As the vast majority of EB-5 investments are made in new commercial enterprises (NCEs), troubled businesses are often overlooked. Within the EB-5 program, investments in troubled businesses can prove to be highly advantageous alternatives to NCEs. This can be attributed to the ability to preserve existing jobs to satisfy program requirements, rather than create new jobs entirely.
According to United States Citizenship and Immigration Services (USCIS), a troubled business must be at least two years old at the time of investment. Additionally, it must have suffered a net loss of at least 20% in the 12- or 24- month period before an EB-5 investor files Form I-526.
Included in the I-526 petition is the business plan, which details how the investment will create at least 10 permanent, full-time jobs. In the case of troubled businesses, an investor does not necessarily have to create new jobs; they can preserve existing positions instead. Near the end of the two-year investment period, an investor must compile and submit Form I-829. This petition serves to prove that the investment followed the business plan provided alongside Form I-526. Essentially, an investor must demonstrate that their investment generated or preserved enough jobs.
When determining if a troubled business’s jobs have been preserved, USCIS will consider any and all relevant information. This includes evaluating employment numbers, so an investor must demonstrate that jobs were preserved at pre-investment levels. USCIS may also consider an investment’s economic analysis. These use economic or statistical methodologies to examine the impact a project has on the local economy. More specifically, the analysis aims to prove the investment generated (or preserved) at least 10 jobs per investor. Generally, an economic analysis is only necessary for regional center investments, through which indirect and induced jobs can count towards the job creation requirement. In comparison, direct EB-5 investments can only count direct jobs. This limited scope can make it difficult to create or preserve enough jobs.
