This post will provide a high level overview of the EB-5 green card program’s steps and requirements. Subsequent posts will delve deeper into the elements introduced in this post and provide more detail on the specific requirements, but this post will serve as a road map for the program at-large.
The EB-5 green card through investment program is fundamentally a job-creation program. The originally intent behind the program was to inject foreign capital to improve the US economy and, most importantly, promote job growth for the US workforce.
The first step in obtaining a green card through investment, is filing an “I-526 Petition” with the USCIS. This petition must establish that the petitioner/investor invested or is actively in the process of investing capital in a new commercial enterprise (“NCE”); that the capital was obtained through lawful means; that the NCE will create at least 10 full-time US jobs; and that the petitioner/investor is or will be engaged in the management of the new commercial enterprise.
If approved, the applicant will be given a two year “conditional green card.”
To seek removal of the conditions on permanent resident status, the immigrant investor must file an “I-829 Petition” within 90 days prior to the 2-year anniversary of the date conditional permanent resident status was granted. This petition must contain evidence that the investor invested, or was actively in the process of investing the required capital and sustained the investment throughout the period of the immigrant investor’s residence in the United States; and that the new commercial enterprise created or can be be expected to create, within a reasonable time, at least 10 full-time positions for qualifying employees.
According to the US government, there are three main elements to the EB-5 program:
- the immigrant’s investment of capital,
- in a new commercial enterprise,
- that creates jobs.
EB-5 Investment of Capital
The minimum amount required for the investment is currently $1,000,000. However, the majority of EB-5 investors opt to invest in a NCE that does business and creates jobs in a “targeted employment area,” which reduces the minimum investment amount to $500,000.
“Capital” is broadly defined, and includes many different ways in which a person can financially contribute to a business. Examples include cash, equipment, inventory, tangible property, cash equivalents, and permissible indebtedness secured by assets owned by the immigrant investor. However all capital must be valued at fair market value in US dollars.
It is important to understand that the invested capital must be “at risk”. This means an investor cannot receive guaranteed payments from the NCE, while he still owes money to the NCE. Furthermore, a redemption agreement between an investor and the NCE would constitute an impermissible “debt arrangement.”
Evidence must accompany petitions filed showing the investor has invested or is actively investing the requisite amount of funds, that the capital is at risk, and that the funds will be used specifically for job-creating activities. Evidence of prospective investment arrangements or mere intent to invest is not enough. Furthermore, the petition must include copious evidence documenting a legal EB-5 source of funds.
New EB-5 Commercial Enterprise
A “New Commercial Enterprise” includes a broad spectrum of business relationships including a sole proprietorship, partnerships (limited or general), holding companies and their wholly owned subsidiaries, joint venture, corporation, business trust or other publicly or privately owned entities provided they are all “for profit” business operations.
Generally, an enterprise is considered “new” if it is established after November 29, 1990. However, an enterprise established before November 29, 1990 can be the target of a qualifying investment if the enterprise will be restructured or expanded through the immigrant’s investment of capital.
EB-5 Job Creation
Lastly and perhaps most importantly, is the requirement that the capital invested in the NCE, be traced to the creation of (at least) 10 full-time, US jobs. It is not enough that the immigrant investor invests funds into the U.S. economy. The invested funds must be traced to activity by the NCE that creates at least 10 full-time positions.
An employee is defined as a person who provides services or labor for the NCE and who receives wages or other remuneration directly from the NCE. In the case of the Regional Center Program, an employee also means a person who provides services or labor in a job that has been created indirectly through investment in the NCE.
It is important to note that a “qualifying” employee is a US Citizen, legal permanent resident (“green card holder”), or other immigrant lawfully authorized to work in the US. However, this does not include the actual immigrant investor themselves (or their family members). The employment must also be “full-time,” meaning at least 35 hours a week.
There are generally three methods of measuring job creation, depending on the type and location of the NCE. If the immigrant investor is investing in a NCE that is a “troubled business,” he or she must show that the number of existing employees in the troubled business is being, or will be, maintained at no less than the pre-investment level for a period of at least 2 years. The investor must still demonstrate that the invested capital can be traced to the preservation (or creation) of 10 full-time jobs.
For a NCE not located within a Regional Center, the full-time positions must be directly created by the NCE to be counted. This means that the NCE itself is actually the job-creating enterprise, and employs the qualifying employees. If the NCE is within a Regional Center, “indirect jobs” may also be counted towards the jobs requirement. Indirect jobs are those held outside of the NCE, but are created as a result of the NCE.
For example, if the job-creating enterprise is a casino, direct jobs, such as casino employees can be counted. Because the casino is being developed through a Regional Center, employees of producers of materials, equipment, or services used by the casino, can also be counted as “indirect jobs.” Indirect jobs also include “induced jobs,” meaning jobs created when the newly created direct and indirect employees spend their earnings on consumer goods and services.
The USCIS generally will look to reasonable economic models to determine whether or not the immigrant investor satisfied the job creation requirement. Evidence used to show job creation also includes W-2s or I-9s.