U.S. Congress created the employment-based fifth preference category (EB-5) visa program in 1990 to "create jobs for U.S. workers and to infuse new capital into the U.S. economy." Under the EB-5 Immigrant Investor program, foreign nationals who invest a specified amount of capital in projects that create or sustain U.S. jobs can qualify for a Green Card and a path to citizenship. There are two types of EB-5 investment: direct investment and regional center investment. The EB-5 minimum investment amount is $800,000 for projects located in designated Targeted Employment Areas (TEAs), which encompass rural and high-unemployment areas, or $1,050,000 in other locations.
One option for qualifying for an EB-5 visa is through direct investment in an investor's own business. The investor must create a new U.S. business or restructure or expand an existing one.
U.S. Citizenship and Immigration Services specifies the following qualifications for EB-5 investments:
All EB-5 investors must invest in a new commercial enterprise that was established:
- After Nov. 29, 1990; or
On or before Nov. 29, 1990, that was:
- Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results; or
- Expanded through the investment, resulting in at least a 40% increase in the net worth or number of employees.
A new commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business, including:
- A sole proprietorship;
- Partnership (whether limited or general);
- Holding company and its wholly owned subsidiaries (provided that each subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business);
- Joint venture;
- Business trust;
- Limited liability company; or
- Other entity, which may be publicly or privately owned.
The new commercial enterprise must create full-time positions for at least 10 qualifying U.S. employees. Full-time employment requires a minimum of 35 working hours per week. If the enterprise is not located within a regional center, it must create the full-time positions directly – i.e., the business or its wholly owned subsidiaries must be the employer of the qualifying employees. The definition of “qualifying employee” is as follows: “A qualifying employee is a U.S. citizen, lawful permanent resident, or other immigrant authorized to work in the United States, including a conditional resident, temporary resident, asylee, refugee, or a person residing in the United States under suspension of deportation. This definition does not include immigrant investors; their spouses, sons, or daughters; or any noncitizen in any nonimmigrant status (such as an H-1B nonimmigrant) or who is not authorized to work in the United States.”
If an EB-5 investor's petition is approved, the investor and their dependents are granted conditional permanent residence valid for two years. Within the 90-day period before the conditional permanent residence expires, the investor must submit evidence documenting that the full required investment has been made and that 10 jobs have been maintained, or 10 jobs have been created or will be created within a reasonable time period.
Requirement of New Commercial Enterprise
Investors who seek an EB-5 visa through individual, or direct, investment, must create a new business enterprise. Investors may either (1) create a new, original business, (2) purchase an existing business that was established after November 29, 1990, or (3) purchase a troubled business and restructure or reorganize it to create a new business enterprise. A troubled business is one that has existed for at least two years and has experienced an annual loss of 20% of the company's net worth at some point over the 24 months leading up to the purchase.
If an existing business is purchased, it must be expanded to result in an increase either in the number of employees or in the net worth of the business by at least 40%. The investment must still create at least ten full-time jobs for U.S. workers.
If a troubled business is purchased, the investor is not required to show that they created ten jobs. In the case of a troubled business, the requirement is for the business to employ at least as many people as were employed at the time of the investment for two years from the date of the purchase.
Visit our comprehensive EB-5 Investor Green Card page here.