In 1990, Congress created the fifth employment-based preference (EB-5) immigrant visa category for qualified foreigners investing in a project that will benefit the U.S. economy by creating or saving at least ten (10) full-time jobs. The Act stimulates the U.S. economy by giving foreign entrepreneurs the opportunity to permanently live and work in the United States, after they have invested. The basic amount of capital required to invest is $1,000,000; however, that amount is reduced to $500,000 if the project is in a rural or high unemployment area.
To assist in encouraging this foreign investment, Congress created an EB-5 pilot program in 1993. This program permits the U.S. Immigration Service to designate qualified applicants as Regional Centers. Of the approximately 10,000 green cards available nationwide each year, 3,000 are reserved for foreign nationals who invest through a Regional Center. Currently, over 98% of EB-5 investment is through Regional Centers.
There have been several related Congressional enactments since the creation of the EB-5 visa category.
- In 2002, Congress in passing the 21st Century Department of Justice Appropriations and Authorization Act of 2002, extended and simplified the EB-5 visa category.
- In 2003, Congress passed the Basic Pilot Program Extension and Expansion Act of 2003 to help revitalize the EB-5 program. The federal government found only a small percentage of the 10,000 visas that were allocated to the program were being granted, and sought to increase that number.
While not being a permanent program, the EB-5 program has been consistently reauthorized. In September of 2012, President Obama reauthorized a three year extension to the EB-5 Immigrant Investor Pilot Program through 2015.
The policy in which the EB-5 investor visa and the related Pilot Program were founded to benefit the U.S. economy. The primary goal of this program is to provide jobs for U.S. workers by encouraging foreign investments. Recent government reports show that, since its inception, nearly $7 billion has already been invested in the U.S. economy and over 50,000 jobs have been created or retained through the EB-5 program. With continued bipartisan political support and the large amount of positive feedback associated with the granting of EB-5 Visas, job creation, and economic development, it is strongly anticipated that the EB-5 program will be around for many years to come.
1. Required amount to invest through the EB-5 program:e investor is required to invest a minimum of $1,000,000 USD; however, if the investment is made in a rural or targeted employment area (TEA), the amount is reduced to $500,000 USD.
1. Required amount to invest through the EB-5 program:
The investor is required to invest a minimum of $1,000,000 USD; however, if the investment is made in a rural or Targeted Employment Area (TEA), the amount required is $500,000 USD.
2. Job creation requirement:
For every investment made by a foreign national EB-5 investor, at least ten full time U.S. jobs must be created. If the investment is made through an approved Regional Center, the investor can utilize both direct and indirect job creation to meet this requirement.
3. Lawful source of funds:
The investor is required to be able to demonstrate that the funds they wish to invest are from a legal source. This can include, but is not limited to, inheritance money, money that was gifted to them, money they earned from a business, and money borrowed through a bank loan. The regulations permit indebtedness secured by the investor’s own assets to count as “capital”, meaning collateralized Bank Loans are allowed to be used for the investment.
4. The investment must always be “At Risk”:
The entire capital invested must be truly at risk. Any guarantees of a return of any capital are strictly prohibited and there can be no redemption agreements. If the “at risk” requirements of EB-5 guidelines are not met, the investor’s petition can be denied. As in any investment, there exists a risk of total loss; we urge all investors to independently verify the information contained in the investment prospectus.
5. The investor must be considered an accredited investor:
An accredited investor is defined as any investor meeting at least one of the following conditions:
a) Any natural person whose individual net worth (or joint net worth with the individual’s spouse) at the time of investment exceeds $1,000,000; or
b) Any natural person who had an individual income in excess of $200,000 or joint income with that persons spouse in excess of $300,000 in each of the two most recent years and who reasonably expects an income in excess of $300,000 in the current year; or
c) Has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in the Units, and of making an informed investment decision, and does not require the use of a Purchaser Representative; or
d) Any other “accredited investor” as that term is defined in Regulation D as adopted by the Securities and Exchange Commission.
Advantages of EB-5
The visa holder and his/her qualified family members are entitled to attend public schools including enrollment in U.S. Universities and Colleges. There can be a significant cost savings if attending an in-state University or College.
- Permanent Residency:
A qualifying investor, their spouse, and any unmarried children under the age of 21 qualify to be granted United States Lawful Permanent Residency. Foreign nationals who obtain a permanent visa can enjoy all the benefits of any other United States resident. The social and healthcare programs of the United States Government are also available including Social Security and The Health Insurance Marketplace. Once the permanent visa is obtained, there is no renewal or re-application required.
- Management Responsibilities:
When investing through a Regional Center, the EB-5 investment program does not require investors to actively manage their investments or run day-to-day operations. Rather they are allowed to “actively engage” in a business enterprise which can be in the form or a General Partnership. The may in turn engage in their own separate professional or personal ventures.
- Sponsorship Not Required:
Foreign investors use their own personal funds and do not require sponsorship from either an employer or a family member. The EB-5 visa has no requirements as to age, business training, management, experience or language skills.
- Live Anywhere in United States:
The Foreign Investor may live anywhere within the United States without restrictions.