There are 4 steps in the EB-5 petitioning process that an immigrant investor should be prepared to complete to become a U.S. permanent resident, along with their spouse and unmarried children under the age of 21.
Step 1: Choose an EB-5 project & make the investment
The EB-5 applicant must first find a “suitable” project which they believe will meet the program requirements. EB-5 investment projects are generally sponsored by regional centers as this makes job creation requirements easier to satisfy.
When selecting an EB-5 eligible investment, consider these two desired outcomes: Green Cards, and return of capital. The first relates to likelihood of immigration benefits, the second relates to likelihood of having your capital returned in a timely manner.
How much do I have to invest in an EB-5 project?
EB-5 visa applicants are required to make an investment of at least $1.8 million, or $900,000 if the job creation occurs in a Targeted Employment Area (TEA), into a U.S. business venture. TEA designation applies to projects in either a rural area or in a high unemployment area.
Job creation requirement
Job creation is a critical requirement to EB-5 success and investors should feel confident that their investment will result in the creation of 10 full-time U.S. jobs.
U.S. Citizenship and Immigration Service (USCIS) will defer to previous petitioner approvals in the same project, so if a project has received investor approvals, or if the New Commercial Enterprise (NCE) requested an exemplar approval (approval of their project documents based on an investor example, then investors can have much more confidence that their petition will be acceptable to the immigration service; but it is no guarantee of approval if there have been “material changes” to the project since those approvals.
Know that an investor approval or exemplar approval does not mean the project will create the estimated jobs.
Financial concerns with EB-5 investment
EB-5 investors want at the very least to be confident that their capital will be returned in full — if not actually deliver some attractive rate of return.
Key drivers that help determine the strength of an investment include the capital stack (the position of EB-5 money in the hierarchy of security interest claims on the assets of the project), and developer equity which shows skin-in-the-game (developer equity is almost universally in a lower position in the capital stack then EB-5 money.
Ideally, EB-5 money is in “first position” and is secured fully by equity in the project.
Another aspect to look for is exit strategy: you want your exit strategy to match up with your I-829 filing date, the time at which your EB-5 investment capital no longer must be “at risk.” This can be tricky as estimating your date of filing your I-829 is based on the time it takes to adjudicate your I-526, but this estimate should be undertaken with a time cushion added on.
Lastly, the historical standard was that an EB-5 project that was likely to produce immigration benefits was not often one that would offer a high rate of return. Higher rates of return generally indicate more risk. But a positive development for investors is that as the market evolves, legitimate EB-5 investments are offering better returns.
What industry should I make my EB-5 investment in?
Historically, real estate projects were favored EB-5 investments because jobs were modelled by an economist to have been created so long as the full budget in the business plan was spent. This simplified job counts considerably and lowered the job creation risk, as real estate projects rarely come-in significantly under budget.
In the past, big real estate projects in marquee locations were deemed to be most attractive as they were seen as “safer” for job creation. With most developments in big cities (think Hudson Yards in New York) investors felt secure being in a major New York real estate development. But this project’s NCE recently stated that they would be suspending all EB-5 repayments indefinitely.
Again, in the past the vast majority of those big-city developments qualified at the lower TEA investment level. But with the new EB-5 program rules implemented as of November 21, 2019, many of these big-city projects no longer qualify at the lower investment level. Thus, real estate may not be the prevalent EB-5 project choice it once was.
In this new EB-5 landscape, job sectors are more diverse — and many new commercial enterprises are no longer location dependent, thus making them easier to qualify for Targeted Employment Area designation — at half the investment amount.
Unless an investor is comfortable investing $1.8 million in a non-TEA project, he or she should be open to a variety of project types and locations.
How do I make the EB-5 investment?
To make the investment, investors will sign a subscription agreement which is a request to join a partnership or a limited-liability company. The Manager or General Partner will then accept the investor, who will then wire their investment funds to an escrow account controlled by an appointed escrow agent.
Step 2: Filing an I-526 petition that meets program requirements
After selecting an investment, the applicant will have his or her immigration attorney provide proof of the investment by filing an I-526 petition with USCIS. The I-526 petition proves the applicant has invested, or is in the process of investing, the required capital, and that they meet the EB-5 program requirements.
We suggest that you interview and retain an experienced EB-5 immigration lawyer that you feel comfortable with to file your I-526 petition.
How does your immigration lawyer help with your EB-5 (I-526) filing?
- EB-5 investors must be able to show that their invested capital was acquired lawfully, so a lawful source and path of funds is required.
- The business plan must be credible in the eyes of USCIS and must meet all “Matter of Ho” requirements, which your lawyer will confirm.
- Invested funds must go into a New Commercial Enterprise and be spent on expenditures related to job creation and the project must create 10 new full-time American jobs.
- The investor’s capital must be placed “at-risk’” with a chance for gain and a risk of loss — without any guarantees of return of capital.
- If the investment is being made in a Targeted Employment Area (TEA), either a rural or high-unemployment area, in order for the investment to qualify at the lower minimum investment amount (currently $900,000), the TEA designation must be valid at the time of the investment.
Do I get my investment back if my I-526 petition is denied by USCIS?
