EB 5 Requirements: Everything You Need to Know
There are a number of EB 5 requirements that you need to know about if you want to enter the United States for investment purposes. 8 min read
EB 5 Requirements
There are a number of EB 5 requirements that you need to know about if you want to enter the United States for investment purposes. There are many stipulations that will allow you to get a green card for starting a business that benefits the American economy.
Required EB-5 Investment Amount
EB-5 visa applicants must invest either $500,000 or $1 million in cash, equipment, property, or additional cash equivalent based on the U.S. dollar market value. The minimum investment can be reduced to $500,000 if your business is in a low cost or rural area or if the area has high unemployment.
EB-5 Job Creation Requirements
EB-5 investors must create 10 full time employment opportunities for U.S. based workers within 24 months. For a business made with a regional center, the investor has to show that the 10 full time jobs were made available
EB-5 Business Entities
A new commercial enterprise is a business that is established after Nov. 29,1990. The investor can consider investing in an enterprise already in existence by increasing the current net worth and number of employees. The increase must be at least 40 percent. After the reorganization, you can then turn it into a commercial enterprise.
The investor may also invest into the regional center that will help in the administration of the business.
Legitimate Source and Path of Funds
The USCIS is extremely strict in investigating where the funds or capital comes from for an investment. Any funds that are obtained in an illegal matter cannot be acknowledged. The USCIS also requires documentation of how the money was acquired.
Acceptable Types of Investment
An acceptable type of investment includes inventory, equipment, tangible property, cash, or any cash equivalent based on the United States dollar. Any money received from a loan to the business or debt of the business cannot be considered an investment.
An investment received from the rent of property, limited partnership, or other enterprises where the investor is not actively part of the management cannot be considered an investment.
The investor has to commit the whole amount of money before the expiration of the two-year conditional period.
Acceptable Types of Investment
Investment obtained from a rent of property, limited partnership or other enterprise in which the investor is not an active part of the management is not qualified as an investment.
Evidence Required For Investment Funds from an Applicant’s Own Income
- Two or more years of banking records
- Five years of personal income tax returns
- Compensation statements
- Certificate of employment
- Five years of business income tax records
- Proof of business ownership, such as a business license and registration
- Legal proof of share ownership or certificate of incorporation
Evidence Required For Investment Funds From a Gift
- Proof of fund transfer from the donor to the investor
- Documentation of how and under what pretense the gift was given
- Record of gift tax returns
- Documentation showing the financial ability of the donor to give the gift
- Documentation that shows the connection of the investor and donor
- A death certificate showing the issuance of an inheritance
- Proof that the investor paid tax on an inheritance
- Statement showing the relationship of the descendent and investor that includes the amount of money left if there is little documentation showing a familial relationship
Evidence Required For Sale of a Business
- Closing statement
- Bank accounts and statements
- Documentation of the process from the closing transaction to the investor
- Registration and proof of business ownership before and after a sale
- Any correspondence discussing the sale, such as the price and information from the buyer’s accounting firm
- Financial statements of the pre-sale worth of a business by a certified financial professional
- Documentation showing the relationship of the buyer and seller of the business and their understanding of all terms and conditions
- Proof of all fees and charges that are incurred while settling
Evidence Required For Sale of Real Estate
- A document proving that the investor has access to the funds from the buyer
- Proof that the investor has paid all real estate taxes
- Proof that the investor has transferred the title of the business to the buyer
- Income tax returns for five years showing the funds from the sale of the real estate
Evidence required for Sale of Stock
- A certificate of incorporation and all legal business registration proof
- Documentation of the agreement on the sale of the shares
- Proof that earnings on the purchase of the stock is transferred to the investor’s account from the brokerage firm
- Proof that all taxes has been paid pertaining to the stock sale
- Documents showing that the shares have been bought and sold
Investment Funds From a Loan
Items needed for investment funds from a loan include the following:
- Documents showing the agreement by both parties
- Documents showing the transfer of the loan from a lender to an investor
- The lender’s income tax return, either business or personal
- Business license and registration
In addition, only the loan retained by the investor’s assets are considered eligible investment funds.
A new enterprise is any business that is established after Nov. 29, 1990, or any business that is established after the reorganization of a company. Additionally, the company must have increased its net worth or number of employees by 40 percent.
