6 EB5 Visa Requirements You Need to Know About

If you are considering whether an EB5 visa is right for you, you should take some time to learn about the EB5 visa requirements.

The EB5 Visa provides investors and entrepreneurs an opportunity to get a green card, for themselves and their family, by investing in a U.S. business.

This can be a great immigration option for foreign investors if they can satisfy the EB5 requirements.

This article will cover all 6 key requirements for the EB5 visa.

If you have any questions, feel free to email me directly at contact@ashoorilaw.com

Now lets get started . . .

As, I mentioned there are 6 EB5 visa requirements and these are the following:

1. Invest in a New Commercial Enterprise

2. Invest a Minimum of $1,050,000 (or $800,000 for TEAs)

3. Create 10 Full-Time Jobs for US Workers

4. Lawful Source of Funds

5. Funds Must be ‘At-Risk’

6. Engage in the Management of the New Commercial Enterprise

1. Invest in a New Commercial Enterprise

As an EB5 investor, you are required to invest in what is referred to as a “new commercial enterprise.”

A new commercial enterprise is a for-profit business, conducting lawful activities, that was formed after November 29, 1990.

For-profit means that the business’s purpose is to generate a profit. Non-profit businesses will not qualify.

If your business was formed on or before November 29, 1990 there are some exceptions that may allow the business to qualify as a new commercial enterprise.

One exception is if you increase the size of the business to the point where there is a 40% increase in the net worth of the business or if there is a 40% increase in the number of employees.

Another exception is if you substantially restructure or reorganize the business.

New commercial enterprises come in all forms.

As an investor, you have two options. You can make a direct investment or you can invest in a regional center.

There are 3 types of direct investments: you can purchase an existing business, invest in an existing business, or start a brand new business (all examples of direct investments).

You can also choose to invest in a large scale business entity known as a regional center.

Regional centers are business entities regulated by the United States Citizenship and Immigration Services (USCIS). Regional centers pool together funds from many EB5 investors to invest in a major development.

Each of these options has different pros and cons. The option you choose will be based on your particular business goals.

For example, if you want a lot of control over the business, you will probably choose to start your own business or purchase an existing business.

If you would rather have very little involvement in the business, you will probably choose to invest in a regional center. With regional centers, a managing member will handle all of the day-to-day management responsibilities.

2. Invest a Minimum of $1,050,000 (or $800,000 if Investment is in TEA)

As an EB5 investor you are required to invest a minimum of $1,050,000 in the new commercial enterprise.

This amount is reduced to $800,000 if you choose to invest in a targeted employment area.

Targeted employment areas are areas with an unemployment rate of at least 150% of the national average or rural areas.

Rural areas are defined by the Immigration and Nationality Act as areas not located within any metropolitan statistical area (MSA) and not located within any city or town with a population of 20,000 or more.

Because of how restrictive the rural area definition is, most TEAs are based on high unemployment.

Tip: As the rules currently stand, more areas than you think can qualify as TEAs. The current procedures for TEA designation allow attorneys to average the unemployment rate of multiple contiguous census tracts to achieve the required unemployment rate.

I know that this sounds confusing, but all you need to know is that through the process mentioned above, very prominent areas within Beverly Hills and Marina del Rey have qualified as TEAs.

If you plan on investing in a TEA, speak to an immigration attorney early so that they can help you determine if the area of your intended business will qualify.

3. Create 10 Full-Time Jobs for US Workers

Your investment must lead to the creation of 10 jobs. Specifically, you must create full-time jobs for “qualified workers.”

Full-time means that the employees must work at least 35 hours per week.

Qualified workers are US citizens, lawful permanent residents, or other immigrants that have the appropriate authorization to work for your company.

People in the United States in nonimmigrant status will not qualify for the job creation requirement.

Your children and spouse will not qualify for the job creation requirement.

Two part-time jobs do not count as one full-time jobs.

1 full-time job can be shared between 2 qualified workers.

Difference Between Direct Jobs and Indirect Jobs…

Another important part of the job creation requirement is to know what kinds of jobs count.

There are 2 types of jobs that may qualify for an EB5 visa:

1. Direct Jobs

2. Indirect Jobs

Direct Jobs

Direct jobs jobs are jobs actually created by the new commercial enterprise.

The new commercial enterprise must be the employer of the employee.

Example:

If the new commercial enterprise is a hotel, the direct jobs would be the hotel staff

Indirect and Induced Jobs

Indirect and Induced jobs are not created directly by the new commercial enterprise but are created as a result of the new commercial enterprise.

Example:

If the new commercial enterprise is a hotel, the jobs created by the hotels furniture supplier are indirect jobs.

The jobs created by the local stores, as a result of increased business brought by the new commercial enterprise, are induced jobs.

One of the big differences between regional centers and direct investments is that regional centers can count direct jobs, indirect jobs, and induced jobs.

