EB-5 Investments in Troubled Businesses: How Do They Work?

Making an EB5 investment is one of the best ways to immigrate to the United States. Many foreign nationals have participated in the EB-5 program and received U.S. permanent resident status. Besides obtaining green cards, successful EB-5 investors can eventually apply for U.S. citizenship. In addition, the EB-5 investment program strengthens the U.S. economy: every EB5 investment is required to create or preserve at least 10 jobs, which can be invaluable for struggling businesses in the United States.

Troubled businesses can benefit greatly from receiving EB-5 investment capital. However, most foreign nationals choose to invest in a new commercial enterprise (NCE), so troubled businesses often get overlooked. According to United States Citizenship and Immigration Services (USCIS), a troubled business is defined as an enterprise that has existed for more than two years and has undergone a net loss of at least 20% within the last 12 or 24 months before the investor submits their I-526 petition.

Investing in a Troubled Business Can Be Advantageous

The COVID-19 pandemic undoubtedly had a terrible impact on the U.S. economy. Many businesses experienced drastic declines in profit because of the lockdowns and travel restrictions. While this meant devastating news for enterprises, it created an opportunity for potential EB-5 investors: As a result of the economic decline during the pandemic, more U.S. businesses than ever are troubled. For investors, this means that there is a wide variety of troubled businesses to invest in.

Foreign nationals can also benefit from a significant change in EB-5 regulations that occurred on June 22, 2021. A U.S. district court invalidated the highly controversial EB-5 Modernization Rule. As a result, the minimum investment amounts were lowered to $500,000 for targeted employment area (TEA) projects and $1,000,000 for non-TEA projects. It is unclear whether USCIS or the Department of Homeland Security (DHS) will raise the required amounts again in the future. Due to these developments, now is the best time for foreign nationals to make an EB-5 investment.

How Jobs are Preserved in Troubled Businesses

While an EB-5 investment made in an NCE is required to create at least 10 new jobs, an EB5 investment in a troubled business needs only to generate or preserve the same number of jobs. For example, if a troubled business has nine employees, an EB-5 investor would have to preserve those nine jobs and create at least one new job for a qualified U.S. worker. The EB-5 investment would thus generate or preserve at least 10 jobs.

Now is the perfect time to make an EB-5 investment at $500,000. To make the investment process easier, EB-5 consultants offer invaluable advice on all topics regarding the EB-5 program. EB5AN is here to help foreign nationals with any questions about the EB-5 program.