What is a Targeted Employment Area?

Targeted Employment Area

 

As a potential EB5 investor, you are eligible to invest either $1 million or $500,000 to qualify for an EB-5 visa. The vast majority of investors invest the lower $500,000 amount. To qualify for the lower investment amount, your EB5 investment must operate in a targeted employment area (TEA).

 

In this guide, I’ll go over what you need to know about targeted employment areas. If you have any questions, feel free to email me directly at Michael@AshooriLaw.com.

 

Overview:

 

1. What is a Targeted Employment Area?

 

2. What is an Area of High Unemployment?

 

3. What is a Rural Area?

 

4. Why is the EB5 Investment Amount Lower for Targeted Employment Areas?

 

5. What does it Mean to be Principally Doing Business in a TEA?

 

6. Conclusion

 

 

1. What is a Targeted Employment Area?

 

The EB-5 regulations define a targeted employment area as “an area, which, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 percent of the national average.”

 

From this definition we learn that there are 2 ways that an area can be classified as a TEA:

 

  • Area of High Unemployment

 

  • Rural Area

 

2. What is an Area of High Unemployment?

 

  • An area of “high” unemployment is an area that has experienced unemployment of 150% of the national average rate at the time the EB-5 investor makes their investment or files their EB-5 petition (Form I-526).

 

  • The vast majority of TEAs are classified as high unemployment area TEAs.

 

  • To prove that an area meets the high-unemployment standard, you may either rely on public records or by getting a letter from a qualified state government agency.

 

3. What is a Rural Area?

 

  • The other way an area can qualify as a TEA is if the area is considered a “Rural Area.”

 

  • A rural area is defined by the EB5 regulations as “any area not within either a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more.

 

What this means is that there are 2 separate requirements to qualify as a rural area:

 

  • The investment cannot be located in any Metropolitan Statistical Area (MSA)

 

  • AND The investment cannot be located within any city or town having a population of 20,000 or more.

 

Important Notes:

 

  • The vast majority of the United States population lives within MSA’s.

 

  • Most areas are classified as TEAs using the high-unemployment area exception.

 

  • Very few areas are classified as TEAs using the rural area exception.

 

 

4. Why is the EB5 Investment Amount Lower for Targeted Employment Areas?

 

According to the USCIS Policy Manual:

 

  • “Congress provided for a reduced investment amount in a targeted employment area to encourage investment in new commercial enterprises principally doing business in and creating jobs in areas of greatest need.”

 

  • Ironically, under the current EB5 rules, many very prominent areas (such as New York City) have been able to obtain TEA status.

 

  • Based on the EB5 programs perceived failures in limiting TEA status to those “areas of greatest need” the EB5 program has come under immense scrutiny to modify the way TEAs are designated. As a result, changes will likely be made to how TEAs are designated in the future.

 

5. What does it Mean to be Principally Doing Business in a TEA?

 

As stated in the USCIS Policy Manual: “For the lower capital investment amount to apply, the new commercial enterprise into which the immigrant invests or the actual job-creating entity must be principally doing business in the targeted employment area” (emphasis added).

 

The USCIS policy manual goes on to specify that:

 

  • “A new commercial enterprise is principally doing business in the location where it regularly, systematically, and continuously provides goods or services that support job creation.”

 

  • “If the new commercial enterprise provides such goods or services in more than one location, it will be principally doing business in the location most significantly related to the job creation.”

 

Here are some factors USCIS uses to determine where a company principally does business:

 

  • Where are the jobs directly created?

 

  • Where are the funds being spent related to job creation?

 

  • Where are the day-to-day operations taking place?

 

6. Conclusion

 

The vast majority of EB-5 investments are made in targeted employment areas (or TEAs). An area can be classified as a TEA if it is a rural area or if it is an area of high-unemployment. Making an investment in a targeted employment area (TEA) is necessary to qualify for the reduced EB-5 investment amount of $500,000.

 

If you need assistance figuring out whether your prospective EB5 investment is located in a TEA, or if you need help with your EB5 visa, feel free to email me directly at Michael@AshooriLaw.com. I’m very responsive via email and I’d be happy to help you.

 

Resources

 

 

 

 

  • Finding the TEA: “Targeted Employment Area” Required to Claim Minimum Investment Amount Under the EB-5 Visa Rules by David M. Moris and Farah S. Abbas 

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