Considering applying for an EB-5 Visa?

Foreign nationals seeking permanent resident status in the U.S. are relying on the EB-5 investment route when there is no other way. Various reasons might be surmised for the popularity of the investment option, including the reduced availability of other options under U.S. immigration laws and the comparatively low investment amount of $900,000, which is lower than many other countries, including Canada.

Those who would benefit from EB-5:

• Self-sufficient retirees who want to reside in the United States
• Graduating students who have no job offer or have a job offer but are blocked by the H-1B quotas
• Foreign nationals who are reaching the 6 year limit for their H-1B visa status
• A CEO or corporate manager who is being hired by a company, but not being transferred from its overseas subsidiary
• Investors who might be eligible for treaty investor visas, but whose countries do not have investment treaties with the U.S., such as China and India
• A foreign national investor in a U.S. business who does not want to be active in the day-to-day operations of the business
• Foreign nationals who need/want to get out of a country with problems
• Foreign nationals who may have no other options for permanent legal status in the U.S.

Direct vs Regional Center Investors

If you are considering the EB-5 investment option for permanent residence, you have two basic choices. Either you find your own individual investment vehicle where you will both invest financially and play an active role in management or policymaking. The second option is a regional center investment. Both options have advantages and disadvantages.

Primary differences & advantages

Individual or direct investment option helps you achieve the primary goal of obtaining a green card, with the additional benefit of a business investment that can potentially provide significant returns and a possible source of income on an ongoing basis.

The regional center investment, on the other hand, generally provides a secure exit strategy. Most importantly, this route is not reliant upon proof of direct employment of 10 qualified U.S. workers per EB-5 investor, as is the case with the direct investment route. This is because both projected indirect and induced employment qualifies. A disadvantage here would be that you are not running your own business, and you will get a very low rate of return.

Regional centers negate some of the complicated issues that can accompany a direct EB-5 petition and offer a significantly greater degree of flexibility and freedom, which is perhaps why they make up over 90% of total EB-5 petitions filed. Additionally, you can live anywhere in the U.S. and work (or not work) anywhere in the country too.

Similarities

With either option, the maximum investment is $1,800,000 unless you can prove that the investment is in a “rural area” or an area with experienced unemployment of at least 150% of the national average rate. In that case, the minimum investment drops to $900,000. Most (but not all) of the regional center projects are located in these $900,000 targeted employment areas.

For both routes, you must be able to prove that your investment has created full-time employment for at least 10 U.S. workers. For individual investors, this must be direct employment. With regional centers, this quota can be met through a combination of direct employment and indirect and induced employment using various accepted economic methodologies.

You are also required to be engaged in minimum management of the business as required under the Limited Partnership Agreement.

Another issue that is significant for both the individual and the regional center investor is proving the “lawful source of funds.” Substantial documentation is required to prove that you did not acquire the funds through unlawful means. You need to submit tax returns, real estate transactions, securities transactions, inheritance documentation, stock dividends, employment records, bank records, etc., depending on the facts of the case.

You are required to show the path of the funds from yourself to the new commercial enterprise. In some cases, this is as simple as a wire transfer document from your personal bank account to the investment enterprise. In other cases involving countries with restrictions on outbound currency transfers, this can be extremely complex, often involving transfers to multiple parties. Most critically, you must be able to show that the investment came from you, an individual investor, and not a corporate entity, including a wholly-owned corporate entity.

An advantage for both cases is that your children can stay and study in the U.S., and you can travel in and out of the country at will.

Permanent resident status

Regardless of how you choose to invest, you will receive conditional permanent resident status if your application succeeds. This means that the “green card” you receive is valid for two years.

During the 21 to 24 month window after approval, you must apply to remove conditions on residence. As part of this process, you must prove that the investment funds have not been withdrawn and that the requisite jobs have been created or will be created within your 2 year conditional green card time period.

For individual investors, this can be difficult if a downturn in the economy has resulted in a reduction in your workforce. For the regional center investor, although indirect employment creation is allowed and although USCIS may in some cases pre-approve the employment creation element, the regional center has the burden to prove to USCIS during the two years referred to above that the actual projected employment has occurred or at least that the foundational inputs of the economic projection have occurred. Here, your choice of both regional center and the particular project is critical.

Managing your business

It is important to understand that most of the regional center projects are limited liability corporations or limited partnerships. According to regulations, if the petitioning investor is a limited partner and the limited partnership agreement provides the petitioner with the rights, powers and duties usually granted to limited partners under the Uniform Limited Partnership Act, the investor is automatically considered sufficiently engaged in the management of the enterprise. The same standard has been applied to members in LLCs.

