The EB-5 Immigrant Investor Program offers a variety of investment options to prospective applicants. Regardless of the investment type, all methods share the same baseline requirements in order to meet United States Citizenship and Immigration Services (USCIS) regulations. Notably, every EB5 investment must be made in a new commercial enterprise (NCE). These are defined as for-profit entities engaged in lawful commercial activities, and can be structured in a variety of ways. In most situations, NCEs must have been established after November 29, 1990 for the investment to qualify. However, the purchase of an existing business is exempt from this requirement. With this method, investors have two options: restructure or reorganize the business into an NCE, or expand the business.
To successfully expand an existing business, an EB5 investor must cultivate a substantial change in the net worth of the business or in the number of employees. A “substantial change” means at least a 40% increase in either area. Investing with the purpose of expanding a business can pose several challenges, such as with job creation. All EB5 investments must create at least 10 jobs per investor, but this minimum can be higher for those expanding a business. Since there must be a 40% increase in the number of employees, this may entail the creation of more than 10 jobs depending on the original size of the existing business. The larger the business is, the heavier the burden on the investor to create enough jobs. Furthermore, it can be particularly challenging to expand a businesses net worth by 40% if it originally operated inefficiently.
Expanding existing businesses is a complex area of the EB5 program. The lack of elaborate and well-defined criteria can make it difficult for investors to be approved for an EB5 visa. Investors considering this method of investment are advised to consult experienced EB-5 immigration counsel to help ensure success.