EB5 Requirements - Investment Options

The EB-5 investment visa program offers a flexible visa option for those who are willing to get a permanent residential visa after fulfilling EB5 requirements of immigrant visa. This allows foreign investors to invest in any type of profitable lawful business entities. Here are the following possible structures for any profitable business entity

1.  Creating a new business:

The EB-5 visa requirement program states a “new enterprise” that was established after November 29, 1990. EB5 immigrant investors are eligible to invest required amount after the given date by making sure that the legal criteria is met. The 1998 law of the EB5 investment stated that the investor should be physically present at the time of foundation of an enterprise, but this created chaos as most of the enterprises were based on a partnership model. The partnership model focuses on the establishment of a business among two entities however it may include more than two partners if the enterprise demands it.  In this case, according to the 1998 precedent such limited partners of an entity were not eligible for an EB-5 immigrant visa program. After 2002, this law was overruled by the Congress granting the authority only to the petitioner that he/she must show his investment in the required EB-5 amount.

Following are the basic requirements for the eligibility to invest in a newly created commercial Enterprise:

• Invest in, or currently be in the process of investing, at least $1,050,000. If this investment is made in a company located in a targeted employment area, the minimum investment is lowered to $800,000.
• Must provide benefit to the U.S. economy in the form of goods and/or services.
• Must create 10 full-time employment positions. If an investor chooses to expand an existing business’s workforce, he/she could be required to create more than 10 jobs.
• Must be involved in the daily management of the company. Acceptable positions include acting as a corporate officer, board member, etc.

2.  Buying an existing business that is restructured or reorganized:

An EB5 Immigrant Investor is allowed to remodel an existing business. However, the USCIS does not consider it sufficient for any organization to just amend its legal structures.

In the case of Soffici, a decision made in 1998, the USCIS Administrative Appeals Office ruled that an investor who had purchased a Howard Johnson hotel and continued to run it as a Howard Johnson hotel did not meet the requirements of adequate restructuring or reorganization of an existing business. The AAO stated that “a few cosmetic changes to the décor and a new marketing strategy for success do not constitute the kind of restructuring contemplated by the regulations, nor does a simple change of ownership.” USCIS gives the examples of a restaurant that is converted into a nightclub or a plan that adds substantial crop production of an existing livestock farm as two examples of adequate restructured or reorganized commercial enterprises.

3. Troubled Business

According to the current precedent a troubled business is an enterprise functioning for at least two years and has incurred a net loss in its twelve to twenty-four month period prior to the priority date on the Form I-256, Immigrant Investor. The loss during the mentioned period must be at least 20 percent of the troubled business entity's net worth prior to that particular loss. For the purposes of determining whether the troubled business has been in existence for two years, the successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

General Requirements for Investing in Troubled Businesses

• Invest in or currently be in the process of investing $1,050,000, or $800,000 if the business is located in a Targeted Employment Area (TEA)..
• The Investor must have maintained at least 10 jobs before investing the money for at least two years. This means that the investor must show that the number of existing employees in the troubled business are being or will be maintained at no less than the pre-investment level for a period of at least two years. This regulatory provision, while allowing job preservation in place of job creation, does not decrease the statutory numeric requirement. Ten jobs must be preserved, created or some combination of the two. For example, an investment in a troubled business that creates six qualifying jobs and preserves all four pre-investment jobs would satisfy the statutory and regulatory requirements. 
• Must be involved in the daily management of the company. Acceptable positions include acting as a corporate officer, board member, etc.

4. Expanding an existing business:

There is great flexibility and multiple EB 5 visa investment options that an EB5 Immigrant Investor could choose from. The investor could expand its existing business in the form of starting a “new business”.  By this formula the EB-5 investor is obliged to expand the worth and the number of employees of an enterprise by at least 40%. For EB-5 investor program the requirements are stated as if the investors increases the number of employee and extends its enterprise he must need to generate more than 10 job opportunities. 

5. Pooling:

The EB 5 visa investment options provides opportunity to multiple investors to pool their investment to form a single enterprise. All of the EB5 combined investors must infuse their capital in such a way to generate at least 10 jobs each. The jobs generated by the investors and their credit should be evenly distributed to the investors. For example if the total number of generated jobs are equal to 21 , that doesn’t reflect that there are only 1 generated by one investors and 20 jobs generated by the other two partners. It means that collectively three of the investors managed to create 21 job offerings, 7 jobs each. 

For questions on your particular situation, do not hesitate to contact us.

Fill out the form to the right, email us, or call us at 617-536-0584.

Click here for information on the EB-5 Application Process