EB-5 Visa: Everything You Need to Know
The EB-5 visa is an investment-based visa for foreign investors who are willing to create at least 10 jobs in the United States 8 min read
2. Employment Fifth Preference: What Is It?
3. Why Is the EB-5 Visa Important?
4. Reasons to Consider Using an EB-5 Visa
5. Examples: Using an EB-5 Visa
6. Examples: Not Using an EB-5 Visa
7. Frequently Asked Questions
8. Steps to Apply for an EB-5 Visa
9. Common Mistakes
What Is an EB-5 Visa?
The EB-5 visa is an investment-based visa for foreign investors who are willing to create at least 10 jobs in the United States and contribute at least $500,000 (in a regional center) or $1 million (in any location in the United States) toward creating a new U.S. business. Congress introduced the EB-5 program to attract foreign investment, increase job creation, and stimulate the U.S. economy.
The EB-5 visa allows foreign citizens to gain a Green Card immediately after entry to the United States for themselves and their accompanying family members. The main condition of being accepted for an EB-5 visa is to make an at-risk investment into a business that directly or indirectly contributes toward creating U.S. jobs. The minimum investment is $1 million, but the amount is reduced to $500,000 for "targeted employment areas," such as rural locations with an unemployment rate at least 50 percent higher than the national average.
In January 2017, Sen. Chuck Grassley (R-Iowa) and Sen. Dianne Feinstein (D-Calif.) introduced a bill (S.232) to end the EB-5 visa program, claiming that it is not effective in attracting investment and that it increases the risk of visa fraud. The U.S. Government Accountability Office (GAO) found in 2015 that there was a need for a reform of the program, due to the national risks associated with the application, such as facilitating the traveling of terrorists to the United States. The current program is due to expire on April 28, 2017.
Employment Fifth Preference: What Is It?
The EB-5 visa, also known as the employment fifth preference, is an investment visa developed to encourage job creation and investment from foreign countries. The investment, however, is not the only requirement of being accepted for an investment visa. The United States Citizenship and Immigration Services (USCIS) carries out certain checks such as:
Confirming the legitimate source of funds
Making sure the visa applicant has no criminal history
Ensuring that the investment is acceptable for the government and local area, based on its profile, method of investment, and the benefits created for the community
Verifying the investor's personal tax returns
Confirming that the venture should be a "New Commercial Enterprise"
Supporting the creation of at least 10 full-time jobs (minimum 35 hours per week) for U.S. citizens within the first two years of investment
Green Cards (permanent residency permits) issued based on successful EB-5 visa applications are conditional and expire in two years. To get an unconditional Green Card, investors need to stay engaged in the business and maintain the investment and jobs. Investments should contribute toward the direct (employment) or indirect (induced through partnerships) creation of employment opportunities for U.S. workers.
The types of businesses that EB-5 visa applicants can open in the United States are:
Corporations (separate legal entities, where owners cannot be personally held responsible for the actions of the company)
Limited liability companies (separate legal entities managed by "member management" or "manager management")
Limited partnerships (partnership between two or more business entities)
Two main EB-5 programs exist: the Direct EB-5 program and the Regional Center EB-5 program.
The Direct EB program is also called the "Million Dollar Investor Visa," as it requires investments of at least $1 million and an investment made into a "new commercial enterprise" in the form of cash, equipment, inventory, tangible property, or secured indebtedness. Both programs require the investor to live in the United States; however, they do not need to be based in the area where the new business operates.
The main difference between the two arrangements is that the regional center program targets high unemployment areas, and the required investment is $500,000 instead of $1 million, but it does not require direct job creation. Instead, it accepts indirect methods, contracting suppliers that need to increase their workforce. The USCIS needs to approval regional center programs.
The USCIS handles EB-5 applications, issues, and approves conditional visas. Not all regional centers can do this; therefore, investors need to be vigilant in choosing their target area for setting up a new venture.
Why Is the EB-5 Visa Important?
The United States government created the EB-5 program to attract investment from abroad and help boost the economy of regions with high unemployment.
For investors, the EB-5 visa is a simple way to gain a Green Card, granting permanent residency and relocation to the United States to start up a business. After five years of being a Green Card holder, investors can apply for a U.S. citizenship.
The main benefit of EB-5 visas over other employment-based visas is that this type of application does not require sponsorship from family members or employers. Applicants can invest into a new enterprise or one owned by another party. The investor is not required to be involved in the day-to-day management of the business.
The partners and unmarried children of the EB-5 visa applicant can also gain conditional residence in the United States. Children will earn the right to study in the United States in elementary, middle, and high school, and become entitled to apply for higher education at state colleges and universities.
Reasons to Consider Using an EB-5 Visa
Foreign investors who want to relocate to the United States with capital to invest from legitimate sources can secure a conditional residency in the United States. There is no need to prove qualifications or sponsor signatures. This type of visa opens up the opportunity for a permanent U.S. citizenship and grants the visa applicant and the applicant's immediate family (spouse and unmarried children) the right to live and study in the United States. The applicant receives a Green Card, which is valid for two years.
