Articles Posted in EB5 Investor Visas

Permanent resident status based on EB-5 eligibility is available to investors, either alone or coming with their spouse and unmarried children. Eligible aliens are those who have invested — or are actively in the process of investing — the required amount of capital into a new commercial enterprise.

They must further demonstrate that this investment will benefit the United States economy and create the requisite number of full-time jobs for qualified persons within the United States.

There is an annual worldwide quota of 10,000 EB-5 immigrants. In fiscal year 2012 (ending October 31), a total of 7631 persons immigrated in this category, of which 80% were from China. According to the U.S. Citizenship and Immigration Services (USCIS), Chinese EB-5 applicant may soon be subject to a wait list. There has never been an EB-5 wait list before.

In this article, we will address the most frequently asked questions to safeguard your EB-5 application.

I. EB-5 Investment Requirements

Generally, you may be eligible for EB-5 immigrant visa if:
1. You establish a new commercial enterprise by:
(1) creating an new business;
(2) restructuring an existing business; or
(3) expanding an existing business resulting in an increase of at least 40% in the net worth of the business or in the number of the employees of the business.

Note: In 2002, Congress has eliminated the “establishment” requirement for EB-5 investors. Instead of proving that they have “established” a commercial enterprise themselves, investors now need only show that they have “invested” in a commercial enterprise.

There are two basic requirements for showing a new commercial enterprise. First, the enterprise must be “new” – i.e. formed after November 29, 1990. However, an enterprise formed before this date may qualify if an investor “restructures” or “expands” an existing business.

Second, it must be a “commercial” enterprise. Any for-profit entity formed for the ongoing conduct of lawful business may serve as a commercial enterprise.

2. You have invested, or are actively in the process of investing, in a new commercial enterprise:
(1) at least $1,000,000, or
(2) at least $500,000 where the investment is being made in a “targeted employment area,” which is an area that has experienced unemployment of at least 150 per cent of the national average rate or a rural area as designated by OMB; and
Note: To qualify, an investor must maintain more than a purely passive role in the new enterprise upon which the petition is based. The petitioner must be either involved in the day-to-day managerial control of the commercial enterprise, or manage it though policy formulation.

The term “invest” means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the entrepreneur and the new commercial enterprise does not constitute a contribution of capital and will not constitute an investment. Capital must be obtained though lawful means.

3. Your engagement in a new commercial enterprise will benefit the United States economy:
(1) create full-time employment for at least 10 U.S. citizens, lawful permanent resident, or other immigrants lawfully authorized to be employed in the United States; or
(2) maintain the number of existing employees at no less than the pre-investment level for a period of at least two years, where the capital investment is being made in a “troubled business,” which is a business that has been in existence for at least two years and that has lost 20 percent of its net worth over the past 12 to 24 months.

Note: Neither the investor nor the investor’s spouse and children count toward the 10-employee minimum. Nonimmigrants also are excluded from the count. The definition also excludes independent contractors.

The jobs created must be full-time, meaning employment of a qualified employee in a position that requires a minimum 35 working hours per week. Job-sharing arrangements, where two or more qualifying employees share a full-time position will also serve as a full-time employment, if the hourly requirement per week is met.

II. EB-5 Investment Options

Three types of enterprise entities commonly associated with EB-5 petitions:

1. Corporations
Corporations are the most familiar business structure. A corporation exists as a separate legal entity. This means that when an individual incorporates his/her business in a particular state, the corporation is responsible for its actions, including taxes and debt. Typically under this structure, corporate officers and shareholders cannot be held personally liable for the actions of the corporation.

Additionally, ownership of corporate stock may be freely transferred by sale or by gift, subject to certain corporate restrictions. An incorporated business may buy, sell, and hold property under the corporation name and enjoy unlimited life, meaning the business remains unaffected by the death of a director, officer, or shareholder. However, some types of corporations are subject to “double taxation.” This means that profit is first taxed at the corporate level and then again at the personal level.