Direct investments can only count the direct jobs created.

4. Lawful Source of Funds

The capital you use to invest in the new commercial enterprise must come from a lawful source.

This means that you must have earned the money lawfully (no illegal activity).

The investment capital can come from many different sources such as:

• your accumulated savings over a long period of time

• from selling a property

• from selling your business

• through inheritance

• by receiving a gift

• and many other ways

This is one of the most complex areas of the EB5 visa.

As an EB5 investor you must show USCIS exactly how you earned your funds. This process requires careful planning with your immigration lawyer.

You must also trace the path of funds.

This is a requirement within the source of funds that many people don’t think about.

By path of funds, I am referring to each step of the way from the time you receive the funds (or earlier), until the time the funds are deposited into the bank account of the new commercial enterprise.

Example:

Lets say your investment is coming from a the sale of a property that you own.

To Show the Source of Funds…

First, you will want to show how you acquired the means to purchase the property.

If its from employment earnings, you will want to provide your resume, a description of your job duties, your various degrees and professional credentials, and your tax returns for the past several years.

You will also want to provide the documents of the sale including the official purchase and sale agreement and a letter attesting to the terms of the sale.

To Show the Path of Funds…

First, you will include your bank statement immediately before the proceeds of the sale were deposited into your account.

Second, you will include a bank statement of your account immediately after the proceeds from the sale of the property enter your account.

Third, you will include bank statements immediately before and after the money is wired from your account to the bank account of the new commercial enterprise.

Fourth, you will include a receipt of the wire transfer order form.

Keep in mind: The above example is simplified to give you a general idea of the source and path of funds requirement.

There are many other documents that would need to be included in the above example depending on the details of the case.

If you are interested in planning out your source of funds, feel free to reach me directly at contact@ashoorilaw.com.

I would be happy to give you more detailed information based on your specific situation.

5. Investment Funds Must be “At-Risk”

One of the most important requirements of the EB5 visa is that you must place your funds “at-risk” for the purpose of generating a profit.

To satisfy this requirement, your investment funds must be subject to total loss or gain.

You cannot show a mere “intent” to invest with no present commitment. You must show an “actual commitment” to investing the required amount of capital.

To meet the actual commitment standard, you can place your funds in an escrow account. You can make the disbursement of the funds conditional on the approval of you Form I-526 and subsequent visa issuance or successful adjustment of status.

You cannot be guaranteed a return on your investment. This would contradict the “at-risk” requirement as it would resemble a debt-arrangement as opposed to an actual investment.

You cannot have the right to demand a return of any portion of your investment or to redeem any portion of your investment in the new commercial enterprise.

Be Careful:

Look out for any projects that guarantee you any sort of return on your investment or promise you property of any kind.

For example, if the project guarantees you a portion of real estate or equipment owned by the business, that guarantee will directly conflict with the at-risk requirement.

The expected present value of what you are guaranteed will not count toward the amount you invested, when determining whether you satisfy the minimum investment amount.

Think about it, your investment funds aren’t subject to total loss if you’re guaranteed a return in the form of money or assets.

A few more points regarding the ‘at-risk’ requirement:

Your investment funds cannot just sit in the business bank account as reserves.

The funds must have a nexus to job creation.

Your investment cannot resemble a debt arrangement.

You can still receive a return on your capital investment, as long as the return isn’t a portion of your initial investment and wasn’t guaranteed.

Through the at-risk requirement, USCIS put in place measures to ensure that you are committed to the success of the project.

By requiring you to place your investment capital at-risk, the government is creating a situation where you are likely to conduct the necessary research and due-diligence before investing in a project.

6. Engage in the Management of the New Commercial Enterprise

As an EB5 investor, you are required to engage in the management of the business.

You cannot just be a passive investor.

There are 2 ways to satisfy this requirement:

1. Handling the day to day managerial responsibilities; or

2. Exercising policy formulation

This requirement can be satisfied pretty easily.

You can prove that you have sufficient engagement in the management by providing a statement of your title within the new commercial enterprise, along with a description of your duties.

If the new commercial enterprise is structured as a corporation, you can prove sufficient management by providing evidence that you are a corporate officer or a member of the board of directors.

If the new commercial enterprise is a limited partnership, you can demonstrate sufficient management as a limited partner by showing that the limited partnership agreement provides you with the rights, powers, and duties normally granted to limited partners (such as voting rights).

Quick Recap:

The EB5 visa is a great option for foreign investors looking to immigrate to the United States.

If you are considering an EB5 visa, make sure that you are able to clearly satisfy all 6 requirements of the EB5 program.

In addition to reviewing the contents of this article, you should consult directly with an immigration attorney that handles EB5 cases.

Ashoori Law is a Los Angeles based immigration law firm that provides legal services including complete handling of EB5 visa petitions.

If you have any questions, I’m happy to answer them for you.

You can reach me directly via email at contact@ashoorilaw.com