This requirement can be met by a limited partner or member without the necessity of the investor committing to any specific amount of time or engaging in any day-to-day management since such activities are performed by the general partner or managing member.

For the individual investor, you must prove that your investment has been made in a new commercial enterprise, which can be created in any of the following ways:

• Establishing a brand new business
• Purchasing or investing in a business established after November 29,1990
• Acquiring an existing business and engaging in significant restructuring or reorganization. This alternative is rarely used.
• Expanding an existing business. You will be required to prove not only the creation of 10 new jobs, but also the expansion of either net worth or number of employees of the business by at least 40%
• If you choose to invest in a troubled business, defined as a business with losses totalling 20% of net worth in the last one or two year period, you may qualify based on preserving all existing employees (at least 10) instead of adding new ones.

Is the EB-5 Visa the right option for you?

It is important that your EB-5 immigration attorney specializes in assisting foreign business professionals and high net worth individuals in considering their options for U.S. residence or visas through investment, including acquiring citizenship by investment in a treaty country. Alongside the EB-5 investor, the E-2 visa is another option to consider. Both can ultimately be a gateway to citizenship, though they take very different routes.

Interest in the E-2 visa option has grown in recent years due to significant quota backlogs for China and Vietnam for EB-5 visas. Investors born in China have at least a 10-year waiting period from filing their EB-5 application to receiving their two-year Conditional Green Card. For those who want to come to the US much sooner, even though the US doesn’t have an E-2 investor treaty with China, they can get a second passport to a country that has an E-2 treaty. Then, they can apply for usually a 4-5 year renewable E-2 visa generally with only a $200,000-$500,000+ investment with 3-5+ employees, substantially less than an EB-5. This two-step process should take only 1 to 1.5 years.

Key differences between the E-2 and EB-5 investor visas:

E-2 Visa —

• A long-term visa (generally 4 or 5 years depending on the country) that allows you to stay in the US indefinitely for as long as the business continues, but does not result in a green card
• Not subject to quotas & can be obtained quickly. The average waiting period is 2+ months, depending on the US consulate.
• By limiting the amount of time you spend in the U.S., you can avoid being taxed on worldwide income
• Flexible requirements when it comes to investment amounts and jobs created
• Applications can be filed directly with the U.S. consulate without immigration pre-approval
• E-2 visas are granted based on the country of citizenship
• You must own at least 50% of the business you choose to invest in
• You can choose how much time you spend in the U.S.
• Not all countries qualify; China and India do not.

EB-5 Visa —

• You qualify for permanent residence, also known as a green card
• Processing times can take 3-4 years. There are quotas, and there arc backlogs in a few countries, such as China and Vietnam
• Should you receive your green card, you will be taxed on your worldwide income
• You must meet the minimum requirement in terms of investment and job creation
• Your EB-5 petition must first be approved by USCIS before you submit your visa application for a 2-year conditional green card to the U.S. consulate
• EB-5 quotas are based on the applicant’s country of birth
• There is no minimum ownership requirement
• You generally need to reside in the U.S. for at least 50% in order to obtain a re-entry permit

Investment in an E-2 business can be used as a down payment toward an EB-5, and some foreign investors find that the E-2 is a good way to spend time in the U.S. while they wait for their EB-5 petition to be addressed. For others, the E-2 offers enough advantages that they find it unnecessary to go through the EB-5 application process at all.

Necessary service

The immigrant investor options aren’t an attractive option for all foreign nationals seeking permanent residence status in the U.S. But, for many, they provide a solution when no other option seems possible. If you do decide to choose this option, it is important to have an experienced immigration lawyer on your team, as well as business, and tax counsel, to provide the necessary advice on the many complex issues that go into determining whether the EB-5 visa is really for you.

An experienced EB-5 immigration attorney is able to offer you the following assistance:

• Performing immigration due diligence relating to the chosen investment project
• Advising regarding qualification as an EB-5 investor
• Responding to questions regarding the EB-5 process

• Obtaining, reviewing, analyzing and presenting information and documentation regarding the lawful source of funds
• Obtaining, reviewing, analyzing and presenting information and documentation relating to tracing the path of funds to the project
• Obtaining, reviewing, analyzing and presenting information and documentation about the project
• Preparation and filing of I-526 petition
• Preparation and filing of conditional immigrant visa application or application for adjustment of status to conditional permanent resident
• Preparation and filing of I-829 condition removal petition