To obtain permanent residency status — a Green Card — through the EB-5 program, an investor must meet specific requirements as per United States Citizenship and Immigration Services (USCIS).
First and foremost, a potential investor must meet the capital investment amount requirements, including a lawful source and path of funds. Unsecured loans may now be an eligible source of funds.
(Learn more about EB-5 process step-by-step.)
Finally, there must be a minimum of 10 new jobs created, as defined by USCIS. Once all of the requirements have been deemed satisfied by USCIS, the EB-5 visa applicant, his or her spouse and any children under the age of 21 will be able to obtain permanent residency status.
1 - EB-5 investment amounts
The EB-5 program requires a $1,050,000 for a standard (non-TEA investment) and $800,000 for a Targeted Employment Area investment (TEA).
TEA rules
Targeted Employment Areas can either be high-unemployment areas or rural areas. To qualify as a high-unemployment TEA, an area must have an unemployment average of at least 150% of the U.S. national unemployment rate.
To qualify as a rural TEA, an area must be outside a metropolitan statistical area (MSA) and cannot be within a city with a population of more than 20,000.
The job-creating entity (JCE) is required to both do its main business in the TEA and also create jobs in that area.
TEA data & methodology
Department of Homeland Security has not provided to applicants and economists any particular required set of data or methodology to use. While some may feel this lacks clarity, an advantage of this lack of defined direction is that this should allow petitioners more flexibility in proving TEA designation.
DHS does accept TEA data from two different sources: the Bureau of Labor Statistics (BLS) and the U.S. Census Bureau’s American Community Survey (ACS). Each source offers advantages: more recent data is provided by the BLS; while the older ACS data goes down to smaller geographic units, including census tracts.
Best practices for TEA filing
Applicants seeking to invest $800,000 into a TEA project should ensure they have expert due diligence verifying that the project meets program requirements and will be approved. Best practices for economists determining TEA qualification should include the following:
- Use direct references to the new regulations to define the geographic area of a TEA
- Ensure sources are clear so that they easily point to the data being referenced online
- Be clear and complete in showing all the steps of the calculation process
A failure in presenting acceptable data for TEA qualification can result in the investor’s I-526 petition being denied. It bears noting that money is not the only issue at hand in the case of a denial; a denial could also result in losing significant time for that applicant in his or her pursuit of an EB-5 Green Card.
2 - Source of funds
To combat money-laundering and address security concerns, USCIS thoroughly examines where an applicant’s money came from as well as the path of that money. For EB-5 investors, proving the lawful source and path of their investment capital is critical.
Where can EB-5 investment money come from?
An EB-5 applicant may have various potential sources of the money they invest. Salaried income may be one. Stocks, securities, and bank account deposits are other potentially lawful sources. For any and all sources, all investment funds must clearly show their original source.
Be strategic in choosing the source of funds & documentation
For investors and their immigration lawyers, choosing which funds to use and not use can be an important decision. Documentation must be complete and valid. If an applicant’s documents are not in English, they should ensure their documentation provides a translation.
Loans as a source of funds for EB-5 investment
Most often, a loan for an EB-5 investment comes from a financial institution. The collateral for the loan must be cited. Contrary to an earlier regulation, USCIS now allows unsecured loans as a source of investors funds.
The value of the collateral must be at least equal to the loan amount. An applicant can expect USCIS to make a request for evidence (RFE) if the value of the collateral is close to amount of the loan. Best practices advise that the loan amount is no more than 70% of the value of the collateral property.
Tax returns & other financial documentation
An applicant must have individual and corporate/partnership tax returns filed in any jurisdiction for the last five years. When an applicant’s preceding years’ tax returns indicate higher income, he or should should also submit tax returns for the three years with the highest income. Ideally, EB-5 tax planning should be conducted before filing, and with an expert.
Can gifts, inheritance, or divorce proceeds be a source of funds?
Sometimes a petitioner investing in an EB-5 project has received their investment capital by means of an inheritance. In such a case, the applicant must provide all documents related to that inheritance, including estate settlements of the deceased.
Gifts are another potentially valid source of funds. All documents related to that gift must be shared, including the registration of the gift money for tax purposes, and the source of income of the gift giver.
Money derived from divorce and other legal proceedings may be used. This includes alimony, and proceeds of civil lawsuits, along with official court judgments.
What happens when documentation is missing?
Sometimes an investor in pursuit of an EB-5 visa cannot obtain certain documents. In such cases, the applicant can file a declaration with a thorough explanation of why they cannot provide the missing documentation.
Though USCIS has, on occasion, accepted declarations of missing documents, this practice should be avoided wherever possible.
3 - EB-5 job creation requirements
For the immigrant investor program, USCIS requires that each EB-5 investment results in the creation or preservation of at least 10 full-time jobs for U.S. workers. These jobs must be created within a two-year period after the immigrant investor has received his or her conditional permanent residency.
In the case of a direct investment into the EB-5 project, the investor must be able to prove that his or her investment led to the creation of direct jobs for employees who work directly within the commercial entity that received the investment.
Investors who invested through a regional center can cite 10 full-time direct, indirect or induced jobs that were created with their investment. Indirect jobs are those created in businesses that supply goods or services to the EB-5 project. Induced jobs are jobs created within the greater community as a result of income being spent by EB-5 project employees.
EB-5 business entities
The EB-5 visa applicant must invest in a new commercial enterprise (NCE) that is a for-profit U.S. business. An NCE may take one of many different business structures; they include corporations, partnerships (general or limited), sole proprietorships, business trusts, or other privately or publicly owned business structures.
Direct investments are made directly into the business that is creating the jobs. Regional center investments are made indirectly into an NCE, or EB-5 fund, which then loans the investor capital to the job-creating entity (JCE).
All New Commercial Enterprises must have been established after November 29, 1990. However, older commercial enterprises may qualify under certain conditions, for example, if the capital investment leads to a 40% increase in either the number of employees or the company’s net worth. If an older business is restructured in such a way that a new commercial enterprise is created, then that entity may then qualify, as well.
EB-5 Visa Requirements Summary
- EB-5 investment amount: $1,050,000 capital investment in a standard (non-TEA) investment project area; or a $800,000 capital investment in a TEA-designated area.
- The investor must show a lawful source and path of investment funds.
- The investment must be made in a for-profit U.S. commercial entity.
- The investment must create 10 full-time U.S. jobs within the first two years after conditional residency is granted.
- A direct investment is made directly into the job-creating business; these investments count “direct” or operational jobs.
- A regional center investment is made into a new commercial enterprise, or EB-5 fund, that loans the funds to the job-creating entity; these investments count direct, indirect and induced jobs.