Compared to other overly complicated United States Citizenship and Immigration Services (USCIS) immigration programs, the EB5 Immigrant Investor Program––designed by Congress to boost the U.S. economy––is rather simple and is open to foreign nationals of all origins, making it one of the most convenient ways that foreign nationals can gain U.S. permanency residency. Although the largest hurdle in making a successful EB-5 investment is the required capital that foreign applicants need to invest, there are more requirements beyond simply funneling foreign capital into U.S.-based projects.
USCIS takes failures in meeting EB5 investment requirements seriously. In fact, EB5 investment infractions can cause the denial of an investor’s I-526 or I-829 petition, depending on where in the EB5 investment process the investor is. Generally, these rules are easy to work with, assuming that an investor’s EB5 investment is conducted in good faith using lawfully obtained capital. Should USCIS find any inconsistencies or unclear information in an investor’s application, they may issue a request for evidence (RFE) to gain more information and make sure the EB5 investment is compliant. This process is lengthy and tedious, so EB-5 investors should work carefully with their EB-5 project and regional center to avoid getting caught up in fraud.
Minimum Required Investment Amount
As the essence of the EB-5 investment program revolves around capital investment, the EB-5 program requires that investors make a minimum amount of monetary investment before a U.S. green card is granted. Although there is no maximum cap for EB-5 investments, there are minimum figures EB-5 investors need to meet. As of June 22, 2021, the minimum required amounts are $500,000 for targeted employment area (TEA) projects and $1,000,000 for non-TEA projects.
Eligible New Commercial Enterprise
As detailed by the U.S. Congress in 1990 when it created the EB5 investment program, EB-5 investors have two options when it comes to investing in U.S.-based projects. The first of these two options is making an EB5 investment in a troubled business––an entity narrowly defined under EB-5 rules. A troubled business is officially defined as one that has been established for at least two years prior to the EB-5 investment and that has lost value by at least 20% within the one- to two-year period right before the investment.
Alternatively, EB-5 investors can invest in new commercial enterprises (NCEs). Under U.S. law, NCEs are defined as for-profit businesses conducting ongoing lawful activities (with limited restrictions). For the majority of EB-5 investors, their NCEs of choice are hotels and real estate developments. Furthermore, these NCEs also need to be formed after 1990 or be using their EB5 investment to expand or restructure their business, if created in or before 1990.
Regardless of the option foreign EB-5 investors take for their EB-5 investment, they are still required to have some participation in the managerial process of the businesses that they invest in. Although this might seem discouraging for potential EB-5 investors lacking managerial experience, EB-5 investment regional centers can often circumvent this requirement. Specifically, they can sign on entities as a limited partner, thereby allowing EB-5 investors to participate simply by remotely voting on company policy decisions.
Since the purpose of the EB-5 investment program is to grow the U.S. economy, it should come as no surprise that EB-5 investors are required to create a minimum number of jobs for U.S. workers. In fact, EB-5 investors are asked to create at least 10 new full-time jobs for U.S. citizens and permanent residents for a minimum of two continuous years. Nonetheless, the good news for EB-5 investors is that this requirement can be relaxed if they make an EB-5 investment through a regional center.
EB-5 investors investing in NCEs are required to document at least 10 newly created jobs––a requirement that can be difficult to attain for some EB-5 investors in certain industries. By investing through an EB-5 regional center, investors can factor in indirect and induced job creation toward their EB5 investment visa job creation requirement, thereby relaxing the demands they need to meet. With EB5 investment regional centers, the job creation sprouting from the NCE’s business expenditures and its employees spending their wages can factor into the job creation requirement for immigration purposes. If an EB-5 investor chooses the regional center option, they must hire an independent economist to calculate the indirect and induced job creation with an approved job calculation methodology. (The EB-5 regional center program was temporarily suspended on June 30, 2021. However, EB-5 experts are confident that it will be reauthorized in the coming months.)
Although in the initial I-526 petition, investors are only required to demonstrate the likelihood that their EB5 investment will create at least 10 new jobs, their I-829 petition at the end of their EB-5 investment immigration process must prove actual job creation. By successfully filing the I-829 form, investors can remove their conditional permanent residency status and gain unconditional permanent residency status, with the right to subsequently apply for U.S. citizenship after three more years.