EB-5 Overview for Investors
To qualify for the EB-5 Green Card, the foreign national must invest a minimum of $900,000 or $1,800,000 USD in a for-profit business. There is no restriction on the type of business so long as it can generate at least 10 full-time jobs for U.S. workers. By meeting these qualifications, Green Cards can be obtained for the investor, his or her spouse, and any unmarried children under the age of 21.
There are two important variations that determine the minimum investment amount and the process of job creation. Whether the minimum investment is $900,000 or $1,800,000 depends on the business or project’s location. If it is located in a designated area called a “Target Employment Area” (“TEA”) then the lower investment amount of $900,000 can qualify. If it is not, then the minimum investment must be $1,800,000. Under the current regulatory standards, it is important to verify the TEA eligibility prior to making the investment.
There are also two variations for calculating job creation. The first is known as the “Direct Job”. This means counting individual human workers who work at least 35 hours per week. If the EB-5 investment relies only on Direct Job-creation, then each investor must generate and maintain at least 10 jobs for individual U.S. workers. In order to improve the EB-5 capacity for project finance, Congress implement a “test” program involve the establishment of “Regional Centers”. These Regional Centers are designated by the U.S. government to oversee qualified EB-5 projects and pool investments from foreign investors.
The investments pooled by Regional Centers are not required to rely on Direct Job-creation. This means each investor does not have to establish the hiring of 10 individual U.S. workers. Instead, they can meet the job creation requirement through “Indirect Jobs”. These jobs are determined through econometric modeling based on certain inputs involving expenditures of the project or business. In other words, it is an estimate of the economic impact of a project on a region.
A well-managed Regional Center can be beneficial to both the investor and the project owner. From the investor’s perspective, the Regional Center acts as a business or investment manager. They are responsible for the day-to-day decision making and ensuring that the project satisfies requirement for EB-5. This allows the investor to take on a more passive role similar to that of a limited partner. For the project owner, they can raise more funds through a regional center because they are no longer restricted to only Direct-Job creation.
The concepts within this section will be further illustrated in subsequent sections. For now, the key points to keep in mind are:
- Minimum Investment Amount: $900,000 or $1,800,000 depending on whether the investment is made in a Target Employment Area (or TEA).
- Job Creation: The Investment must create at least 10 full-time jobs for U.S. workers. The jobs can be created through direct employment of individual workers or through an economic formula that estimated indirect impact of a project or business on a region’s economy.
- Indirect Job Creation: Regional Centers investments can utilize Indirect Job Creation which can help greatly reduce the work required of investors and can significantly increase the amount that can be raised for projects.
EB-5 Application Process
There are three key steps to the EB-5 petition process. The first, is the Petition “I-526”, which is known as the Immigrant Petition for Alien Entrepreneur. This petition documents that the project qualifies for EB-5 and that the investor’s funds are derived from a lawful source. In other words, it needs to show that the EB-5 project or business can generate at least 10 full-time jobs for U.S. workers, and it also needs provide evidence of how the investor earned the $900,000 or $1,800,000 used for the investment.
Once the I-526 is approved, the investor and immediate family members can apply for the Green Card. If the investor and family are in the United States, this process can be done through an adjustment of status. If they are overseas, this would be processed through a designated U.S. consulate. The family members that can be included are the spouse and any unmarried children under the age of 21.
Often, investors wish to obtain Green Cards for their children and not necessarily for themselves. In these cases, it is important to consider the age of the children at the time the I-526 is filed. This is because the processing time for the I-526 can take some time and the age of the children need to be under 21 at the time the I-526 is approved. Therefore, if a child is near age 21 at the time the I-526 is being filed and the parents have no immediate need or desire to come to the United States, then it may be more prudent to make the child the primary applicant on the petition.
After the investor (and or family) completes adjustment of status or consular processing, he or she would obtain a conditional permanent residence status (or “Conditional Green Card”). The Conditional Green Card is same as a normal Green Card with the exception of one requirement: the investor must maintain the investment and job creation for a period of two years. Near the end of that two-year period, the investor needs to do an additional filing to remove the condition and obtain the final Green Card.
The final filing to remove the conditions is known as the I-829 (or the “Petition by Entrepreneur to Remove Conditions on Permanent Resident Status”). The primary component of this petition involves documenting that the required jobs were created by the investor. For a Direct Job-creation project, the investor must show that the employment of at least 10 U.S. workers has been sustained. For projects relying on Indirect Job-creation, the investor would need to show that the project has been completed in accordance with the estimated expenditures. (In other words, the project spent the money in the region like it said it would.) With the approval of the I-829, the investor (and or family) would become permanent residents (Green Card holders) in the United States. Furthermore, the investment can be returned by the project to the investor.
It is important to note the that the complete timeframe of the EB-5 will differ depending on the processing time of the USCIS and the country of birth of the investor.