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Fifth Preference

EB-5 Classification: Investment Visas
The EB-5 permanent residency application category is based on a substantial investment in a US company.  The three basic requirements in the EB-5 investment visa category are the following:
  1. First, the individual must establish a new commercial enterprise or invest in an existing business that was created or restructured after November 19,1990;
  2. Second, the applicant must have invested $1 million in the business, or $500,000 in a business in an economically depressed area; and
  3. Third, the business must create full-time employment for at least 10 US workers.

I. Investing in a new commercial enterprise
The law requires that the investor-petitioner is investing in a "new" commercial enterprise, which must have been one established after November 29, 1990. However, contribution of capital to an "existing" business (that was formed prior to November 29, 1990) may be acceptable in two situations:
  1. First, the investor may substantially reorganize or restructure the existing business. A complete transformation of the nature of the business is required.  Minor changes in ownership, changes to the business site, or implementation of a new marketing strategy are insufficient changes to constitute establishment of a new commercial enterprise.
     
  2. Second, the investor may expand an existing business resulting in an increase of at least 40 percent of the net worth or number of employees of the business. The USCIS requires evidence of the change in business through documentation such as income tax returns, audited financial statements, and employment tax returns.
The investment must be in a "commercial" enterprise. A for-profit entity formed for the ongoing conduct of lawful business may serve as a commercial enterprise. The format of the company is very flexible.  The company may be a sole proprietorship, partnerships, holding company, joint venture, corporation, business trust, or another entity that is publicly or privately owned.  The term new commercial enterpriserequires an active investment; it does not include noncommercial activities, such as owning and operating a personal residence or buying stock on the stock exchange.
 
The investor must be engaged in managerial activities.  While the law requires the investor to be engaged in a new commercial enterprise, USCIS regulations state that if the investor is a corporate officer or board member or, in the case of a limited partnership, a limited partner, then the investor satisfies the management criteria. 
 
II. Investing capital
The law requires an investor-petitioner to have invested in or be in the process of investing the required capital. 
 
A. Amount of capital 
The amount of required capital is at least $1 million. The minimum investment is reduced to $500,000 in cases of investment in "targeted employment areas," which are rural areas or areas which have experienced unemployment of at least 150 percent of the national average rate. A "rural area" is an area not within either a metropolitan statistical area or the outer boundary of any city or town with a population of 20,000 people or more. The assessment of whether the investment is in a “targeted employment area” is based on statistical information relating to the time of investment and the location at which the company is principally doing business. 
 
B. Equity capital  
An applicant must contribute equity capital to the company. Loans of capital by the investor to the enterprise do not qualify as an appropriate investment. The investor cannot receive any bond, note, or other debt arrangement from the company in exchange for the contribution of capital.   
 
C. Types of capital 
"Capital" may include cash and cash equivalents, equipment, inventory, and other tangible property. Although capital does not include loans made by the applicant to the company, the investor may borrow the investment money if it is secured by assets owned by the investor, provided the investor is personally and primarily liable for repayment of the loan, and the assets of the enterprise upon which the petition is based are not used to secure any of the indebtedness.
 
D. "At risk" 
The US CIS requires proof that the capital invested is "at risk." The US CIS focuses on actual and intended uses of capital to confirm that it will be used for job creation and profit-generating activity. The USCIS requires more than a deposit of funds into a business account; it also requires evidence of the actual undertaking of business activity. The US CIS has held that use of capital for partnership expenses and reserve accounts unrelated to job creation is insufficient.
 
E. Tracing and lawful source
Applicants are required to provide evidence that capital is invested by the applicant-investor. The proof of investment requires the applicant to provide evidence that traces capital from the applicant directly to the enterprise through legal means.  The US CIS requires that an applicant-investor provide evidence that the source of funds was obtained by legal means.  Further, the US CIS requires copies of income tax returns and financial statements of the applicant-investor for the past five years to prove that he has sufficient lawful sources for the capital invested.
 
