EB-5 Job Creation Requirement: Regional Centers vs. Direct Investments
The EB-5 visa job creation requirement is one of the most important aspects of the EB-5 program. In this guide, I’ll discuss this requirement in detail and compare the differences between regional center job creation and direct investment job creation. If you have any questions, feel free to email me directly at Michael@AshooriLaw.com.
1. Introduction to EB-5 Job Creation Requirement
2. What are qualifying employees?
3. What is considered a full-time position?
4. When do the jobs need to be created?
5. Do the employees need to be hired by me directly?
6. How do I show that the jobs were actually created?
7. Do existing jobs count?
1. Introduction to EB-5 Job Creation Requirement
For those of you that are new to the EB-5 visa, here’s a quick introduction: the EB-5 visa is an investment-based immigrant visa. Through the EB-5 program, a foreign investor can get a green card for themselves and their immediate family members by investing either $500,000 or $1,000,000 in a US business and creating 10 full-time jobs for US workers.
Now, let’s focus more closely on the job creation requirement. As I mentioned above, the formula for an EB-5 visa is basically: investment + jobs = green card. Regarding job creation, the EB-5 regulations specifically state:
- “A petition submitted for classification as an alien entrepreneur must be accompanied by evidence that the alien has invested or is in the process of investing lawfully obtained capital in a new commercial enterprise in the United States which will create full-time positions for not fewer than 10 qualifying employees.” (emphasis added) [8 CFR Section 204.6(j)]
The statement above might seem fairly straightforward, however, there are many important questions that must be answered, such as:
- What are qualifying employees?
- What is considered a full-time position?
- When do the jobs need to be created?
- Do the employees need to be hired by me directly?
- How do I show that the jobs were actually created?
- Do existing jobs count?
The remainder of this guide will focus on answering the above questions.
2. What are Qualifying Employees?
Regarding qualifying employees, the EB-5 regulations state the following:
- “Qualifying employee means a United States citizen, a lawfully admitted permanent resident, or other immigrant lawfully authorized to be employed in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or an alien remaining the United States under suspension of deportation. This definition does not include the alien entrepreneur, the alien entrepreneur’s spouse, sons, or daughters, or any nonimmigrant alien.” [8 CFR Section 204.6 (e)]
- Qualifying employees can be any US citizen, permanent resident, or any other immigrant lawfully authorized to work in the US.
- The EB-5 investor, their spouse, and their children do not count as qualifying employees (so they will not count toward the 10 jobs).
- Non-immigrants do not count as qualifying employees.
3. What is Considered a Full-time Position?
With respect to full-time positions, the EB-5 regulations state the following:
- “Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week.” [8 CFR Section 204.6 (e)]
- “A job-sharing arrangement whereby two or more qualifying employees share a full-time position shall count as full-time employment provided the hourly requirement per week is met.” [8 CFR Section 204.6 (e)]
- “This definition shall not include combinations of part-time positions even if, when combined, such positions meet the hourly requirement per week.” [8 CFR Section 204.6 (e)]
- Full-time means that the qualifying employee works at least 35 hours per week.
- Part-time, seasonal, and temporary positions do not However, 2 employees can share 1 full-time position. This would count as 1 job.
4. When do the Jobs Need to be Created?
One of the most common questions asked about the EB-5 job creation requirement is: when do the jobs need to be created?
To answer this question, I will explain the EB-5 visa process. There are 2 main stages in the EB-5 visa process: 1) I-526 stage; 2) I-829 stage.
- The first stage in the EB-5 process is filing a Form I-526 with USCIS. The I-526 currently takes approximately 20 months to process on average.
- Once the I-526 is approved, you are eligible to either adjust status or apply for an immigrant visa.
- Once you enter the US on an immigrant visa, or your adjustment of status is complete, you are classified as a conditional permanent resident for 2 years.
- As a conditional permanent resident, you have all the same rights and privileges as an unconditional permanent resident except for the fact that your permanent residency (green card) only lasts for 2 years.
- It is during this 2-year period of conditional permanent residency that the 10 full-time jobs must be created.
- This means that the jobs do not need to be created until about 4 years after filing your Form I-526.
- As early as 3 months before your conditional permanent residence expires, you are eligible to apply to have the condition removed from your green card to become an unconditional permanent resident (green card holder).
- To have the condition removed from your green card, you must file a Form I-829 with USCIS.
