Immigrant Entrepreneurs: The Requirements of the EB-5 Program

The Immigrant Investor Program was created back in 1990 to provide targeted stimulation the U.S. economy. What on the surface looks as simple as a standard business investment in return for the EB-5 Visa and status as a conditional permanent resident, is actually a complicated program with a high amount of communication with USCIS (United States Citizenship and Immigration Services) and regional agencies. If you’re looking at the EB-5 program to get your U.S. visa, you should know about the requirements, how to find a business, and how to properly invest in it in this three part series.

Requirement: New Commercial Enterprise

The EB-5 program revolves around the idea of providing permanent residency in exchange for business investment, but this isn’t as easy as providing capital to any company in the United States. Certain regions are easier to invest in then others, and the investment must be a “new commercial enterprise” not an established, well-to-do business.

Investing in a “New” Business

A new business requires it to be established after Nov. 29th, 1990. “Commercial enterprise” is defined as “any for-profit activity formed for the ongoing conduct of lawful business”. These can be investing in something where you will be the sole proprietor, or a joint venture, corporation, or business trust, to name a few options

Restructuring or Expanding an Old Business

If you want to invest in a business established before Nov. 29th, 1990, your investment needs to radically change the company to make it “new.” The USCIS defines this as a business that is:

• Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or
• Expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs.

Requirement: Job Creation and Preservation

Part of this investment is the creation or retention of jobs by investing in this business. Again, there are requirements on these job creations, and when job preservation is counted as meeting this requirement.

Create at Least 10 Jobs

Within two years (circumstances on an individual basis may increase this time) you need to create at least 10 full-time jobs for qualifying U.S. workers. These are direct, identifiable jobs within the commercial enterprise.

Preserve at Least 10 Jobs

To be qualified with preserving jobs, these existing jobs must meet the requirements of the job creation jobs and be in a “troubled business.” A trouble business is an enterprise that was established at least 2 years ago that has had incurred a net loss of profit equal to at least 20% of the company over the last 12 to 24 months.

In addition to direct job creation or preservation, if you are investing in a Targeted Employment Area (see below) you can claim indirect job creation if those jobs can be shown to have been created as a result (or collaterally) of your capital investment in a commercial enterprise.

Requirement: Capital Investment

Besides picking a business and creating or retaining jobs, there is a minimum level of capital that must be placed at risk by the investor by investing in this company. “Capital” in this case can be either legal currency (valued at its exchange to U.S. dollars) or assets (assessed at a fair market value through asset valuation). This can provide opportunities: if you owned valuable assets related to a certain industry, you could ship those assets to a U.S. company as part of the investment. The amount of investment capital depends on the region.

General vs Targeted Employment Areas

The minimum qualifying investment is $1 million in U.S. currency for general investment. In addition, there are special regions where less investment ($500,000 USD) is allowed, known as Targeted Employment Areas. They are:

• High Unemployment Areas: an area experience unemployment at least 150% of the national average.
• Rural Areas: an area outside a metropolitan statistical area or outside the boundary limits of a city or town having a population of at least 20,000.

There is no centralized listing of Targeted Employment Areas. Several state agencies maintain lists for their region, but others have to be privately analyzed and submitted to USCIS for approval.

If you’re interested in learning more about how the EB-5 Program works and eligible commercial enterprises and Targeted Employment Areas, contact George & Company. Experts in business brokerage, investments, and mergers and acquisitions, we can help you find the right business in the right place in the New England area. To learn more about how to use your entrepreneurial skill to gain a U.S. Visa, check back soon to learn about finding the right business for the Immigrant Investor Program.