F. Gifted funds
The applicant may receive a gift of the funds, provided the proper gift taxes are paid, if required by law.
 
G. Multiple investors
Multiple investors may establish a new commercial enterprise which can be the basis for the EB-5 classification.  However, each investor applying for the classification must meet the requirements for the EB-5 classification separately. For example, each investor must create 10 jobs for US workers.
 
III. Creating or saving jobs
The investor must create full-time employment for at least 10 US citizens, lawful permanent residents or other immigrants lawfully authorized to be employed in the US.  The investor and his or her spouse and children do not count toward the 10-employee minimum. Note that non-immigrants (i.e., individuals with temporary employment visas) are also excluded from the 10-employee requirement. An "employee" is an individual who provides services or labor for the new commercial enterprise and receives wages or other compensation directly from the new company. Independent contractors also are no included in the definition of employees.
 
A. Types of jobs 
The jobs created must be full-time positions -- positions that require a minimum of 35 working hours per week. Part-time jobs do not count. However, job-sharing arrangements, in which two or more qualifying employees share one full-time position, may be counted.
 
B. When jobs must exist 
The applicant may base the petition on proof that the required jobs have been created or on proof that the required jobs will be created before the end of the two-year period of conditional residence. In the latter case the investor must support the petition with a comprehensive business plan demonstrating a need for at least 10 employees before the end of the conditional residence period.
 
C. Troubled business/saving jobs
Special rules govern investments in "troubled" businesses. A troubled business is one that has been in existence for at least two years, has incurred a net loss for accounting purposes during the 12 or 24 month period before the petition was filed, and the loss for such period is equal to at least 20 percent of the net worth of the business before the loss. If the petition is based on an investment in a troubled business, the investor is not required to create 10 new jobs. Instead, the petition may be based on proof that the business will maintain the number of existing employees during the conditional status period.
 
D. Regional Centers/indirect jobs
To encourage immigration through investment, and to concentrate investment in specific regions, Congress created a temporary Pilot Program in 1993, directing the US CIS to set aside visas for people who invest in a designated "Regional Center." The Pilot Program does not require that the immigrant investor enterprise employ 10 U.S. workers as long as the investor can reasonably demonstrate that the investment in the Regional Center has indirectly created 10 or more jobs and has resulted in improved regional productivity. The US CIS has designated various special Regional Centers throughout the United States.
 
E. EB-5 Investor’s managerial responsibilities
An EB-5 investor must be engaged in the management of the company either through day-to-day managerial control or through policy formulation.  A purely passive role is not permitted.  An EB-5 applicant should submit documentation verifying such a role which may include the following:
  1. A statement of position or title and a description of duties
  2. Evidence that the EB-5 investor is a corporate officer or member of the board of corporate officers
  3. Evidence demonstrating the management role of the EB-5 investor

What evidence is required for an application for the EB-5 investor investing in a new enterprise?
The EB-5 investor must provide evidence of creation of a new enterprise, or investment in an existing enterprise, through documentation including, but not limited, to the following:
  1. Articles of incorporation, partnership agreements, organizational documents
  2. Evidence of lease agreements for the qualifying business
  3. State business licenses
  4. Evidence that the required amount of capital has been transferred
  5. Evidence that investment has resulted in the substantial increase of net worth
  6. Documentation of sources of capital
  7. Documentation of intent to invest or actual commitment to invest capital
  8. Documentation of assets purchased or transferred from abroad for the qualifying enterprise
The initial resident status issued to the applicant is "conditional" for two years. In order to become a lawful permanent resident, the applicant must file a Petition by Entrepreneur to Remove Conditions with the appropriate US CIS Regional Service Center within 90 days before the second anniversary of approval of the applicant as a conditional permanent resident in the EB-5 visa application category. The petition to lift the condition and award permanent residency generally is approved if the investor demonstrates that he invested, or was actively in the process of investing, the required capital; he maintained the investment throughout the two-year period of conditional residence; and the investment created the requisite employment.