The First Step to a U.S. Green Card
- The Two EB-5 Investment Models
- Mitigating Immigration and Financial Risk
- The Minimum EB-5 Investment Amounts
Making an EB-5 investment that results in a U.S. Green Card requires careful planning, and the entire EB-5 process takes several years.
The first step an EB-5 visa applicant must take after making their investment is to file Form I526, Immigrant Petition for Alien Investor. This petition determines whether an EB-5 applicant has made a valid investment and can receive a conditional two-year visa. Thereafter, they may be eligible for a permanent Green Card.
In essence, an EB-5 visa applicant must show through the I 526 petition that they have made a qualifying investment and that all United States Citizenship and Immigration Services (USCIS) regulations were met. Gaining approval for the I 526 petition requires investors to work closely with an immigration attorney and provide a variety of documentation. This is one of the most important stages in the EB-5 visa process.
What Are the Requirements for Filing the I 526 Petition?
Before submitting the I 526 petition to USCIS for review, an applicant must already have made a capital investment.
USCIS will not approve an investor’s I 526 petition if it lacks evidence (including relevant bank statements) that the funds have been injected into a qualifying business; a mere intent to invest is not enough.
In most cases, this requirement entails that foreign nationals have to invest the entirety of the funds before filing the I 526 petition. Some offerings, however, allow investments to be made in installments throughout a set period.
The Two EB-5 Investment Models
When selecting a U.S. business in which to invest, visa applicants have two investment models to choose from: the direct and regional center options.
Direct EB-5 Investment
Direct EB-5 investors inject their capital directly into a U.S. business; no third parties intervene in the process. Moreover, direct projects can accept no more than one investor.
Many direct businesses are restaurants, schools, and similar moderately-sized enterprises.
Regional Center Investment
On the other hand, regional centers are USCIS-designated entities that manage EB-5 capital across various projects. They are subject to close scrutiny by USCIS, which audits each regional center every five years and requires them to release audited financial statements or retain a third-party fund administrator.
Regional center projects can involve numerous investors.
As a result, large real estate developments and other business types that require a significant amount of funding are common in the regional center industry.
Businesses can be found across a wide variety of industries and in several locations throughout the United States.
Mitigating Immigration and Financial Risk
Prospective investors are advised to carry out careful research on each investment opportunity. It is particularly beneficial to find out more about the management team of each new commercial enterprise and regional center, including their track record with previous investors who filed the I 526 petition.
Carrying out such research enables investors to reduce their immigration and financial risk.
In the EB-5 investment industry, an applicant’s immigration risk represents their chances of obtaining a permanent U.S. Green Card.
To a large degree, a project’s compliance with USCIS regulations, especially the requirement to create at least 10 jobs per EB-5 applicant, determines the investors’ immigration success. The safest projects in this regard do not rely excessively on investment funding; rather, their capital structure is diversified, with a significant amount coming from the developer.
An EB-5 applicant’s financial risk of losing their capital investment can be mitigated by investing in projects that are likely to succeed. Once more, a balanced capital structure that does not rely solely on funding for completion is a good indicator that an EB-5 project will be able to return the investors’ capital.
Investors should also examine each project’s repayment strategy and timetable.
The Minimum EB-5 Investment Amounts
The standard minimum investment threshold is $1,050,000. Investors who choose projects located in targeted employment areas benefit from a reduced threshold of only $800,000.
Targeted employment areas are either high-unemployment or rural locations in the United States with a great need for economic development through EB-5 investment funding.
A location qualifies as a high-unemployment targeted employment area if its unemployment rate is 150% of the U.S. national average. Rural targeted employment area status is granted to locations with a population of less than 20,000 that do not border a metropolitan statistical area (MSA) or a municipality with a population of more than 20,000.
Certain kinds of public infrastructure projects may also qualify for the reduced investment threshold.
How to Make an EB-5 Investment
EB-5 visa applicants are required to invest in a new commercial enterprise. USCIS defines a new commercial enterprise as any for-profit enterprise established or restructured after November 29, 1990. This broad catch-all encompasses a wide variety of businesses.
