EB-5 Immigrant Investor Opportunities

Understanding Investment-Based Immigration

 

 

In 1990, when the United States Congress crafted EB-5, its fifth employment-based visa category in the Immigration Act, its purpose was to encourage foreign investment and create jobs on American soil.  In a nutshell, the program provides permanent residency to immigrants who can ultimately prove that their investment has benefited the American economy and created a minimum of 10 permanent, full-time U.S. jobs.

 

The theory is simple, but the execution has been wrought with hurdles.  As an attorney with a law practice dedicated only to immigration concerns, I take pride in my ability to assist you in overcoming those hurdles.  In addition to sharing with you an understanding of the ins and outs of EB-5, I will provide you with diligent, competent representation should you decide to pursue an immigration visa.

 

EB-5 Program Basics

 

Current federal law designates 10,000 immigrant visas per year to foreign individuals looking to establish permanent United States residency.  These visas are implemented based on the immigrant’s investment in a new commercial enterprise.

 

An immigrant must invest a minimum of $1,000,000 into a fresh commercial endeavor.  The government defines qualifying endeavors as:

 

·         An original business venture

·         The purchase of an existing business that the investor reorganizes and restructures to effect a new commercial enterprise

·         The expansion of an existing business to meet certain criteria

 

To attain immigrant investor status, the immigrant must do the following:

 

·         Demonstrate a real benefit to the American economy

·         Establish a minimum of 10 full-time jobs for American workers or preserve the jobs of existing employees in a an established company currently in trouble or in danger of failure

·         Be hands-on involved in the business 

 

Another option, sometimes referred to as the “regional center,” or “pilot program,” reduces the financial investment amount to $500,000.  A regional center is an investment vehicle approved by the U.S. Citizenship and Immigration Service (USCIS) to enable investors to make passive investments.

 

This type of investment is managed through a limited partnership and relieves the 10-job requirement and the hands-on involvement.  The most glaring drawback of the regional center investment is the complete loss of control of investment funds.  (A more thorough consideration of both types of immigration investment opportunities are discussed below in the “Understanding the Two Types of Investment-Based Immigration” section.)

 

The basic $1,000,000 monetary requirement can also be halved if the immigrant invests in a “targeted employment area.” Such areas include:

 

·         A rural area

·         An area that has suffered unemployment of at least 150 percent of the national average

 

Investment in a targeted employment area may be made via traditional EB-5 guidelines or through the regional center program.  However, it is important to note that individual traditional investment in a targeted employment area, which is more often than not a blighted area, can be ill suited because of the scope of the investment.  Large investment structures, such as a regional center that attracts between 10 and 50 investors, may be able to improve a targeted employment area and reap benefits from the developments, but the traditional individual investor may not accomplish the same regional center objectives, and may fall short of meeting the USCIS requirements for residency.

 

If approved, residency status through the EB-5 program is granted not only to the investor, but to his or her immigrating spouse and children as well, opening doors to extended educational opportunities and other benefits.

 

Those who apply for an EB-5 visa with the USCIS are obligated to meet all of the requirements detailed under the EB-5 program.  If an investor is granted a conditional permanent residency, that status will be viable for a period of two years. 

 

Before the end of the initial two-year period (at approximately 21 months,) the immigrant must apply for a permanent green card.  Failure to timely apply will permit the original conditional visa to permanently expire.  After issuance of the permanent green card, the next step, if the immigrant so chooses, is an application for U.S. citizenship.  The application to become an American citizen can be filed five years after the initial conditional visa is granted.

 

Hurdles

 

Though the government offers 10,000 annual visas, EB-5 statistics show that nowhere near that many have been pursued.  Until very recently, few foreign investors have considered the EB-5 program a particularly desirable path to American residency.  The United States tax structure may be the primary culprit, for an immigrant investor is subject to American taxation of his or her worldwide income during the two-year conditional residency.  During this time there is no guarantee that the conditional visa will be maintained or that a permanent green card will be issued at the conclusion of the initial two-year period.

 

For investors who have substantial holdings outside of the United States, this policy has been an understandable and large hurdle.  However, the government’s recent expansion of regional areas has resulted in a striking increase in EB-5 applications.  The reduced investment amount coupled with a passive business involvement has made the taxation rule easier to swallow for some investors.