An I-526 denial refund guarantee may be offered to investors by the New Commercial Enterprise (NCE) and the terms of the refund would be included in the offering documents. But not all “guarantees” are created equal. It is important to identify who is offering the guarantee and whether the guarantor has the means to deliver on the repayment promise, especially if the project gets denied and all investors would then expect a full refund.
Some NCEs will hold back 10-20% of all investor funds in an escrow account that would be used to repay a denied investor, but this guarantee can, by definition, only satisfy a portion of the NCE’s investors.
I-526 processing times
As of June 2020, USCIS has posted an average historical I-526 processing time for FY2020 (to date) of 13.1 months.
Step 3: 2-Year Conditional Permanent Residency
Once an investor’s I-526 petition is approved, conditional permanent residency can be attained in one of two ways:
- Investors living abroad file Form DS-260 with a U.S. Consulate or U.S. Embassy.
- If the investor is living in the U.S., they will file Form I-485 for adjustment of status.
Either way, the investor’s next step in the EB-5 visa process is to become a two-year conditional resident of the United States.
Filing an I-485 for Adjustment of Status
When an EB-5 applicant gets their I-526 approved and is already living in the U.S., they can then adjust their status from non-immigrant to permanent resident.
This petition can be filed immediately after I-526 approval. It is six pages long and has a filing fee of $1,140 (not including the $85 fee for biometric services). It is highly advisable to have an immigration attorney do the filing for you.
What documents are required for the I-485 petition?
- birth certificate
- marriage certificate and, when applicable, divorce certificate
- criminal history
- two photographs of the petitioner
- passport copy & copy of non-immigrant visa showing current U.S. status
After filing, biometric screening ($85 fee) including fingerprinting is required for petitioners between 14 and 79.
As of June 2020, USCIS has posted an average historical I-485 processing time for FY2020 (to date) of 13.7 months.
Most petitions result in approval. Denial, though not very common, usually happens in cases of criminal or immigration law violations. A petitioner may file an I-765 Application for Employment Authorization and/or I-131 Application for Travel Document while they wait for their I-485 to be processed.
The DS-260 application process
If an EB-5 investor has their I-526 petition approved and they are not living in the U.S., then they must file a DS-260 application for conditional permanent residency. It is processed at a U.S. Consulate or Embassy in the petitioner’s country. It is highly advisable to file this form with an immigration attorney. The application consists of two parts, application and interview.
The application documents biographical information, including previous residences, job history, and military service history (if applicable). Note: On May 31, 2019, Department of State (DOS) updated its requirement for DS-260 forms applicants to fully disclose the social media activity of the last five years under a Social Media Disclosure.
This is conducted at the U.S. Consulate or Embassy of the applicant’s country. A consular worker assists in completing this part of the application process. The applicant may be asked to bring documents such as birth certificates, passport, and marriage certificate (if applicable).
I-485 or DS-260 approval: Green Card and next steps
Approval of an I-485 or DS-260 petition results in a Green Card — the applicant is now a conditional permanent resident in America. This status is good for two years. The investor and his or her family members can live and work in the U.S..
During the 2-year conditional residency period, the EB-5 visa investor will be required to fulfill “physical presence requirements,” and cannot remain outside of the United States for more than one year. If the immigrant investor does reside outside of the U.S. for more than one year, they would be required to obtain a re-entry permit.
Three months before the expiration of the conditional permanent resident status, the investor will want to remove the conditions of permanent residency.
Step 4: Unconditional Permanent Residency and the I-829 Petition
The final step in the EB-5 visa process is for the applicant to become an unconditional permanent resident. This is done by the removal of his or her 2-year conditional residency status after an I-829 application is filed, adjudicated, and approved. This application provides documented evidence that the petitioner has met all of the requirements of the EB-5 program, as per the United States Citizenship and Immigration Services (USCIS).
What documents are required to file an I-829 petition?
- conditional permanent resident card
- evidence that a commercial enterprise was created, as per federal tax returns
- documentation that the new commercial enterprise received the petitioner’s capital investment
- documentation showing the commercial enterprise was maintained for the entire conditional residency period of two years
- Proof that at least 10 fulltime jobs were created according to the business plan, as per payroll and tax records
- biometric documentation including fingerprints, photograph, and signature
- legal documents pertaining to the applicant’s criminal history (if applicable)
Filing an I-829 petition
The I-829 petition is submitted to USCIS 90 days prior to the anniversary of the date that the applicant first received his or her conditional residency. If the I-829 is not filed according to such timelines, the investor may not be granted permanent residency.
The I-829 petition is typically filed by an EB-5 investor’s immigration attorney. There is a $3,750 filing fee and $85 biometrics fee associated with the filing. Here is a link to the I-829 petition on the USCIS website.
Note that USCIS may request an interview after the I-829 petition is processed.
I-829 processing times
As of June 2020, USCIS has posted an average historical I-526 processing time for FY2020 (to date) of 37.2 months.
Upon successful approval of an I-829 petition (and the approval rates have been well over 90% for a consistent period of time), the EB 5 visa investor, his or her spouse, and their unmarried children under the age of 21 are issued 10-year Green Cards that can always be renewed. Now they can permanently live and work in the United States.
Five years from the date they were issued initial conditional residency, they will have the option to become U.S. citizens with all applicable rights and benefits.
For a free consultation about the EB-5 process, email me at firstname.lastname@example.org