The Immigrant Investor Program, also known as the EB-5 visa program, was created by the United States Congress to stimulate the U.S. economy through job creation and capital investment by immigrant investors. The creation of the program was the first time that Congress facilitated a path to lawful permanent residency specifically for immigrant investors and remains the only program to do so. The EB-5 visa is available to non-U.S. citizens who invest $1,000,000, or in certain circumstances $500,000, in a new commercial enterprise that employs at least 10 U.S. workers full-time. The program sets aside approximately 10,000 new EB-5 visas for immigrant investors each year.
In addition to the “standard program” there is also the “Regional Center Program” which was created in 1993 to attract more investors to apply for EB-5 permanent residency. Investors are particularly attracted to the Regional Center Program because the requirements are more flexible. The Regional Center Program allows for investment in projects sponsored by “regional centers” and relaxes the job creation requirement by allowing “indirect jobs” to count toward the requisite number of workers.
With substantial improvements made to the EB-5 visa program, investors have become increasingly more interested in the investor visa. The number of EB-5 visas issued increased from 1,885 in 2010 to 8,567 in 2013. Additionally, the high approval rate for EB-5 visas is attractive to investors. Historically, about 80 to 85 percent of EB-5 visas are approved each year. Taking the high approval rate into account with short wait times due to no visa quota backlog, the EB-5 visa is a great option to obtain permanent residency in the United States for those who have the financial resources.
To qualify for an EB-5 visa under the standard program, the investor will need to meet six requirements:
A. Investment Amount Requirement
Generally speaking, an investor will need to make a minimum investment of $1,000,000. However, the limit is lowered to $500,000 for investments made in "targeted employment areas." These areas include rural areas and areas experiencing high unemployment.
B. Acceptable Types of Investments
For an investment to qualify for the EB-5 program, the investment must take the form of a contribution of capital. Acceptable investments for EB- 5 purposes include:
ii. Cash equivalents
v. Other tangible property
vi. Indebtedness secured by assets owned by the investor
C. Investment Capital Obtained Through Lawful Means
The investor will need to show that the invested capital came from a legitimate source. Funds obtained by any lawful means are acceptable, including inheritance, gifts, loans, lawful income, and the sale of a business, real estate or stock.
D. Job Creation Requirement
The enterprise will need to create full-time employment for at least 10 U.S. workers. Qualifying employees include United States citizens and authorized immigrant workers.
E. Acceptable Types of Enterprises
The investor must invest in a qualifying enterprise. The two types of acceptable enterprises are "new commercial enterprises" and "troubled businesses."
i. New commercial enterprise
A new commercial enterprise is one that was established after November 29, 1990. An enterprise established before this date can also be considered "new" if (1) the investor buys and reorganizes an existing enterprise or (2) the investor invests in an existing enterprise which results in a substantial change to the business. An enterprise is deemed to have undergone "substantial change" if the investment results in either a 40% increase in net worth or number of employees.
ii. Troubled business
A troubled business is one that has been in existence for at least two years and experienced a 20% or greater loss in net worth. The creation of 10 new jobs is not required for an investment in a troubled business. An investment in a troubled business need only sustain the number of employees prior to the investment.
F. Management Requirement
The EB-5 investor must be involved in the management of the enterprise either through daily managerial control or through policy making. Adequate policy formulation positions include corporate officers, members of the board of directors, and limited partners. A “purely passive role” is not permitted.
As mentioned, Congress relaxed the requirements to obtain the EB-5 visa under the Regional Center Program to attract more investors to apply for EB-5 permanent residency. Two distinguishing characteristics of the Regional Center Program are that 1) the investor will not need to start their own business but rather invest in an approved Regional Center in the United States and 2) the job creation requirement can be met with the creation of “direct” and “indirect” jobs. These characteristics are discussed below in more detail.
A. Investor Must Invest in An Approved Regional Center
Rather than taking on the burden of starting a business, the investor will invest in an approved Regional Center. "Regional Centers," designated as such by the government, promote economic growth and job creation in a specific geographic area in the United States. Currently, there many options to choose from as there are over 170 approved regional centers in 40 states through-out the United States.
B. Job Creation Requirement Allows For Direct and Indirect Jobs
An important advantage to the Regional Center Program is that the job creation requirement can be met with the creation of “indirect” jobs, which are much easier to achieve than “direct” jobs. Indirect jobs do not have to be directly related to the investment project. For example, certain construction jobs or jobs created at other businesses as a result of the EB-5 project can be counted toward the 10 job requirement. Thus, EB-5 investors utilizing the Regional Center Program may take advantage of “indirect” job creation to more easily meet the EB-5 visa requirements.
Upon completing the I-526 application and accompanying documents, the investor will need to file the petition with USCIS. Once approved, the investor can receive conditional permanent residence by either going through consular processing abroad or adjusting status within the United States.