Immigrants are a driving force of American innovation, invention and enterprise. In 1990, Congress recognized the potential of foreign entrepreneurs and their contributions to the American economy by enacting the EB5, or foreign-investor program. In simple terms, the EB-5 program allows an immigrant to secure an employment visa and gain permanent residence in the U.S. by investing in a new commercial enterprise and creating jobs for American workers.
This page was designed to help foreign investors understand some of the basic concepts surrounding the EB5 visa. Continue reading to learn more about the following topics:
- EB5 Basics
- Qualifying For an EB5 Visa
- Applying for An EB5 Visa
- Regional Center Program
- Removing Conditions of Permanent Residency
- EB5 in the News
- Can My Family Apply Too?
- Do I Need an Immigration Lawyer?
While this page discusses certain topics relating to immigration law, it is not intended as a substitute for speaking directly with an attorney. The law is complex, and an experienced attorney can help foreign investors avoid costly and time- consuming mistakes during the application process.
Every year the U.S. Department of State (DOS) issues roughly 140,000 employment-based immigrant visas. Of the five types of employment visas issued annually, 7.1 percent are EB-5, also known as fifth-preference visas. Obtaining an immigrant visa is one of the key steps in applying for lawful permanent resident status (green card).
Unlike other types of employment visas (EB-1, EB-2, etc.), the EB-5 doesn’t require the applicant to have an offer of employment inside the U.S. Rather, the applicant’s eligibility for residence hinges on his or her investment in the U.S. economy. In order to qualify for an EB-5, a foreign investor must do one of two things:
- Invest $1,000,000 in a qualifying new commercial enterprise.
- Invest $500,000 in a high unemployment or rural area inside the U.S. (targeted area).
Qualifying for an EB5 Visa
It is not enough for a foreign investor to simply give money to any U.S. company in order to gain permanent resident status. The law requires an investment in a new commercial enterprise that creates 10 full-time jobs.
According to federal code, a new commercial enterprise is defined as a company formed after Nov. 29, 1990. In some cases a business formed prior to this date can be considered new if the business has been expanded or restructured so that a new commercial enterprise results.
If only $500,000 is to be invested, the money must benefit a business in a targeted employment area — either high unemployment or rural area.
According to U.S. Immigration and Citizenship Services (USCIS), a targeted employment area features unemployment of at least 150 percent of the national average or lies outside of a metropolitan statistical area or city with a population of 20,000 or more. For more information on statistical areas, visit the Office of Management and Budget.
The 10 full-time jobs created as a result of the investment must go to U.S. citizens, lawful permanent residents or immigrants authorized to work in the U.S. It is important to note these jobs cannot be applied to the investor, investor’s spouse, or children.
When it comes to verifying the funds used for the investment, the entrepreneur must be able to establish that he or she is the legal owner of the capital. Money gained illegally cannot be used in the investment, and the accounts used must be in the entrepreneur’s name.
While joint accounts between the entrepreneur and spouse can be used, joint accounts between the entrepreneur and other family members do not qualify. The foreign investor can use money from a business loan, but only if the investor is personally liable for the amount of the loan.
During the petition process, the applicant will be required to provide evidence of his or her involvement in the commercial enterprise through foreign business registration records, tax returns or documents identifying sources of the investor’s money.
Regional Center Program
The regional center program was established to lessen some of the job creation requirements for EB5 applicants and allows, in certain cases, investment that contributes indirectly to the creation of jobs. A regional center is defined by USCIS as an “economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation and increased domestic capital investment.”
If you have questions about investing with a regional center, call our immigration lawyer to see if we can help.
Applying for an EB-5 Visa
Unlike other immigrant visas, an EB-5 applicant does not need to be sponsored by a U.S. employer, or have a job offer waiting inside the U.S.
The foreign investor can begin the process by hiring a lawyer and filing a Petition by Alien Entrepreneur (Form I-526). This is done through U.S. Immigration and Customs Services (USCIS). During this stage of the application process, the foreign investor must provide a comprehensive business plan that demonstrates jobs will be created within two years. This two-year time frame commences six months after the petition is approved. Once the petition is approved, the applicant has two options:
- File an Application to Register Permanent Status (Form I-485) with USCIS.
- File an Application for Immigrant Visa and Alien Registration (Form DS-230 or DS-260) with U.S. Department of State.
Once either of these forms is approved, the applicant will be granted conditional permanent residence, which is valid for a two-year period.
Removing Conditions on Permanent Residency
The purpose of the two-year condition on the EB-5 visa is to prevent immigrants from making an investment, gaining permanent residence, then abandoning their business.
In order to have the conditions removed, the immigrant must file, prior to the two-year anniversary of conditional status, a Petition by Entrepreneur to Remove Conditions on Permanent Resident Status (Form I-829). This should be done no later than 90 days before the two-year anniversary date. During this portion of the application process, the foreign investor must provide documentation of the investment, which includes:
- Business invoices and receipts
- Bank statements
- Business licenses
- Audited or reviewed financial statements
- Federal or state income tax returns
- Quarterly tax statements
The EB5 applicant must also provide evidence of the creation of 10 full-time jobs for qualifying employees:
- Business payroll records
- Relevant tax documents
- Employee Eligibility Verification (Form I-9)
In the event that the EB5 recipient has invested in a troubled business in an attempt to preserve existing jobs, the same documentation listed above is required, except the proof is applied to whether 10 jobs were saved as opposed to being created.
If UCSIS approves the petition, the EB-5 investor and his or her family will have unconditional permanent resident status and be able to live and work permanently in the U.S.
EB-5 in the News
In Long Beach, California, plans are underway to invest in the Queen Mary tourist attraction, a long-time city destination that has lost some of its luster over the decades. According to the LA Times, a private company named Urban Commons hopes to add to existing hotel rooms on the vintage ocean liner as well as construct an entirely new boutique hotel on nearby terra firma. As questions of funding arise, financing through the EB5 visa program has been floated as a way to attract foreign investors.
A recent OC Register article detailed the story of Xiaoyu Hou, a 32-year-old Chinese immigrant who invested $500,000 in a San Bernardino redevelopment project and secured a green card. The article notes that since the end of the great recession, the EB5 program has grown rapidly. Orange County developers claimed that in 2012, EB-5 investment created 16,000 direct and indirect jobs and generated $404 million in revenue. In 2015, the OC Register posted a list of EB5 projects around the county. These projects included construction of condominiums, office buildings and hotels.
Can My Family Apply Too?
Generally speaking, yes. Based on an EB-5 investor’s approved petition, the applicant’s spouse and minor unmarried children (under 21 years old) may apply for an immigration visa too. It is important to remember however, that the 10 jobs to be created as a result of the foreign investment cannot be slotted for the applicant’s family. If you have questions about who is eligible to obtain permanent residence through an EB5 visa, a qualified immigration attorney can help.
Do I Need an Immigration Lawyer?
In our opinion an EB-5 applicant should not petition on his or her own behalf. The assistance of an experienced immigration lawyer in this complicated application process may save thousands of dollars and an enormous amount of time. The process of applying for permanent residence through federal agencies can be extremely intimidating as well as confusing. When considering the application for an EB5 immigrant visa, many variables come in to play and include questions of funding, the benefits of investment as well as family eligibility. If you would like to find out more about the application process for an employment-based visa, contact our office to see if we can help.
If you want to learn about other types of employment based green card visas, visit our employment based immigration overview page.