Who Does Not Qualify as a Potential EB-5 Investor?

The EB-5 Immigrant Investor Program, which is administered by the United States Citizenship and Immigration Services (USCIS), was introduced by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. In return for this investment, the program grants U.S. lawful permanent resident status to foreign investors and their derivative beneficiaries (their spouse and unmarried children below 21).

Unlike other employment-based preferences, the EB-5 visa does not require employer sponsorship, advanced educational qualification, or professional accomplishment. As a result, this route, which provides a relatively faster method of obtaining U.S. permanent residency, has become popular among high-net-worth foreign nationals.

While the EB-5 visa is open to investors of all nationalities, not everyone will qualify as a potential EB-5 investor. Several factors can affect an individual’s eligibility for an EB-5 visa.

In this article, we will discuss the EB-5 program requirements and factors that can hinder a potential investor from receiving approval for their immigrant visa petition.

Eligibility Requirements for an EB-5 Visa

Foreign investors must meet the following requirements to be eligible for the EB-5 program.

1. They must invest a minimum of either $1,050,000 in a new commercial enterprise (NCE), or $800,000 if the NCE is in a targeted employment area (TEA).
2. The NCE must create and maintain at least 10 full-time jobs for qualifying U.S. workers.
3. The investment fund must come from a lawful source, and the investor must provide relevant documentation to prove this.
4. The investment must remain “at risk” for at least two years.

If an investor meets these requirements and their relevant petitions are approved, they can receive conditional permanent residence status. After two years of conditional residence, they’ll submit an application to USCIS to lift these conditions and become lawful permanent U.S. residents.

Eligible EB-5 investors can choose one of the two investment models: direct or standalone investments, or investments in regional center-sponsored projects. Regional center investments currently account for over 90% of all EB-5 investments. Most EB-5 applicants prefer investing through regional centers because of several benefits like less stringent job creation requirements and the chance to make a passive investment.

Who May Not Qualify as an EB-5 Investor?

Although the EB-5 program is open to applicants of all nationalities and requires no special qualifications, certain individuals may not qualify as potential EB-5 investors. We’ll look closer at the reasons for this in the following sections.

Unaccredited Investors

The Security and Exchange Commission (SEC) mandates that only accredited investors can participate in certain security offerings. Since regional centers pool funds from different investors and invest these funds in large-scale projects, a regional center investment is a private security offering. As a result, an unaccredited EB-5 investor cannot invest in a regional center-sponsored project.

To qualify as an accredited investor, an EB-5 investor must meet either of the following criteria:

• The investor must have an individual or joint (with their spouse) net worth of at least $1 million, excluding their primary residence.
• The investor must have earned a gross income of $200,000 or a joint spousal income of $300,000 in the past two consecutive years and expect to earn the same or higher in the present year.

If you meet one of these criteria and want to invest through a regional center, you must provide evidence of your eligibility. Your immigration attorney can help you obtain an accredited investor verification letter using your financial statements.

Meeting the Accredited Investor Requirement

Given the substantial investment amount ($1,050,000 or $800,000) and the SEC’s accredited investor requirement, you may think the EB-5 program is reserved for millionaires. But that’s not the case.

EB-5 applicants can combine their savings, inheritance, profit from property sales, and cash gifts to raise their investment capital and meet the accredited investor requirement. This means that potential EB-5 applicants who ordinarily would not qualify as accredited investors can combine funds from different sources to meet the “net worth criteria” and become accredited investors.

This is especially helpful for F-1 students looking to acquire U.S. Green Cards through the EB-5 program. These students can qualify for the EB-5 visa by combining their savings, inheritance, and cash gifts from their families. Critically, though, they must prove that the family members who gifted them the money earned it through lawful means.

Individuals With Criminal Records

Having a criminal record can make foreign nationals inadmissible as potential EB-5 investors. Although there’s no rule barring persons with criminal records from participating in the EB-5 program, it can significantly complicate the process. While a criminal record may not affect a person’s I-526E petition, it’s a major consideration for Green Card applications.

USCIS conducts background checks on all U.S. immigration applicants to determine their admissibility to the U.S. as permanent residents. They run each applicant’s identity and biometric data across FBI and DHS databases. If you have a criminal record, they’ll consider the severity of the offense committed, the number of offenses, and how long ago you committed the crime.

Crimes such as fraud, money laundering, murder, assault, and other offenses considered “crimes of moral turpitude” or “aggravated felonies” are the most concerning. They can render you inadmissible to the U.S. or subject to further scrutiny. Convictions relating to violence, illegal drugs, and national security can also significantly reduce your chances of admissibility.

If you have a past criminal conviction, it’s best to inform your immigration attorney as early as possible. That way, they can conduct background checks, assess your situation, and advise you on the necessary steps to avoid immigration hurdles.

Applying for a Waiver

A potential EB-5 investor with a past criminal history may be able to apply for an inadmissibility waiver in certain circumstances.

A waiver is a formal request to USCIS for forgiveness and permission to obtain permanent residency. Waivers are typically considered on a case-by-case basis, and to qualify, you must show that the denial of your permanent resident application would cause a family member in the U.S. to face extreme hardship.

Inability to Prove Lawful Source of Funds

A lawful source of investment funds is one of USCIS’s core criteria for deciding on EB-5 applications. Potential EB-5 investors must provide evidence documenting the origin and path of their investment funds. This evidence must prove beyond a doubt that their EB-5 capital was obtained legally.

If an investor is using their own funds, they just have to provide evidence for how they obtained them. If, on the other hand, an EB-5 applicant invests with gifted funds, they must also prove that the person giving them the money legally obtained it.

Proving a lawful source of EB-5 funds involves extensive documentation tracing the investment funds to their origin. Failure to do this can disqualify a potential investor from the EB-5 program.

EB-5 investors need to hire expert EB-5 immigration attorneys to help them collect the necessary supporting evidence before making their EB-5 investment to avoid the risk of losing time and money.

Start Your EB-5 Journey With EB5AN

While the factors mentioned above can complicate the EB-5 visa application process, with the right approach and adequate assistance, most foreign nationals who consider becoming EB-5 investors can qualify for the program.

And even if unexpected problems arise, it’s important to have seasoned industry professionals on your side. EB5AN’s projects come with an I-526E denial refund guaranty, so our investors receive their investments back if their I-526E petitions are denied. However, not all regional centers offer their clients such guarantees, so it’s best to conduct thorough due diligence at the project selection stage.

For more information about the EB-5 program and guidance in starting your EB-5 journey, book a free one-on-one consultation with our EB-5 team today.