- In order to get your I-829 approved, you must show that you kept your funds invested in the EB-5 project and that you created at least 10 full-time jobs for US workers.
5. Do the Employees Need to be Hired by me Directly?
To answer this question, let’s explore the different investment types that qualify for an EB-5 visa. To get an EB-5 visa there are 2 basic investment types that you can choose between: 1) Direct Investment; 2) Regional Center Investment. The investment that you choose will determine how your jobs will be calculated.
Regional Center Investment
A regional center is defined by the EB-5 regulations as follows:
- “Regional center means any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.” [8 CFR Section 204.6 (e)]
- Regional centers are special entities which are approved by USCIS to sponsor EB-5 projects.
- Regional centers typically sponsor large-scale real estate developments such as hotels, resorts, and apartment/condominium complexes.
- By investing in a regional center, an EB-5 investor is typically classified as a limited partner. As a limited partner, the EB-5 investor has very little responsibility for managing the business.
- A direct investment is any type of investment other than a regional center investment.
- Examples of direct investments include starting your own business, investing in an existing business, purchasing an existing business, or opening a franchise.
- Direct investments typically require much more direct involvement in the management and operations of the business.
Job Creation Benefits of Regional Center Investments Compared to Direct Investments
- As an EB-5 investor, if you choose to invest in a project sponsored by a regional center, there are multiple benefits with respect to job creation.
- The main benefit is that EB-5 regional center projects are able to take credit for direct jobs, indirect jobs, and induced jobs when calculating the total number of jobs the project will create.
- Direct jobs are jobs where the new commercial enterprise directly employs the employee.
- Indirect jobs are jobs “that are held outside of the new commercial enterprise but are created as a result of the new commercial enterprise.”
- For example, lets say an EB-5 project hires a construction company to handle construction related work for the project. The construction workers are employed by the construction company, not the EB-5 project, so they would not be considered direct jobs. Instead, they are considered indirect jobs. An EB-5 regional center project would be able to include these indirect jobs as part of its overall job creation.
- Regional centers may also take credit for induced jobs. Induced jobs are jobs that are created as a result of regional center. For example, lets say the regional center project is a 500 room resort. The presence of this resort may lead to increased tourism in the area where the resort is located. As a result, surrounding businesses (such as restaurants and bars) may need to hire additional workers. These are examples of induced jobs that the regional center project would be able to take credit for.
- This means that the regional center project would be able to take credit for jobs that it does not directly create.
- Conversely, EB-5 investors making a direct investment can only take credit for direct jobs. They cannot take credit for indirect and induced jobs.
6. How do I Show that the Jobs were Actually Created?
- By investing in a project sponsored by a regional center, the way you prove job creation is different than if you were to make a direct investment.
- If you make a direct investment for an EB-5 visa, you must submit I-9 forms which directly prove that you’ve hired 10 full-time workers.
- Conversely, because of the job creation benefits given to regional centers, an EB-5 investor that invests in a regional center project does not necessarily have to rely on I-9 forms alone. Regional center projects may instead rely on economic formulas and other similar methods to prove the total number of jobs that will be created.
- Regarding job creation for regional centers, the EB-5 regulations state: “To show that 10 or more jobs are actually created indirectly by the business, reasonable methodologies may be used. Such methodologies may include multiplier tables, feasibility studies, analyses of foreign and domestic markets for the goods and services to be exported, and other economically or statistically valid forecasting devise which indicate the likelihood that the business will result in increased employment.”
7. Do Existing Jobs Count?
- The EB-5 regulations specify that the new commercial enterprise must create not fewer than 10 full-time positions for qualifying employees. In most cases, this means that the jobs must be new jobs.
- If you are starting a business, all of the jobs you create will be new jobs that can potentially qualify toward the 10 job requirement.
- However, if you purchase an existing business, the jobs that are already in existence do not count toward the EB-5 job creation requirement.
Exception for Troubled Businesses
- If the business that you purchase for your EB-5 investment is considered a “troubled business,” you may be able to take credit for the existing jobs that you preserve.
- A troubled business is a business that has been in existence for at least 2 years and has incurred a net loss during a certain number of months prior to the EB-5 investor filing their EB-5 petition.
The EB-5 job creation requirement is one of the most important aspects of the EB-5 visa. The job creation requirement is very different depending on whether you will make a direct investment or whether you will invest in a regional center project. The main differences are focused on 1) how jobs are calculated; and 2) whether indirect jobs can be calculated in the total.