EB-5 Green Card and Permanent Residence: How Your Investment Can Help
The EB-5 program creates the opportunity for foreign investors and their families to attain full immigration benefits, including access to the U.S. educational system for their children and legal permanent residence status to live and work anywhere in the U.S. Furthermore, this program eventually leads the opportunity for U.S. citizenship.
The benefits of EB-5 investments to the U.S. economy are not abstract; they create real jobs for real people, in areas that are most in need of economic support. Further, it changes the lives of the investors and their families, who can enjoy the many benefits of living and working in the United States.
However, the EB-5 immigrant visa raises many questions that must be carefully considered: “Is the EB-5 program the best way for me to pursue a Green Card?” “Does it fit the needs of my family?” “Will it be the best avenue to allow my child to study and live in the United States?” “Do I even qualify for an EB-5 visa?”
The two investment-based immigration paths available to EB-5 applicants are: Direct Investment and Regional Center Investment.
Direct Investment: An investment of at least $1,000,000 in a new U.S. enterprise
The Direct Investment route requires an immigrant investor to demonstrate an existing or imminent investment of $1 million in a new commercial enterprise in the U.S. that will substantially benefit the economy by creating 10 new jobs within a 2 year period.
The immigration regulations permit three methods of establishing a new commercial enterprise:
- The creation of an original business;
- The purchase of an existing business and simultaneous restructuring or reorganization such that a new commercial organization results; or
- The expansion of an existing business through the investment of the required amount, so that a substantial change in the net worth or number of employees results from the investment of capital. The term “substantial change” is defined to mean a 40% increase in either the net worth or number of employees so that the new net worth or number of employees equals at least 140% of the business’ pre-expansion net worth or number of employees.
Alternative Direct Investment: An investment of at least $500,000 in a “target employment area”.
In an alternative pathway under the Direct Investment option, an investor may be allowed to qualify by making a $500,000 investment if the capital injection is made into a “target employment area”. To qualify the investment must be made in:
- A rural area (i.e., not within a metropolitan statistical area or within the boundary of a city or town with a population of 20,000 or more); OR
- Areas having an unemployment rate that is at least 150% of the national average.
Either of the Direct Investment pathways is difficult, complex and has the “high bar” requirement to create at least 10 jobs within the first 2 years.
Pilot Program Regional Investment Center: An investment of $1,000,000 in a USCIS approved Regional Investment Center
Alternative Pilot Program Regional Investment Center: An investment of $500,000 in a USCIS approved Regional Center that invests in ‘Target Employment Area” (see above)
The Pilot Program was created only three years after the original “Direct Investment” EB-5 visa was established. It didn’t take long for U.S. lawmakers to catch on to the fact that far fewer investors were applying for a visa than anticipated. Realizing the program’s burdensome requirements and complicated application process were responsible for turning investors away, Congress initiated a temporary “Pilot Program” in 1993, experimenting with a completely different approach to the visa application process. The Pilot Program set aside 5,000 “regional center” visas a year – half of the 10,000 total EB-5 visas available annually.
Currently, there are many qualifying investment centers that have projects pre-approved by USCIS to accept investment funds. To qualify, these centers must show a track record of performance and investment returns and specify how long funds must remain invested. However, it is entirely up to the investor to complete all due diligence and choose the Regional Investment Center that is the best fit with the investors objectives. Some centers are more established than others and – as with any investment – return on investment cannot be guaranteed . Investments in Regional Centers are “investments”: They carry risks like any other investment.
The benefits of the Pilot Program provide significant advantages over the Direct Investment option:
- Under the Direct Investment program, the investor is required to create an entirely new commercial enterprise. The investor must also have been present at the “inception” of the business. These conditions do not exist under the Pilot Regional Center Program.
- Under the Direct Investment program, the investor must prove that the new business directly created at least 10 new full-time jobs. In contrast, the Pilot Program requires that the investment indirectly create 10 jobs using industry job-multiplier statistics and economic modeling tools. If these measures show that the investment would contribute to the regional economy in a way that would likely create or save at least 10 jobs, then the job creation requirement is satisfied. The investment itself need not directly create any jobs at all. Note that satisfying the jobs requirement is the responsibility of the regional center, not the investor.
- The “active management” (day-to-day management) requirement for Direct Investment is not a requirement for the Regional Center pathway. While the Pilot Program does technically require the investor to participate in management or policymaking, this participation is often largely symbolic, with the investor’s vote as a limited partner satisfying the requirement.
- One major benefit of the Regional Investment Center pathway is that an investor can enter the U.S. on a conditional green card (see below) and then be free to work wherever they and their families (spouse and unmarried children under 21) desire. Additionally, the investor can undertake a side venture and not have their green card directly tied to the success of their own enterprise.
