EB-5 Investor Green Card

EB-5 investor green card applicants often ask whether they should make an investment in a Regional Center or in a business they create. Both have advantages depending on the investor's goals as well as the Regional Center or individual investment.

The Regional Center Program

Most but not all EB-5 investors immigrate using the Regional Center program. This program reserves 3,000 visas each year for people to invest at least $500,000 in designated Regional Centers. Regional Centers are government approved developers who are permitted to pool investors' funds and fund projects. The Regional Center program does not require the enterprise itself to create 10 jobs directly. Instead, it is sufficient if 10 or more jobs are created indirectly downstream in the economy as a result of the investment. The investment requirement is only $500,000 if a Regional Center is in a targeted employment area (TEA), which is either in a rural or high unemployment area (as defined in this site's section on EB-5 regulations). Once permanent resident status is granted, minimal involvement with the investment is required, allowing the applicant to work in any business, go to school, or enjoy retirement. Martin Lawler will send you a list of Regional Centers.

Individual Created Investment

An investor may create their own business or invest in a business they locate. The job creation must be at the firm in which one invests.

Here are some general factors to consider in deciding whether the Regional Center or self-created business is right for you:

• 70 to 90 percent of EB-5 investors choose Regional Centers but they are not for everyone.
• Regional Centers may count indirect employment toward the 10 jobs each investor must create. One’s own business must create the jobs as direct hires.
• The investment amount is $1 million unless the enterprise is in a high unemployment or rural area. High unemployment is defined as 150 percent above the national average. Most Regional Centers are located in a high unemployment or rural areas and thus the investment amount is $500,000 not $1 million. To create a new company with $500,000 it must be in a rural or high unemployment area and with today’s high national unemployment rate this can be a challenge.
• Regional Centers are run by developers - one does not have to operate the enterprise. One may go to school, enjoy retirement, or own another business. The same is true for a self-owned business; it may be run by another manager, although the investor may choose to manage its day-to-day operations. Some prefer to manage their own company and investment, and are not interested in relinquishing control to another.
• Returns on Regional Center investments are usually low. Creating one’s own business may generate a much higher return.
• As soon as the case can be documented and the investment made in a Regional Center, the first step of the EB-5 process (Form I-526) can be filed. Usually the same is true if one purchases a business. However, for one creating a new firm from the beginning, the funds must be substantially spent and not just sitting in the company’s bank account – the funds must be “at risk” for the I-526 to be filed. Thus, investing in a Regional Center can be a faster visa process than creating a new business.
• Often there is no temporary visa until the owner/investor immigrates allowing an investor to run a new enterprise. This can complicate the process of opening a new business unless one has a trusted manager to run the new enterprise until the EB-5 green card is issued.
• The USCIS has approved hundreds of EB-5 cases for two of the Regional Centers and more than 70 for two others. Other Regional Centers have had some petitions approved indicating the USCIS accepts the Regional Center’s business concept. People creating a new business must provide the USCIS substantial documentation about the enterprise to prove it is a viable business, the funds are at risk, and the jobs will be created.
• Individuals may be more comfortable in investing with relatives or business acquaintances or in a business they form than with a Regional Center developer they do not know.

These are just some of the factors to consider. Martin is pleased to talk with investors about the process and advantages of both Regional Centers and individually created businesses. He helps people file both types of EB-5 cases.

ABOUT THE DETAILS

The Basic Program

One may create their own business or locate a business in which to invest. A person investing $500,000 in a high unemployment or rural area (called a targeted employment area - "TEA") or $1 million in other ares in a business that creates 10 jobs may be granted EB-5 permanent resident status. The government criteria for this green card are:

• Investment must be in a business, not a passive security such as the stock market;
• Invested funds must be the individual's, but may be a gift or loan from a parent or other person, provided the appropriate gift taxes are paid, if required by the tax law;
• The business must have been created after November 29, 1990, or the investment must substantially change an older business;
• The amount of investment may be $500,000 in a rural or high unemployment area; and
• Create 10 jobs (or save 10 jobs if the business is a "troubled" enterprise).

Two types of Regional Centers

One may invest in a Regional Center. These are usually limited partnerships. Generally, there are two different types of Regional Centers. One permits the investor to take an equity ownership in a Limited Partnership which owns an enterprise. The other is akin to a venture capital firm that pools investors' capital and loans the funds to a development. The loan type provides for the investors' capital to be returned at a fixed date usually about five years later.

Lists of Regional Centers

I can send you a list of Regional Centers to contact.

Procedure

EB-5 permanent resident status involves making the investment, filing a petition at a USCIS Service Center, and applying for an immigrant visa at a U.S. consulate or applying for adjustment of status in the U.S. After "Conditional" Permanent Resident Status (Green Card) is granted, the individual must wait one year and nine months to file an application to remove the "conditional" status. With this application, evidence of the creation of the 10 jobs, if necessary, is required as well as proof the investment has been maintained. Upon approval of the application by USCIS, the applicant is granted permanent resident status.

The USCIS has been approving qualifying EB-5 cases following controversy in the 1990s over interpretations of the relevant regulations.

I can analyze business opportunities and advise you whether they may qualify for an EB-5 Green Card. We do not, however, give business advice or analyze an investment for determining financial viability. You are encouraged to hire accounting and business law experts to conduct a due diligence analysis of the investment.

Go on to Step-By-Step Process...