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.
There are two USCIS-mandated checkpoints a foreign investor must complete to obtain their permanent green card through the EB-5 program. In the first stage, the investor files an I-526 form, which explains how the investment will create the required jobs. This form is evaluated by the USCIS on a number of conditions:
New commercial enterprise status of the business
Investment capital: funds must be at risk and be invested or in the process of being invested at the time of application review
Source of capital: funds must have been obtained through legal means
Managerial role: the investor must be in some way involved in the management of the enterprise for investment (most often as a limited partner)
Upon approval of the I-526 (usually within eight months of submission), the investor (as well as the investor’s spouse and children under the age of 21 at the time of investment) will receive a conditional visa permitting two years’ residency in the United States. After this period, the investor must submit an I- 829 form to remove the conditions on his or her green card and allow for indefinite residency. This form is filed sometime in the 90 days preceding the second anniversary of I-526 approval and must demonstrate:
Investment of the full amount required
Investment has been sustained in the commercial entity for the full two-year period
Required jobs (10 new full time) have been created
Approval rates for both I-526 and I-829 applications have increased since the program’s inception, primarily because Regional Centers have become better at locating those projects most likely to fulfill all the investment requirements and because immigration attorneys and investors have gained more knowledge about producing a viable application.
What is the Cost?
While the actual investment sum does comprise the largest financial outlay for EB-5 investors, it is important to note that a number of other costs, which cannot be recouped, exist. Assuming that the investor goes through a Regional Center and invests in a TEA-based project, the total cost of an EB-5 visa can be projected at about $550,000. This amount is made up of:
Initial Investment: $500,000
Regional Center Administrative Fees: $35,000 (ranging from $0 – 60,000)
Legal Fees ($14,000)
Application Fees (I-526 and I-829): $5,250
Regional Centers provide a range of services at a variety of prices, and this value can therefore fluctuate. Additionally, many investors will face higher application fees, as the USCIS is increasing the rate at which it denies applications or requests additional information. It is for this reason that the hiring of a lawyer well trained in EB-5 is absolutely essential to ensuring that applications go through smoothly.
Profile of the EB5 Investor
The individuals who are most interested in immigrating tend to be from the middle class (with an income of ~$100,000), working either for large corporations or in their own small businesses. These investors have four primary interests in investing:
1. Permanent green card. This is far and away the most important aspect of any program or project, and was consistently referred to as the most critical component of any investor’s considerations. The great fear for any investor is that, after two years, they will face deportation.
2. Education for children. Educational opportunities are a prime motivator for immigration to the United States.
3. Health care access/private property protections. These are less important motivators than educational opportunities, but were also cited by the investor.
4. Profit. While investors are certainly interested in profit, it is actually the lowest motivator for investment. The $500,000 mark for EB-5 is seen as an acceptable price to be able to come to the United States quickly, even for the middle class investors who are the primary targets of the program.
Investors are interested in coming to the United States, but also seriously consider locations such as Canada, Australia, and Singapore. Of these countries, the U.S.’s immigration process is the most difficult to navigate and has the lowest rate of success for immigrants. Because of this, immigration agencies in China push opportunities in the other countries over American options.
Within the U.S., investors are indifferent as to where their investment goes. Most investors do not consider the U.S. in terms of different states and do not consider major legal or regional differences between states.
For an immigration process to be considered successful, it must result in a permanent green card. Investors want to know from the start what it will take to get a green card and do not want to be surprised by any additional regulations in the process. Investors are skeptical of programs like EB-5 and need assurance that they will not be deported. Investors do not hope to lose their investments, but the profit motive is secondary to the successful immigration process.
If you have questions about this program, feel free to email us at anytime.