In summary, although in certain instances the original Direct Investment option may still make sense for investors, most participants have found the Regional Center investment to be the easiest route to an EB-5 visa.
Conditional EB-5 Green Card
With either the Direct or Regional Center investment route, an investor will be issued a Conditional Green Card valid for two years, assuming admissibility requirements are satisfied. At the conclusion of the two-year period, or in some cases slightly longer, an application to remove the “conditions” must be filed in order to obtain a permanent (10 year) green card. This application must demonstrate that the job creation and other requirements of either the Direct or Regional Center investments have been satisfied.
EB-5 Compared to E-2 and L-1 Non-Immigrant Visas for Investors or Immigrant Entrepreneurs
Often the EB-5 green card is considered along with temporary, non-immigrant visa options when an investor is considering the best option for entering the U.S. We discuss the various options for entrepreneurs here.
As opposed to the non-immigrant visa options, an EB-5 application has the benefit of being a direct application for Permanent Residence – a Green Card: When entering the U.S., the investor already has a conditional green card. This eliminates some of the uncertainty that accompanies non-immigrant visa applications with a subsequent green card application.
Frequently Asked EB-5 Green Card Questions
What advantage does the investor based green card route provide me?
The two main advantages of this investment based immigration route are the speed by which an applicant receives legal permanent residence in the U.S., and the lack of several application requirements that often make the green card process prohibitive for many applicants. To get a better idea of these advantages let us quickly consider the general path that persons not availing themselves of the investor based green card process must endure:
An applicant would first have to apply for a non-immigrant visa such as an H-1B or L-1 visa. To do this an applicant would need to have an employer, which by itself can already be prohibitive for many people. One must also convince USCIS of your educational and experiential qualifications and that you are going to be engaging in a qualifying occupation. If one manages to qualify for such a non-immigrant visa it would then only be granted for a period of 1 or 3 years depending on certain factors. After that time is used up on the non-immigrant visa one would have to apply for an extension which is by no means assured. If an applicant then wishes to apply for a green card and adjust status from the H-1B or an L-1 visa to an immigrant visa (green card), then another arduous process begins. In some cases this requires finding a sponsoring employer for the green card case, having the company conduct recruitment advertising, and justifying why the company needs the applicant and cannot find suitable employees in the U.S. to complete the applicant’s job. As one can imagine, this process is often difficult, especially in the current economic situation in the U.S. Often times this whole process can take 3-5 years or more.
What is the basic procedure for filing an investment based EB5 green card case?
Whichever investment route you decide to take, whether direct or through an investment center, an immigrant petition (Form I-526) must be submitted to USCIS with the appropriate filing fees and detailed documentation proving that the applicant satisfies all regulatory requirements. Once such a petition is approved, the investor must then obtain an immigrant visa either at a U.S. consulate or if they are already in the U.S. then via an application for adjustment of status.
Upon either admission or adjustment of status the applicant is granted a conditional green card valid for a two year period. Then, between 90 days prior to the second year on the conditional green card, and no more than 24 months after such issuance, the applicant must file an application to remove conditions, again with a fee and detailed documents verifying both that the investment has been maintained and that the required number of jobs have been created. Once the application to remove these conditions is approved by USCIS an unconditional permanent residence card is issued.
What is the difference between the direct investment route and the regional investment center path?
Direct Investment: This immigration route requires an applicant to invest or be actively investing into a new commercial enterprise that employs 10 US citizens or authorized immigrant workers full-time and requires an applicant to be engaged in the business through day-to-day management or policy formation.
Regional Investment Center: The difference with this immigration route is that the applicant need only invest into a business that has already been approved by USCIS by demonstrating that it will promote economic growth through increased export sales, improved regional productivity, job creation, or increased domestic capital investment.
Note that with either the direct or regional center routes, the required investment of $1,000,000 may be reduced to $500,000 if the investment is made in a Target Employment Area. These are rural areas of economic need where the unemployment rate is above average.
Is one of these two investment based routes more advisable then the other?
The vast majority of investment based cases that are filed with USCIS each year are $500,000 “regional investment center” cases. There has been much written about this trend and the general consensus correlates this to a couple of factors. One such factor is rather obvious as the investment amount is far lower. Perhaps a more determinative factor however is that the $500,000 “regional investment center” cases seem to be more streamlined as the business in which these funds are invested have already been screened and approved by USCIS, thereby receiving the “regional investment center” designation.
The result of investing into such a pre-approved business model is that the process of removing the conditions from an applicant’s green card after two years is often far simpler. The reason for this is that after two years, you as a green card applicant do not have to show that the regional investment center has directly created at least 10 jobs for each investment they have received, but instead, the regulations permit one to merely show that at least 10 jobs have been indirectly created from the use of such funds.