2. Limited Liability Companies

A limited liability company (LLC) exists as a separate legal entity. This structure combines some of the limited liability advantages of a corporation with the tax-related benefits of avoiding double taxation associated with a partnership. One of the major advantages of an LLC is that the business can choose how it would like to be taxed—as a corporation or partnership. Additionally, there is no limit to the number of shareholders that can exist in a LLC structure. A LLC can be managed either through “member management,” in which all members of the LLC have a say, or through “manager management,” in which members appoint a manager to operate and direct the business. Many states have implemented “franchise taxes” for LLCs which serve as fees to the company for the limited liability and flexibility they enjoy.

3. Limited Partnership
A limited partnership occurs when two or more individuals join together to form a business by contributing capital, property, labor or skills in exchange for part of the profit or losses of a business. In a limited partnership, there is usually only one general partner and one or more limited partners with limited duties and liabilities. In this structure, the general partner(s) have full management responsibilities and control daily business functions. The limited partner is typically a passive investor. Limited partnerships enjoy the tax benefit of avoiding double taxation on their profit. However, partners are personally liable and not all partners share liability equally. Examples of limited partnerships include large law firms.

III. EB-5 Visa Process

1. Filing for Immigrant Petition
Investors should first file Form I-526, accompanied by all supporting documentations with the USCIS California Service Center. Form I-526 is equivalent to the I-140 in that after approval, one still needs to adjust status through an I-485 if he or she is in the U.S., or through consular processing if he or she is outside of the U.S. The required documentation must show that the immigrant investor has invested or is investing the required lawfully-gained capital in a company within the U.S., and that the investor will create full-time jobs for at least 10 U.S. workers.

Specifically, first, an investor must show that an investment has been made in a qualified commercial enterprise. Evidence may include but not limit to: 1) an organizational document for the new enterprise, including articles of incorporation, certificates of merger and consolidation, or partnership agreements; 2) a business license or authorization to transact business in a state or city, if applicable; and 3) for investment in an existing business, proof that the required amount capital was transferred to the business and the investment has increased the net worth or number of employees by 40% or more.

Second, the investor must prove that the required amount of capital “at risk” has been placed. A mere intention to invest will not satisfy the “actively in the process of investing” requirement. Evidence may include: 1) bank statements showing deposits in the U.S. account of the enterprise; 2) evidence of assets purchased for use in the enterprise; 3) evidence of property transferred from abroad; 4) evidence of funds invested in the enterprise in exchange for stock; 5) evidence of debts secured by the investor’s assets and for which the investor is personally and primarily liable.

Third, the regulation s require filing the following types of documentation to establish that the capital used in the new enterprise was acquired by legitimate means: 1) foreign business registration records; 2) personal and business tax returns, or other tax returns of any kind field anywhere in the world within the past five years; 3) documents identifying any other source of money; or 4) certified copies of all pending governmental civil or criminal actions and proceedings, or any private civil actions involving money judgments against the investor within the past 15 years.

Fourth, the investor needs to show that a new commercial enterprise will create at least 10 full-time positions for qualified employees. Petitioner should provide copies of relevant tax records, Form I-9 or similar documents, and a comprehensive business plan.

Fifth, the petitioner must be involved in the management of a new commercial enterprise, by providing documentations including comprehensive job description for the position occupied by the investor, certificate that the investor is a corporate officer or on the board of directors, or any other documents showing that the investor is involved in direct management activities or policymaking activities.

The filing fee for Form I-526 is $1,500. Current processing time for I-526 is four to six months.

2. Filing for Change of Status Petition
Once an investor has received I-526 approval, he or she can receive Conditional Permanent Residence by filing Form I-485.

If You Are residing Outside the United States

You can become a permanent resident through consular processing if you live outside the United States. Consular processing is when USCIS works with the Department of State to issue a visa on an approved Form I-526, Immigrant Petition by Alien Entrepreneur Petition when a visa is available. Processing time is between 6 months to 1 year.

If You Are residing in the United States

You can become a conditional permanent resident through change of status if you live inside the United States. Once Form I-526 is approved and a visa number is available, you can apply for conditional permanent residence using Form I-485, Application to Register Permanent Residence or Adjust Status.

Upon approval of the Form I-485 or admission on an EB-5 immigrant visa, the investor and his/her derivative family members are granted two-years of “conditional” permanent resident status. Children must be unmarried and under the age of 21 to be considered derivatives at the time the I-526 is filed.

