. However, any proof of indirect job creation must be clearly correlated to the investment to be considered. For example, indirect job creation from the tenants of a real estate development is not enough to meet the indirect job creation criteria. Evidence that shows the required job creation include:

  • Tax records,
  • Employment Eligibility Verification (Form I-9), or other similar documents for 10 qualifying employees who have already been hired; or
  • A copy of a comprehensive business plan showing that the new commercial enterprise, will need at least 10 qualifying employees within 2 years and the projected dates of such required hires.

Generally, there are two ways to approach the job creation requirement during the initial application process in order to properly link your capital investment to the creation of jobs.

A. You can show that your contribution will create the jobs by showing the following:

  • You have placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk;
  • There’s a risk of loss and a chance for gain;
  • The business activity has actually been undertaken; and
  • The full amount of the investment is available to the business(es) most closely responsible for creating the required number of jobs upon which the petition is based. This can be shown through a comprehensive business plan.

B. You can show that your contribution has created jobs by showing the following:

  • You have placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk;
  • There is a risk of loss and a chance for gain;
  • Business activity has actually been undertaken; and
  • At least 10 jobs for U.S. persons were created as a result of the capital investment.

6. More about the Type of Commercial Enterprise and the reduced investment amount in the Targeted Employment Area (TEA)

The new commercial enterprise is any for-profit business formed for the ongoing conduct of lawful business transactions after November 29, 1990. If the business was established on or before November 29, 1990, then the enterprise would need to be reorganized or restructured to fall within the definition of a new commercial enterprise for purposes of obtaining the eb-5 visa. The definition of commercial enterprise is broadly defined and can include a sole proprietorship, a corporation, partnership, joint venture, holding company, business trust, other types of public or privately held entities or business organizations. It is very important to note that non-commercial investment such as purchase of a condo or personal residence does not qualify as a new commercial enterprise.

If you are investing in a new commercial enterprise, generally the minimum investment must be a minimum of $1,000,000. However, congress authorized a reduced investment amount of $500,000 in a new commercial enterprise that is conducting business in a TEA and which has created jobs in this area. There are two ways to prove that your investment has created jobs in a TEA. First, investment in a new commercial enterprise in a rural area. A rural area is not within the “statistical area” or outer boundary of a city or town with 20,000 or more population.

Second, investment in a new commercial enterprise is in a high unemployment area. A high unemployment area is one that has an unemployment rate that is 150% of the U.S. national average. To meet the requirements of investment within a TEA, enterprise must principally be doing business in this area. To principally be doing business, the enterprise must be continuously and consistently providing goods and services in the area, which promotes job creation. This is where it is beneficial to invest in regional service centers to show job creation which can be either direct or indirect. The investor may also provide evidence that an area in which they invest the capital is a TEA and must also verify that the area continues to be a TEA. A list of regional service centers for investment is located on the uscis.gov website.

To increase your success in the eb-5 immigrant visa application process, you must meet all eligibility criteria explained above. You must provide convincing, solid and credible evidence showing it is more likely than not that your capital investment in a new commercial enterprise has or will create at least 10 U.S. jobs.

NOTE: As always this is for informational purposes only and is not legal advice. Consult an immigration attorney, like myself, for advice regarding your particular circumstances.

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