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The Employment Creation, EB-5 “Green Card.”

The EB-5 Category presents an amazing opportunity for many foreign nationals to become permanent residents of the United States of America.

There are two basic programs:

The Regular Program

A person investing $500,000 (with specific criteria addressed infra) or $1 million in a business that creates 10 or more jobs, may be granted EB-5 permanent resident status. The basic legal and regulatory criteria are:

The investment must be in a business and not in a passive investment such as the stock market; the invested funds must be the individual's, but may be a gift from a parent or other person, provided the appropriate gift taxes are paid, if required; The business must have been created after November 29, 1990 or the investment must substantially change an older business; The amount of investment may be $500,000 in a rural or high unemployment area; and Create 10 jobs – no direct job creation is required if the investment is in a "Regional Center" (see infra).

The Regional Center Program

Congress created the Regional Center program to encourage immigration through the EB-5 category. 3,000 visas have been earmarked each year for people who invest at least $500,000 in a designated Regional Center. The Regional Centers program does not require the immigrant investor enterprise itself to employ 10 U.S. workers, it is sufficient if 10 or more jobs have been created indirectly as a result of the investment. Regional Centers are designated as "any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productively, job creation, or increased domestic capital investment." The investment requirement is only $500,000 if a Regional Center is in a targeted employment area, which is either in a rural or high unemployment area, which is discussed further infra. In 2003, Congress gavethe USCIS (formerly INS) discretion to "give priority" to EB-5 petitions filed through a Regional Center. Once Permanent Resident status is granted, minimal involvement with the investment is permitted, allowing the applicant to work in any business, go to school, or enjoy retirement in any area of the United States.

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 Procedures

EB-5 Permanent Resident status involves making the capital investment, filing the appropriate petition at the CIS Service Center, and applying for an Immigrant Visa at a United States consulate abroad, or applying for Adjustment of Status if legally in the U.S (certain conditions apply). After "Conditional" Resident Status (Green Card) is granted, the individual must wait one year and nine months and then file an application to remove the "conditional" status of their permanet residence. With this application, evidence of the creation of the 10 jobs, if necessary, is required as well as proof the entire investment has been made. Upon approval of the application by the USCIS, the applicant is granted Permanent Resident status in the United States.

The CIS has been approving qualifying EB-5 cases following the controversy in the 1990s over interpretations of the regulations.

We can advise you whether you may qualify for an EB-5 Green Card. We do not, however, give business or tax advice or analyze an investment for determining financial viability. We encouraged you to hire accounting and business law experts to conduct a due diligence analysis of the investment.

 STEP-BY-STEP PROCESS FOR EB-5 INVESTOR GREEN CARDS

1 – Schedule a personal or telephone consultation with Mark Weiner. He will review the legal requirements and consult with you on applying for an investor Green Card. Call Mark Weiner at (786) 228-5661 or emailimmigrationlaw@mac.com to schedule an appointment.

2 – Discuss the source of the funds and the required documentation needed to prove the investment and tracing of the legal funds.

3 – Investigate whether the investment, or regional center, is financially viable. As stated earlier, we recommend you hire experts on business analysis and conduct a due diligence on the prospective investment.

4 – Make the capital investment.

5 – File Petition for Alien Entrepreneur with the USCIS.  This petition requestsUS CIS to certify the applicant and the investments are eligible for EB-5 status.

6 – Upon approval of the Petition, (a) if you are legally in the United States, you may apply for Adjustment of Status to Conditional Resident status (but not if in the United States on Visa Waiver).  (b) If you are abroad, you must wait for notification from the National Visa Center to prepare documents for the Immigrant Visa interview at the U.S. Consulate or Embassy in your home country. The purpose of the Adjustment of Status or Immigrant Visa interview is to ensure you are not subject to grounds of exclusion, e.g. a criminal past, infectious diseases, etc.

7 – Once granted conditional resident status, wait 21 months to reconfirm that the full investment has been made and 10 jobs created (if required, based on type of investment).

8 – File application to remove conditional resident status (Form I-829) between 21 to 24 months after Conditional Resident status is approved.

9 – Once conditional resident status is removed, a full Green Card is granted for indefinite permanent resident status and work permission in the United States. U.S. Citizenship is possible 5 years after conditional resident status is first granted, with proof of physical residence and other criteria for naturalization, which are discussed further in this site.

 EB-5 REGULATIONS

Permanent residence is permissible for investors who invest in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs. The minimum investment is $1 million of capital, which may be reduced to $500,000 if the investment is made in a "targeted employment area".

Procedure

An investor must file a petition with U.S. Citizenship and Immigration Services ("USCIS"). Upon approval of the petition, the investor and immediate family (spouse plus single children under 21 years of age) may apply for an Immigrant Visa at a U.S. consulate or apply for Adjustment of Status at a regional USCIS office if the investor is already in the United States.

The initial resident status is "conditional" for two years. Prior to the expiration of the two-year period, the conditional resident investor must file a petition with the USCIS to request removal of the condition on permanent residence. The petition should be granted if the investor demonstrates that he/she invested or was actively in the process of investing the requisite capital; the investor maintained the investment throughout the two-year period of conditional residence; and the investment created the requisite employment.

