By Robert L. Reeves, Nancy E. Miller & Eric R. Welsh
Immigrating to the United States through financial investment can be a complex process, but the rewards can be significant. In 1990, the “EB-5” visa was created as a means to incentivize foreign entrepreneurs to invest in job-creating enterprises in the U.S. This immigrant visa is available to individuals (and their immediate family members) who are willing and able to make substantial at-risk investments into for-profit commercial enterprises that will result in maintaining or creating permanent jobs for Americans. The visa, initially granted on a conditional basis, can lead to permanent residency and, ultimately, citizenship, and is obtained on the basis of a “self-petition” (i.e., does not require a family member or an employer to petition on behalf of the investor). The EB-5 category is “current” for all nationalities, meaning that the backlog of several years that plagues other immigrant visa categories does not apply to the EB-5. In short, the EB-5 visa provides a path to citizenship with no visa backlog for persons with no previous ties to the United States, coupled with the opportunity to make a potentially lucrative business investment in a U.S. company.
In order to qualify for the EB-5 visa, the following criteria must be met: (1) the investor must place an investment of $1,000,000 (or, in certain circumstances, $500,000) at risk into a for-profit commercial enterprise; (2) the investment must result in the creation or maintenance of ten new jobs (directly or indirectly) for U.S. citizens or permanent residents; and, (3) the investor must be engaged in the management of the enterprise, either through direct managerial control or through policy creation (e.g., voting member of board of directors). The source of the funds used for the investment must be well-documented to show that the funds are lawfully obtained and solely within the control and possession of the investor.
The standard minimum investment to qualify for the EB-5 visa is $1,000,000, but under certain circumstances, an investment of $500,000 will be sufficient. The reduced investment minimum applies to investments made in enterprises located in “Targeted Employment Areas” (TEAs), which are rural areas with small populations, or areas suffering from high rates of unemployment.
An investor applying for an EB-5 can choose to make a qualifying investment directly in a job-creating enterprise, or can choose to invest through a designated “regional center.” A regional center is a public or private entity, organization, or agency that works within a specific geographic area within the United States, seeking to promote economic growth in that area through improved regional productivity, job creation, increased exports, and increased domestic capital investment. A regional center must apply for designation from USCIS before it can receive and use investor funds. As of November 2011, there were 201 approved regional centers in 40 U.S. states. Regional centers are involved in a vast array of projects, including hospitality, alternative and renewable energy, real estate transactions, and many others. An investor involved with a regional center is typically named a limited liability partner of the job-creating enterprise, and usually plays a more “hands off” role than a direct investor.
The EB-5 visa is rising in popularity, but potential investor-immigrants should be aware of several significant issues before making this substantial investment and immigrant applicant. For example, U.S Citizenship & Immigration Services (“USCIS”) has raised its level of scrutiny with regard to the methodologies and computations used to calculate speculative job creation, and many previously accepted methodologies are no longer considered viable by USCIS. USCIS requires the use of well-established economic models and detailed analyses to demonstrate that the investment will result in the creation of ten jobs for U.S. workers. USCIS has recently hired full-time economists for the specific purpose of analyzing job-creation claims in EB-5 applications.
It is vitally important that a potential investor-immigrant retain the services of an experienced team of EB-5 specialists to prepare this application. This team should include, at a starting point, a knowledgeable, experienced immigration attorney, and should also include an independent economic analyst, a business plan writer, and a corporate/securities attorney to prepare documents essential to the application. A potential investor is also well-advised to consult with a trusted financial advisor who can explain the risks and benefits of the investment, independent of the immigration consequences.
For financially-capable intending immigrants, the EB-5 might be the fastest (and in some cases, the only) option to immigrate to the United States, but no potential applicant should undertake this complex and detail-focused application without the assistance of an experienced law firm.