This brings us to another very important point. When considering the $500,000 regional investment center route one needs to diligently consider various USCIS approved investment centers, reviewing data regarding job creation as well as a number of other factors. Apart from just the immigration implications of this data, it is also important to have this information to discuss with financial and business advisors.
If on the other hand an applicant is searching for specific investment returns that approved investment centers may or may not be able to provide, or if an applicant is determined to set up and invest their own new commercial enterprise for personal or business reasons, then the $1 million direct investment route might best suit such needs.
Each individual is different and accordingly advice on which path to take differs from one investor to another although it can be stated with confidence that investing into an already approved USCIS investment center is often more streamlined and saddled with fewer potential delays and legal impediments to conditional permanent residency.
If I choose to make the $1 million direct investment into a new commercial enterprise, can I make my investment along with other partners?
Yes.Two or more individuals are allowed to make a joint investment into a new commercial enterprise as long as (1) each petitioning investor has invested (or is actively in the process of investing) the required $1 million amount, and (2) each petitioning investor can show the creation of at least 10 distinct qualifying full-time jobs. 8 CFR §204.6(g)(1).Note that a new commercial enterprise investment can also be made with persons who already have U.S. Citizenship or immigrant status. Accordingly, all of the new jobs created by the new commercial enterprise will be allocated among those investors within the investment pool seeking green cards.
When must I make my EB-5 investment?
This answer depends on whether you are pursuing the direct investment or regional investment center route.
Direct Investment: For those persons making the direct investment, USCIS effectively requires that the entire capital amount be invested and at risk in the commercial enterprise at the time the first stage of the case is filed. Often times, in order to reduce the risk of making such a large investment and not being granted a green card afterwards, persons place funds into escrow (third party trust) accounts with the transfer of funds being made contingent on the approval of the first stage of the green card case (I-526).
Regional Investment Center: For those persons who decide to make at least a $500,000 investment into their chosen investment center, most centers place all funds into an escrow (third party trust) account pending the approval of the first stage of the green card case (I-526), after which time the funds are transferred.
Do I have play an active role in the EB-5 enterprise in which I invest?
Yes, although this requirement is often less onerous then it appears. The general rule, for all investment based cases, is that to qualify, an investor must maintain more than a purely passive role in the new enterprise upon which the petition is based. The regulations require that an investor be involved in the management of the business either through policy formulation or through the day-to-day managerial control of the commercial enterprise. One way to satisfy this requirement is for an individual to be acting as a corporate officer or board member for example.
Do I have to live in a specific area of the U.S. to maintain my EB5 green card?
If an applicant decides to invest at least $500,000 into an approved investment center then there is no requirement that you reside in any particular area of the country, in fact you can enter the U.S. and then invest in any other projects which interest you and live wherever in the country you desire.
Who counts as an employee of the EB5 commercial enterprise for purposes of satisfying the conditional green card requirements?
To qualify for green card status (without conditions), an investment must create full-time employment for at least 10 U.S. citizens, lawful permanent residents, or other immigrants lawfully authorized to be employed in the United States. Note that an immigrant lawfully authorized to be employed in the U.S. does not include H-1B workers as they are non-immigrants. Additionally, INA §203(b)(5)(A)(ii) (8 USC §1153(b)(5)(A)(ii)).neither the investor nor the investor’s spouse or children count toward the 10 employee figure.
Regulatory language in this area provides that such jobs need not exist at the time of the initial investment or before the filing of the first part of the petition, form I-526, however USCIS does require that such employees be hired within a reasonable period after issuance of the conditional green card and must definitely be evidenced when applying for removal of conditions within 24 months.
Must EB-5 created employment be full-time?
Yes. The jobs created must be full-time, meaning employing persons in a position that requires a minimum of 35 working hours per week.
How long does this EB-5 process take if I am located outside the U.S.?
The first decision that needs to be made by the applicant is whether to make a “direct investment” into a new commercial enterprise or whether to take the “regional investment center route to permanent residency (green card status). Once this decision is made then the time it will take before one can enter the U.S. on a green card is currently averaging between 8-14 months. The first part of the process (I-526) takes roughly 5-7 months to process with the second part, consular processing, taking the remaining amount of time. Note that these are just estimations as each U.S. consulate has differing processing times based on a number of factors such as the volume of cases that are adjudicated through the consulate and whether a particular country has been labeled as an area with a high risk of immigration fraud.
Do I have to go to the U.S. Consulate to process my EB5 conditional green card?
Yes. The purpose of the consulate process is to ensure that each applicant undergoes background tests and checks, including medical exams, police and security checks, as well as immigration history checks. The consular office will also inquire as to your investment and potentially the source of your investment funds.