3. Filing for Removal of Conditional Residency
Within 90 days of the 2-year conditional green card’s expiration date, the investor must file Form I-829, to request removal of conditional permanent residency. The petition will be granted if the investor has fulfilled the EB-5 requirements in accordance with the business plan in the approved Form I-526 petition. Failure to file Form I-829 will result in automatic termination of the conditional resident’s status and will initiate deportation proceedings.

Immigrant investors remain in “valid” status while their I-829 petition is pending. Their status is supposed to be extended automatically in one year increments until USCIS acts on the petition. During that time, investors are authorized to travel.

Once conditions have been removed, a full green card is granted for indefinite permanent resident status in the United States. After five years of permanent residency (including the two conditional years), an investor may apply for U.S. citizenship.

If you need assistance with you EB-5 Visa, be sure to email us with your case request.

See Chinese Version below:
EB-5 投资移民律师：EB-5 投资移民申请指南

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Many of our Blog visitors are often asking about the EB5 program, How can I apply? How much does it cost, How Fast?. In this post let us look at the basics of this program. This is in part from a study by the Carlson Consulting Enterprise from Minnesota.

The EB-5 program places two requirements on foreign investors seeking a green card: first, they must invest $1,000,000 in an approved project of their choice, and second, ten new full-time jobs must be created as a direct result of that investment. The investment must be either in a new business (defined by the USCIS as ―a commercial enterprise established after November 29, 1990‖) or in one which has been purchased and restructured such that a new commercial enterprise has resulted, or the investment will spur either a 40% increase in net worth or employees.

Prior to 1992, these restrictions meant that foreign investors either had to create their own new business or find a budding business in which to invest at its earliest stages. In 1992, Congress established a pilot program, which has been regularly reauthorized but has not yet been made permanent, which allows for the creation of economic entities called Regional Centers to assist in the investment process.

We are happy to share USCIS performance data containing statistical information on immigrant petitions by alien entrepreneur and petitions by entrepreneur to remove conditions. The number of cases received, approved and denied for through the fourth quarter of FY2012. These petitions are filed under the fifth employment-based preference category (EB-5) for foreign investors.

It is interesting to note that the number of I-526 applications (for initial EB-5 green card) have more than doubled compared to 2011 (6041 compared to 3805) while the approval rate has dropped at 79%. The rate of I-829 filings (application to remove condition) have dropped off at 712. The approval rate for I-829 has dropped at around 92%.

We can some sort of a slowdown in the EB5 filings, but we hope that with the current elections results, more confident investors will start with more EB5 cases in 2013.

USCIS has recently published Questions & Answers on EB-5 Economic Methodologies. This Q&A document prepared by two USCIS economists came after a 6/22/12 public engagement where stakeholders sought clarification on issues related to hotel/resort development & acquiring real estate related to EB-5 program.

Two of the primary questions raised at the public engagement that needed clarifications were in regards to EB-5 projects involving Hotel or Resort Development and acquiring Real Estate.

When EB-5 petition is filed through a Regional Center, employment requirement can be fulfilled by creation of indirect jobs. Thus, if funds are invested through a Regional Center, the EB-5 requirement of creation of at least 10 full-time jobs can be satisfied through showing that as a result of the EB-5 investment 10 indirect jobs were created. These 10 jobs do not have to be directly related to the EB-5 project and can, for example, include jobs created at other businesses as a result of the EB-5 project being developed.

Facebook co-founder Eduardo Saverin drew public ire last month following the revelation that he had renounced his U.S. citizenship, a move widely seen as a tax dodge. But thousands of wealthy foreigners are lining up to replace him, making investments here and putting themselves on a path to citizenship in the process.

The State Department expects to issue over 6,000 “investor visas” in the current fiscal year, which would be an all-time record. Other countries, meanwhile, are following the U.S.’s lead, keen to spur growth in lean economic times.

“Our goal is certainly job creation, and that’s what this program is all about,” said Bill Wright, a spokesman for U.S. Citizenship and Immigration Services. “At the same time, it’s allowing somebody from a foreign country to come and invest in our nation.”
Under the government’s EB-5 Immigrant Investor program, foreign investors can get conditional visas that allow them and their families to live, work and attend school in the U.S. To qualify for the visa, they must invest at least $1 million in a new or recently created business, or $500,000 for businesses in rural or high-unemployment areas.