Investing in a new commercial enterprise

The law requires the investor-petitioner is investing in a "new" commercial enterprise, which must have been one established after November 29, 1990. However, contribution of capital to an "existing" business (that was formed prior to November 29, 1990) may be acceptable in two situations:

1. The investor may substantially reorganize or restructure the existing business. The mere change in ownership, cosmetic changes to the decor of the business site, and implementation of a new marketing strategy are insufficient changes to constitute establishment of a new commercial enterprise. A complete transformation of the nature of the business is likely to be considered sufficient.
2. The investor may expand an existing business resulting in an increase of at least 40 percent of the net worth or number of employees of the business. USCIS requires evidence of the change in business in the form of income tax returns, audited financial statements, and employment tax returns.  The investment must be in a "commercial" enterprise. Any for-profit entity formed for the ongoing conduct of lawful business may serve as a commercial enterprise. This includes sole proprietorships, partnerships (whether limited or general), holding companies, joint ventures, corporations, business trusts, or other entities publicly or privately owned. This definition includes a holding company and it’s wholly owned subsidiaries, if each subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. However, the term new commercial enterprise does not include noncommercial activity such as owning and operating a personal residence or buying stock on the stock exchange.

Engaging in a new commercial enterprise

While the law requires the investor to be engaged in a new commercial enterprise, USCIS regulations state that if the investor is a corporate officer or board member or, in the case of a limited partnership, a limited partner, then the investor satisfies the management criteria. 

Investing capital

The law requires an investor-petitioner to have invested in or be in the process of investing the required capital. 

A. Amount of capital 

The amount of required capital is at least $1 million. The minimum investment is reduced to $500,000 in cases of investment in "targeted employment areas," which are rural areas or areas, which have experienced unemployment of at least 150 percent of the national average rate. A "rural area" is an area not within either a metropolitan statistical area or the outer boundary of any city or town having a population of 20,000 or more. The assessment of whether the investment is in a targeted employment area is based on statistical information relating to the time of investment and the location where the enterprise is principally doing business. 

B. Equity capital  

To "invest" is to contribute equity capital to the enterprise. Loans of capital by the investor to the enterprise do not qualify as an appropriate investment. The investor cannot receive any bond, note, or other debt arrangement from the enterprise in exchange for the contribution of capital.   

C. Kinds of capital 

"Capital" may include cash and cash equivalents, equipment, inventory, and other tangible property. Although capital does not include loans made by the petitioner to the enterprise, the investor may borrow the investment money if it is secured by assets owned by the investor, provided the investor is personally and primarily liable for repayment of the loan, and the assets of the enterprise upon which the petition is based are not used to secure any of the indebtedness.

D. "At risk" 

USCIS requires proof that the capital invested is "at risk."  USCIS focuses on actual and intended uses of capital to confirm that it will be used for job creation and profit-generating activity. USCIS requires more than a deposit of funds into a business account; it also requires evidence of the actual undertaking of business activity. USCIS has held that use of capital for partnership expenses and reserve accounts unrelated to job creation is insufficient.

E. Tracing and lawful source

Documents are needed to prove that capital is invested by the investing petitioner. Thus, an investing petitioner should present evidence that traces the capital from the petitioner directly to the enterprise.

USCIS also requires that an investor petitioner provide evidence to prove that the source of funds was procured by legal means. CIS requires evidence of the investor's past five years of income tax returns and financial statements to prove the investor has sufficient lawful sources for the capital invested.

F.  Gifted funds

The applicant may receive a gift of the funds, provided the proper gift taxes are paid, if required by law.

Creating or saving jobs

The investor must create full-time employment for at least 10 U.S. workers. The investor and his or her spouse and children do not count toward the 10-employee minimum. Note that non-immigrants (i.e., those with E, H, L, and other temporary worker visas) are also excluded from the 10-employee requirement. An "employee" is an individual who provides services or labor for the new commercial enterprise and receives wages or other remuneration directly from the new commercial enterprise. Independent contractors are excluded under this definition.

The jobs created must be full-time, i.e., positions that require a minimum of 35 working hours per week. Part-time jobs do not count. However, job-sharing arrangements where two or more qualifying employees share one full-time position will be counted.

 B. When jobs must exist 

 The petitioner may base the petition on proof that the required jobs have been created or on proof that the required jobs will be created before the end of the two-year period of conditional residence. In the latter case the investor must support the petition with a comprehensive business plan demonstrating a need for at least 10 employees before the end of the conditional residence period.

 C. Troubled business/Saving jobs

 Special rules govern investments in "troubled" businesses. A troubled business is one that has been in existence for at least two years, has incurred a net loss for accounting purposes during the 12 or 24 month period before the petition was filed, and the loss for such period is equal to at least 20 percent of the businesses net worth before the loss. If the petition is based on investment in a troubled business, the investor is not required to create 10 new jobs. Instead, the petition may be based on proof that the business will maintain the number of existing employees during the conditional status period.

D. Regional Center/Indirect jobs

To encourage immigration through investment, and to concentrate investment in specific regions, Congress created a temporary Pilot Program in 1993, directing USCIS to set aside visas for people who invest in a designated "Regional Center." The Pilot Program does not require that the immigrant investor enterprise employ 10 U.S. workers as long as the investor can reasonably demonstrate that the investment in the Regional Center has indirectly created 10 or more jobs and has resulted in improved regional productivity. The USCIS has designated a number of Regional Centers located throughout the country.

Timing

 It is currently taking about two months for CIS to process an EB-5 petition. Prior to filing the petition, time is required to conduct due diligence, make the investment, and prepare the documentation in support of the petition. If an individual is in lawful status upon approval of the EB-5 petition, he/she can apply for Adjustment of Status to Conditional resident without departing the United States. This application can take six months or longer to be decided. If not in the United States, he/she will apply for an Immigrant Visa at a U.S. Consulate, which typically takes six months or longer depending on the country.