 

Another positive influence is the state of the American economy.  An attractive environment exists for investors when there is a surplus of labor and a low cost of resources.  Further, indicators predict that the resilient U.S. economy is making its expected comeback.  This can be especially lucrative for foreign investors seeking financial diversification.  For those from China and other countries that currently enjoy a thriving economy, diversification can help insure sustainable growth in the event of a down-the-road economic adjustment.  And investment through the EB-5 program is more than a traditional investment.  It can be a direct path to U.S. residency.

 

The hurdles that arise from EB-5 requirements can be mitigated through knowledge, understanding and experience.  The issues are complex, but I am dedicated to staying abreast of the latest alterations and updates, and as your attorney, I can effectively help you triumph over any anticipated hurdles on your road to permanent residency through investment.

 

The General Procedure

 

Obtaining permanent residency begins with an investment in a commercial enterprise.  The investor must then file, on his or her own behalf, a preliminary petition with the USCIS seeking investment immigrant classification. 

 

The application can be made at a U.S. Consulate office outside of the United States.  If the applicant is already in the United States, he or she can “adjust” his or her status into a permanent resident.  This “permanent” residency will still only be temporary, valid for the initial two-year period.

 

Prior to the two–year anniversary, the USCIS petition requesting that expiration of the permanent residency be removed from an immigrant’s status will only be granted if the investor establishes that he or she continues to meet all legal immigration requirements.

 

Getting the paperwork correct from the onset is key, and one of the most common issues is the lack of transparency of the funding source.  For security’s sake, there must be ample, verifiable documentation as to the source of the investment funds, and foreign collateral must be available and marketable to qualify.

 

Problems with applications can cause undue delays, headaches and even the possibility of denial from the USCIS.  Efficiently and effectively shepherding your documentation through the system is an important part of my job.

 

Understanding the Two Types of Investment-Based Immigration

 

As described, there are two paths to investment-based immigration.

 

The first requires the $1,000,000 investment, (or $500,000 in a targeted unemployment area,) with all funds at risk of loss, the creation or sustainment of 10 full-time jobs, (not including the immigrant’s spouse and children,) and active management of a for-profit business.  While most business ventures are accessible to EB-5 immigrants, certain business involvement is federally restricted.  These sectors include:

 

·         Aviation

·         Banking

·         Communications

·         Shipping

·         Land Use and Energy Resources

·         Government Contracting

 

The second path involves the lesser $500,000 passive investment (also 100% at risk) in a regional center but no direct involvement in management of the business or the investment.

 

Both scenarios have obvious pros and cons.  The determination of which path to follow should be predicated by an individual investor’s personal goals.

 

If the primary objective is permanent residency and ultimate U.S. Citizenship, the investment in a regional center may be the answer.  However, if residency together with a sound investment makes more sense, then creating the new commercial enterprise is likely the best option.

 

While the regional center investment does offer the convenience of not having to manage one’s own investment, it may prove to be unnecessarily risky.  Once an investment is made into a regional center, the investor loses all control, and to further exacerbate the issue, some of the regional centers invest in high risk or uncharted investment projects.  A not uncommon scenario is that the investor will receive his or her green card but lose all of his or her investment.  The regional center investment process can essentially buy a green card but may do little else.

 

A worse case scenario is that the operation of a large enterprise operated by a regional center may not be able to meet the timeline requirement set forth by U.S. Immigration laws.  During the execution of any large project, time delays are common, and a project can seemingly take on a life of its own.  If progress lags, and at the end of the second year the project is unable to support you with documentation that jobs have been created and maintained, and that your investment has created economic benefit, all the money you have invested may be wasted.  In that scenario, an investor would have to begin anew with another cash investment in order to restart qualification for permanent residency.

 

I frequently advise prospective immigrant investors who want to have control over his or her investments to choose the traditional path to investment immigration.  To make this option more viable and more easily navigated, I work closely with the business professionals who specialize in business development.  Our business professionals team fosters a more potentially lucrative environment for investors by creating a responsive entity concerned with generating profits for investors while meeting all the immigration requirements on demand. 