The investment must be demonstrated to have created or preserved at least 10 full-time jobs for U.S. workers within two years. Assuming this condition is met, investors and their families go through the next process that grants them permanent resident status, which allows them to apply for U.S. citizenship three years later.

While the EB-5 program has been around since 1990, demand has been surging as of late, fueled in large part by China’s growing elite, who accounted for 70% of the roughly 3,500 investor visas issued last year. State Department officials expect the program’s quota of 10,000 visas per year, which includes visas given to the spouses and children of investors, to be filled for the first time ever within the next year or two.

Some critics of the U.S. program question the fairness of letting wealthy immigrants pay for special treatment, while others say investments and job creation claims need stricter vetting. Immigrants who arrive via the program have no guarantee of recovering their investments, and may face deportation if they don’t produce the required number of jobs.

Of the roughly 12,000 immigrants who’ve arrived on the EB-5 investor visa, just 39% have earned permanent residency, according to USCIS data. There’s also the lengthy application and approval process — a 2005 study by the Government Accountability Office said the program’s reputation for red tape had decreased interest among foreigners in prior years.

USCIS press secretary Christopher Bentley said in an email that the agency “continues to take steps to enhance [the EB-5 program’s] efficiency and integrity.” USCIS recently expanded the team of analysts responsible for evaluating EB-5 projects and proposals, he said.

Whatever the program’s problems, interest has been growing recently, and meanwhile, the U.S. has faced increasing competition from other countries trying to woo well-heeled foreigners with the promise of residency or citizenship. In January, Ireland announced a new residency program for immigrant investors, and Australia unveiled a similar program last month.

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Recently USCIS provided EB-5 statistics provided for a stakeholder engagement meetig, including information on service-wide receipts, approvals, and denials of I-526s and I-829s; the number of approved EB5 Regional Centers by fiscal year.

The statistics reveal an increase across the board in all EB-5 related filings including I-924 applications for both initial regional center designation as well as amendments to existing regional centers. Individuals also filed the highest level of I-526, EB-5 Immigrant Investor Petitions and I-829, Petitions to Remove Conditions to date.

The Immigrant Investor Program, also known as “EB-5,” was created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by immigrant investors by creating a new commercial enterprise or investing in a troubled business. There are 10,000 EB-5 immigrant visas available annually. In 1992 and regularly reauthorized since then, 3,000 EB-5 visas are also set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth.

In a recent Reuters article, a report showed that immigrants founded or cofounded almost half of 50 top venture-backed companies in the United States for 2011, a new study shows, underscoring some of the high stakes in potential immigration reform.

The venture capital community argues the study, completed by research group National Foundation for American Policy, proves the need to overhaul rules governing how entrepreneurs can immigrate to the United States to spur job development.

“It’s a gamble whether an entrepreneur should stay or leave right now, and that’s not how the immigration system should work,” said Mark Heesen, president of the National Venture Capital Association, on a call with reporters. “What we need is legislation that helps these entrepreneurs from outside the United States.”

The EB-5 Category is an excellent opportunity for many foreign nationals to become permanent residents of the United States. In the U.S. so far this year almost 3,000 Chinese citizens have applied for investor visas, up from 270 in 2007. That’s 78 percent of the total applicant pool for this type of visa, according to U.S. Citizenship and Immigration Services (USCIS). The U.S. investor visa, also known as the EB-5, requires a minimum investment of $500,000 by the applicant in a commercial project in the U.S. that employs at least 10 Americans within two years. If the Chinese applicants can’t generate those jobs, they and their family may have to leave the U.S.

A person investing $500,000 in certain circumstances or $1 million in a business that creates 10 jobs may be granted EB-5 permanent resident status. To encourage immigration through the EB-5 category, Congress created a Regional Center program in 1990. 3,000 visas have been set aside each year for people to invest at least $500,000 in designated Regional Centers.

The Regional Centers program does not require the immigrant investor enterprise itself to employ 10 U.S. workers. Instead, it is sufficient if 10 or more jobs are created indirectly as a result of the investment. Regional Centers are designated as “any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productively, job creation, or increased domestic capital investment.” The investment requirement is only $500,000 if a Regional Center is in a targeted employment area, which is either in a rural or high unemployment area, as defined hereinafter in the section on EB-5 Regulations.