A commercial enterprise is one that is made up from any profitable, lawful act that includes the following:
- Sole proprietorship
- Limited Partnership
- General Partnership
- Holding company
- Joint venture
- Business trust
- Or any publicly or privately owned entity
Eligibility of a Commercial Enterprise
Owning a personal residence is not for profit; therefore, it will not be considered a commercial enterprise. A subsidiary of a holding company that was designed to perform a business for profit is eligible.
Eligibility of an Investor
A corporation or other business is not eligible to be an investor in an EB-5 petition. The USCIS lets investors set up an NCE through a EB-5 as long as all investors in the group invests the required minimum investment. All involved have to invest the required minimum investment. All investors must also create 10 full time jobs for United States workers for a certain amount of time.
A troubled business is one that has been operational for at least two years and having a 20 percent loss within the two years of acquisition.
The Importance of Choosing an Enterprise Wisely
Picking an appropriate business model is best for ideal management and tax purposes. EB-5 applicants must participate in the operation of the business either in a daily capacity or in the planning or policymaking aspect.
Types of Commercial Enterprises
A corporation is the most popular method of developing an enterprise. It is a separate legal entity from the owner or shareholder yet has the same legal rights. It exists as a legal entity and can hold, buy, and sell property in the name of the corporation. It will be unaffected in the event of a death of an officer or shareholder.
Some corporations will be subjected to double taxation where profit is taxed at a corporate and personal level.
A limited liability company combines the benefits of a corporation and a partnership with the option on the method of taxation via corporation or partnership. Limited partnership provides the partners are liable to the invested money.
Jobs created by the NCE institutes connected between the employer and the hired workers. Direct jobs are defined as those that established an employer an employee relationship between the NCE and those that are employed.
Indirect jobs are designed as opportunities that stem from the need of the business or the employees. They are ancillary to the business yet are created because the enterprise needed additional human resources.
Job conservation is still considered job creation for even a business in trouble. The investor needs to keep the same amount of employees for a minimum of 24 months.
Restriction of age has not been defined according to the USCIS. Rather, it is determined by each state in which the business is located.
10 Easy Steps to an EB-5 Visa
The following are the steps needed to obtain an EB-5 visa:
- Determine the eligibility of the investor according to Regulation D of the U.S. Securities Act of 1933. This requires completing a personal questionnaire pertaining to investor finances.
- Select the most ideal business opportunities from a list of available investments.
- Select an immigration attorney that typically charges from $12,000 to $25,000, dependent on the complexity of the case.
- Collect all of your supporting documents for the visa application. Your attorney will provide you with a list.
- Submit the visa application via your immigration attorney. This will be an additional cost over the required minimum investment. You are paying for attorney’s fees, filing fees, and other expenses.
- Start the investment management, in which you will get a status report on the project. At this time, start creating the required 10 full time jobs.
- Sit tight as the application is in line at the USCIS. This can take eight to 18 months. The average timeframe is 15 months.
- Attend an appointment with the U. S. embassy for an interview. This will occur after your application is approved. The consulate provides the documents you will need to submit to immigration once you arrive in the United States. You will then become the holder of a green card.
- File a Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status. After you are approved, your conditional visa will be exchanged with a permanent green card. This only has to be renewed every 10 years.
- Continue the investment and repay based on the terms.
EB- 5 Helpful Tips
You and your family are subject for admissibility evaluation. This is done for all who seek a green card. It ensures there are no felonies, critical illnesses, or illegally gotten assets.
Becoming an investor does not mean that you have to be the person who hires the 10 full time employees. You also do not have to work on the business. You are even allowed to live in a different state.
Pluses and Minuses of an EB-5 Green Card
EB-5 green cards are conditional in the beginning and expire in two years. However, if you have a strong business that employs the minimum required workers, you can get a permanent green card.
The USCIS has declined many applications in this category. The eligibility requirement is very limited, and there has been a history of fraud and misuse.
There is no requirement for business training to get this green card. You only need to have the funds needed to invest in a lucrative business. You have the option to invest in any business in the country, and the investor has to maintain the investment until an unconditional green card is acquired.
You may work for a different company or not work at all after you receive an unconditional green card. The green card visa is not for those who want to work or travel. You will have to reside in the United States.
Your relatives, including a spouse and kidsunder age 21 that have not married can also get a green card. However, it can be confiscated, and you can face deportation if you commit any misuse, felony, if you are not in the country for the specified time, or if you do not inform the USCIS of address changes.
You may apply for American citizenship if you keep your green card and live in the United States for five years back-to-back.
If you need help learning more about EB 5 requirements, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.