Several benefits exist for EB-5 visas for investors over other types of applications:
No need to prove qualifications or get a visa sponsor
Immediate issue of Green Card for family members upon approval
Access to schools and U.S. services
Increased security through Green Card over other visa types
Examples: Using an EB-5 Visa
An approved investor planning to start a business venture in the United States and gaining access to the market will be able to benefit from the EB-5 visa. They can relocate as soon as they have an approved application and Green Card. They can buy a house, make an investment, and get the legal protection Green Card holders enjoy in the United States.
The conditions of the permanent residence under the Green Card program is that the person named on the visa remains a U.S. resident and obeys the law of the country. After the two-year conditional residency expiration, but no later than 90 days before the expiration date, the applicant can submit a request for the removal of the conditions on the applicant's residence status.
A foreign investor can buy a business established in the United States after Nov. 29, 1990. This arrangement helps them take advantage of the available workforce.
Examples: Not Using an EB-5 Visa
USCIS and other agencies carry out several checks, and if the investor does not have proof or documentation related to the queries of the USCIS, the application will be rejected. Some of the reasons why one would not consider using the EB-5 visa are:
Not planning to live in the United States
Committing a crime (including fraud) will result in rejection
Lack of evidence that the investment funds exists
No evidence of the legitimacy of funds
Frequently Asked Questions
How long does it take to get an EB-5 visa approved?
Visa applications are handled on an individual basis, and the time frame depends on the documents available and the information provided. Contact the USCIS for time frames and further advice. Generally, it takes 1 1/2 years for the USCIS to process and complete the application. For China-born investors, the process takes longer, about three to five years.
How easy is to obtain an EB-5 Visa?
The process of applying for an investment visa is complicated. Applicants should consult with international investment and immigration lawyers before submitting an application.
Will I be eligible for a Green Card?
If your application is successful, you will receive a conditional two-year Green Card. The USCIS will review the conditional permit, based on how the business functioned, and how you maintained your investment. Green Cards for investors are limited to 10,000 per year, and Green Cards for investors from any one counry are also limited. If more than 10,000 people apply in a year, or a large number of people from your home country applies, you may be placed on a waiting list with a priority date, the date you filed the first part of the application. Until recently, however, the 10,000 limit had not been reached, although China has created a waiting list for investors (as of 2016, other countries do not have waiting lists).
As with all Green Cards issued, yours can get taken away if you misuse it. If you live outside the United States for too long, commit a crime, or fail to advise immigration authorities of a change of address, you may be eligible to be deported. If you keep your Green Card for five years and live in the United States continuously during that time (including your two years as a conditional U.S. resident), you can apply for U.S. citizenship.
Can my married children get Green Cards, too?
Only spouses and unmarried children under age 21 are eligible for Green Cards as accompanying relatives.
Are there any age restrictions for applying for an EB-5 visa?
No age-related restrictions exist for applying for an EB-5 visa.
Are there any countries excluded from the EB-5 arrangement?
The EB-5 arrangement does not exclude any countries; however, you should consult with an EB-5 visa expert to find out about future changes.
Do any special cases come up for investing in troubled businesses?
If you buy a troubled business with the plan to save it from going under, you need to prove that the business has been around for at least two years and has experienced an annual loss of 20 percent of the company's net worth during some part of the 24 months leading up to the business's purchase. You need to still invest the full required amount, but in order to get the unconditional Green Card, you aren't required to show you created 10 jobs. Instead, you need to prove that for two years from the date of purchase, you employed at least as many people as the business emplooyed at the time of your investment.
What type of investment is accepted under the EB-5 visa arrangement?
It is the applicant's responsibility to prove that the investment comes from legitimate sources, that is, legally operating businesses, inheritance, investments, and gifts. If the investor has a business abroad, the past five years of taxation documents (financial statements, tax returns, and balance sheets) also must be attached to the application.
Steps to Apply for an EB-5 Visa
Confirm that you are eligible for the application using information from the USCIS.
Hire an immigration attorney to counsel you on the process and information needed. Select your investment type and region.
Prepare your petition for an EB-5 visa and file it.
Attend an interview after your case the USCIS processes your case.
Note your responsibilities and complete your investment.
Receive your Green Card and obtain conditional residence.
Relocate and manage your investment.
You need to develop a sound and sustainable investment plan that will create profits and jobs in the United States on a long-term basis. You should consult with an investment lawyer to select the right area and location.
You need to plan years ahead, as the process to apply for this visa generally takes more than a year.
Assuming that a Green Card allows you to work a second job is a mistake. You will not be able to work for another company until you get a permanent residence in the United States.
If you need help with EB-5 visa applications, post your legal need online by using UpCounsel's immigration resources. 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.