Greg Siskind

Congress created the EB-5 immigrant investor visa category in the Immigration Act of 1990 in the hopes of attracting foreign capital to the United States and creating jobs for American workers in the process. The overall advantage of the EB-5 visa category is that it allows the beneficiary to engage in commercial enterprise anywhere in the U.S. subject only to some restriction in the pilot program targeting certain areas. There are 10,000 visas available in the category each year, one-half of which are reserved for people who participate in a pilot program option designed for targeted investments in approved regional areas. 

 An applicant for the EB-5 visa must file Form I-526, Immigrant Petition by Alien Entrepreneur with the appropriate regional U.S. Citizenship and Immigration Services. 

There are three basic requirements for the EB-5 visa: First, the alien must establish a business or invest in an existing business that was created or restructured after November 19,1990; second, the alien must have invested $1 million ($500,000 in some cases) in the business; third, the business must create full-time employment for at least 10 U.S. workers.

There are three ways of meeting the requirement for a qualifying business: The creation of an original business; the purchase of an existing business with simultaneous restructuring or reorganization such that a new commercial organization results; or the expansion of an existing business created after November 1990 through the investment of the required amount and the creation of 10 new jobs.

 Any for-profit entity formed for the ongoing conduct of lawful business may serve as a commercial enterprise, including sole proprietorships, partnerships, holding companies, joint ventures, corporations or business trusts. A holding company with its subsidiaries would also qualify if each subsidiary is engaged in the active conduct of business.

Noncommercial activities, such as home ownership, do not qualify. Also, the alien must be actively involved in the business, and cannot be a passive investor.

 What types of investments meet the requirements for the EB-5 investor?

 The investment can be in the form of cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien provided that he or she is personally and primarily liable and the assets of the new commercial enterprise are not used to secure any of the indebtedness. The definition specifically excludes capital acquired by unlawful means.

How much investment is required to be an EB-5 investor?

 The basic investment amount is $1 million. The required investment is $500,000 for a business established in a "targeted employment area." Targeted employment areas include: Rural areas, defined as any area other than one within a metropolitan statistical area or within the boundary of a city or town with a population of 20,000 or more; and areas having an unemployment rate that is at least 150 percent of the national average.

For a pilot program investment, the threshold is a $500,000 capital contribution to a designated Regional Center, which allocates portions of the capital in the form of business loans to small business within the targeted area.

How may the EB-5 Investor invest in a qualifying new enterprise?

 There are several ways an EB-5 applicant can qualify by investing in a new enterprise. The EB-5 investor can create an original business purchase an existing business or expand an existing business. Investment in an existing business must result in a substantial change in the business' net worth or number of employees by at least 40 percent.  The EB-5 investor must meet the required investment amounts of $1 million. Furthermore, the EB-5 investor must demonstrate that the investment capital was obtained form a legal source and the required capital is at risk for investment purposes.

 What evidence is required for an application for the EB-5 investor investing in a new enterprise?

The EB-5 investor should provide evidence of creation of a new enterprise, or investment in an existing enterprise including, but not limited to the following: Articles of incorporation, partnership agreements, organizational documents; evidence of lease agreements for the qualifying enterprise; state business licenses; evidence that the required amount of capital has been transferred; evidence that investment has resulted in the substantial increase of net worth; documentation of sources of capital; documentation of intent to invest or actual commitment to invest capital; and documentation of assets purchased or transferred from abroad for the qualifying enterprise.

Greg Siskind is a partner at Siskind Susser, a national immigration law firm. He can be reached at gsiskind@visalaw.com.