 

The role of the business professionals I work with is to insure that the investment is made in a way that is absolutely compliant with U.S. immigration laws.  The process will transpire in four basic steps:

 

1.      A consultation between the investor and the business development team will set the business parameters.

2.      The business development team will draft a business plan for the investor. 

3.      This business plan will be evaluated by the USCIS along with the initial petition for residency. 

4.      Upon USCIS approval, and after the investor has arrived in the U.S., the business development team will assist the investor in running the business.  (The investor must remain at least nominally in control of the business to meet the “active management” requirement set forth by law.)

 

The General Requirements for a Traditional Investment Immigration Business

 

·         The investor must invest or be actively in the process of investing $1,000,000 in a business enterprise.

·         The investment must take the form of a contribution of capital that has been placed at risk for the purpose of generating a return on that capital.  In other words, there can be no guarantee of return on any investment made.

·         The capital invested must have been obtained through lawful means.

·         The enterprise must create full-time employment for at least 10 legally qualified American workers.

·         The investor must be engaged in the management of the enterprise either through day-to-day managerial control or through policy formulation.

 

The Multiple Investor Scenario

 

The EB-5 guidelines make accommodations for a multiple investor enterprise, and the establishment of a commercial enterprise may be used as the basis of a petition of immigration by more than one investor. 

 

To qualify, each investor seeking to immigrate must invest, or be actively involved in the process of investing, the required amount of capital as well as be responsible for the creation of 10 full time jobs.  Investment portions and requirements are equal.  For example, one investor may initiate a new enterprise with a $1,000,000 investment and the creation of 10 jobs.  If three investors are involved, $3,000,000 in investment funds and the creation of 30 jobs in the initial two-year period will establish the threshold that must be met for each investor to seek residency. 

 

Location of the Investment

 

My office, in close conjunction with a team of business professionals, processes investments in primarily in the California Bay area.  The San Francisco Bay area is rich with cultural diversity and opportunity.  To invest in a business locally, the immigrant must choose to become a resident of the area.  To make the transition as smooth and as pleasant as possible, relocation services are available.  I work closely with a team of real estate and business professionals to help insure a welcome immigration experience.  As an immigrant myself, I not only understand the process, I recognize needs others may not find apparent.  In many ways, I am your boots on the ground long before you arrive.

 

Investors choosing to invest in regional centers may live anywhere regardless of where the regional center is located.  However, as previously discussed, choosing to invest in a regional center may not be the wise choice for those investors looking for residency plus an ongoing return on their investment and control of his or her own business enterprise.

 

Why Appropriate Legal Representation During the EB-5 Process is Crucial

 

The EB-5 qualification process is a highly complicated subspecialty of immigration law that requires extensive knowledge of corporate, tax, investment and immigration regulations.  An immigrant investor’s attempt to navigate the process on his or her own could prove fruitless.  And for an investor to utilize an attorney not well versed in immigration law and the EB-5 process could prove equally ineffective.

 

I dedicate my life and my practice to immigration law, and I take your individual circumstances to heart.  Whatever your personal situation, my expertise and experience are reliable attributes you can count on.

 

Welcome to California!

 

If you are considering immigrating to the United States, currently have over $1,000,000 in liquid assets to invest and have the desire to maintain control over your investment, California welcomes you!  California is a beautiful, progressive state full of visionary entrepreneurs, and the San Francisco bay area of California is a treasure.  From the business-friendly environment to an endless world of the arts to unique culinary experiences, educational opportunities and breathtaking landscapes, there is much to appreciate.

 

If navigated properly, the EB-5 program offers you a viable path to immigration and, if the traditional path is chosen, allows you ultimate control of your investment.  With my team working hard for you, your experience will be as worry-free as possible.  We are here to help, and more importantly, we have the skills and the tools to be effective.  You can bank on our dedicated and individualized attention. 

 

Within the parameters of the EB-5 program there are no guarantees.  However, I do guarantee that my team will work to the best of our ability for you.  The program has been successful for many immigrant investors, and we will expend every effort to make your immigration investor experience as rewarding and as successful as it can be.  Your success is our success.

 

 

 

DISCLAIMER:  According to EB-5 laws, guarantees are forbidden.  All investment must be at risk, and investment does not guarantee permanent resident status for the investors.  Neither my office nor any entities I work with can guarantee that the investor will receive permanent resident status or that any investment will yield returns.  There can be no guarantee that the investment will not be lost.