The At-Risk Requirement
Before investing in a new commercial enterprise of their choice, visa applicants must keep in mind that their funds must be kept “at risk”; essentially, this requirement dictates that investors can receive no contractual rights to repayment or similar guarantees.
The financial outcome of their investment cannot be predetermined, and all EB-5 applicants should be open to either losses or gains.
In general, EB-5 investment funding must remain at risk until USCIS reviews Form I-829, the final visa petition in the EB-5 process. Form I-829 determines whether an investor is granted permanent resident status.
Being cognizant of the at-risk requirement will likely encourage prospective investors to work with an experienced immigration attorney and invest only in safe offerings.
Lawful Source-of-Funds Documentation
Perhaps the most challenging aspect of preparing the I 526 petition is gathering the source-of-funds evidence. USCIS is careful to root out applicants with suspicious pasts or who cannot clearly show where they obtained their funds.
Therefore, the agency requires copious evidence tracing the EB-5 investment capital to its source.
Compiling source-of-funds evidence is difficult because the required documentation varies in each case; for instance, an investor who uses salary payments to finance their investment will need a significantly different set of documents than one who uses stock proceeds.
In any case, the documentation, including bank account statements, must be as detailed and thorough as possible.
USCIS’s high evidentiary standards require investors and their immigration attorneys to do in-depth research.
An investor who uses proceeds from the sale of real estate, for instance, should not only present evidence of the transaction and relevant bank account statements. They must also demonstrate how the property was acquired in the first place and that all the relevant taxes were paid while the investor owned it.
Managing the NCE
USCIS also requires investors to participate in managing the NCE. Regional center projects typically grant investors limited managerial duties, whereas direct investors are more involved in day to day management. Still, each project’s day to day management structure ultimately determines the investors’ degree of involvement.
How to Invest in a Regional Center Project
The vast majority of all EB-5 investments in recent years have been made through regional centers. Along with many other benefits, regional centers often provide investors with guidance on how to prepare each visa petition and much of the project-specific and security agreements documentation.
The most compelling reason to invest in a regional center commercial enterprise is the more relaxed job creation requirements.
To create at least 10 jobs per investor, direct projects must generate full-time, W-2 jobs that appear on the company’s payroll.
These positions must be filled by U.S. citizens, permanent residents, or other authorized immigrant workers. They must be sustained for a minimum of two years.
In contrast, regional center projects can count different kinds of employment for EB-5 purposes. In addition to direct jobs, they can also calculate indirect and induced employment, which results from a project’s economic impact.
Data including the project’s expenditures are used as inputs in an econometric model for this purpose. Consequently, regional center projects typically find it easier to create the needed jobs.
How Long Does USCIS Take to Adjudicate the I 526 petition?
USCIS typically takes years to process I-526 petitions. It usually takes longer than two years–or significantly more–for the form to be adjudicated, so investors should not expect to immigrate very quickly.
Recently, I-526 processing times were affected by the COVID-19 pandemic, which caused a sharp increase in delays.
Moreover, China, which has a high volume of EB-5 applicants, is currently facing a visa backlog. Investors of this nationality may have to wait 10 to 15 years before obtaining their visas.
The Future of I 526 Petition Processing
Fortunately, the EB-5 Reform and Integrity Act of 2022, which was passed in March, makes several welcome changes to the EB-5 Immigrant Investor Program. Among these is the higher filing fee for regional centers and visa applicants, which may grant USCIS more resources to adjudicate visa petitions quickly.
Investors in targeted employment areas and infrastructure projects are now eligible for priority processing and can have their petitions approved in significantly less time.
Gaining approval for the I 526 petition is an indispensable stage of the EB-5 capital investment process. Investors who need guidance on how to file the petition or get in touch with an EB-5 immigration attorney can contact EB5 Affiliate Network (EB5AN) for a free consultation.