Here are the questions we most frequently hear from investors:
Here are the questions we most frequently hear from investors:
To secure permanent residency status, also known as a Green Card, through the EB-5 program, investors must fulfill specific requirements set by the United States Citizenship and Immigration Services (USCIS).
This article provides an overview of the requirements for obtaining permanent U.S. residency through the EB-5 program and the rules and considerations for Targeted Employment Areas (TEAs) with their lower investment amount and faster visa processing and the different types of business entities that qualify for EB-5 investments.
It highlights the key criteria investors must meet, such as the investment amount, job creation requirements, and lawful source of funds that are acceptable including loans, and various financial documentation that can should be used.
This article provides recommendations and emphasizes the importance of due diligence and expert guidance to ensure compliance.
To obtain U.S. permanent residency, immigrant investors, along with their spouse and unmarried children under the age of 21, must navigate through four crucial steps in the EB-5 petitioning process. These steps are essential for attaining permanent residency status in the United States.
A primary EB-5 requirement is an initial investment in a new commercial enterprise. That investment must be $800,000 (USD) in a Targeted Employment Area or $1,050,000 in a non-TEA area. As per United States Citizenship and Immigration Services (USCIS) regulations, investors must provide appropriate documentation in their I-526 petition to show the capital for their EB-5 investment has been obtained or earned through lawful means.
For an immigrant investor hoping to obtain a Green Card through the EB-5 program, the path begins with choosing an investment project and then filing Form I-526, the Immigration Petition by Alien Investor.
U.S. Citizenship and Immigration Services (“USCIS”), on July 24, 2019, published the “EB-5 Immigrant Investor Program Modernization.” The new regulation rules will take effect for all I-526 investors and I-924 petitioners as of November 21, 2019.
The most significant change to the EB-5 Program will be the raising of the minimum investment requirement from $500,000 to $900,000 (for Targeted Employment Area investments, aka, TEA’s) and the increase of $1 million to $1.8 million for non-TEA investments.
The majority of the EB-5 investments in the market today would not qualify for the $900,000 investment amount since they would not qualify under the new TEA rules. Therefore, many petitioners who would under today’s rules invest in a $500,000 TEA project would have to invest $1.8 million in the same project, with non-TEA designation, as of November 21, 2019. (See the TEA section below for more on this.)
Real estate construction projects often require a substantial investment with abundant job creation that EB-5 investors can rely on.
EB-5 regional center projects are allowed to count direct, indirect and induced jobs based on the construction budget; an economic study will determine how many total jobs will be created. One needs only spend the project budget to ensure jobs will be created.
Making an investment of $800,000 - $1,050,000 in one of the EB-5 projects that ultimately fails, jeopardizes both the investor’s funds and the U.S. residency of the investor’s family, therefore every investor would be wise to know as much as possible about the investments they’re considering.
What is EB-5 due diligence?
Due diligence is an investigation of an investment prior to signing a contract. Due diligence contributes significantly to informed decision making by enhancing the amount and quality of information available to the investor allowing him or her to better understand the benefits and risks.
What is included in an EB-5 Immigrant Visa due diligence review?
Due diligence begins with a thorough analysis of the investment documents including the capital structure, project viability, exit strategy and job creation potential as it relates to the the EB-5 green card program.
The due diligence review should also identify risk mitigation strategies that have been implemented by the Manager or General Partner to protect investors. These include use of a fund administrator to oversee all transfers of investor funds, and construction monitoring to ensure transfers to the Developer are in-line with construction progress.
The EB-5 program requires that each EB-5 Investor create ten (10) jobs. Job cushion refers to the percentage of jobs exceeding the requirement. Having a Job cushion is important so that the job creation estimates are above the minimum required by all investors in a project.
So, what is a sufficient job cushion? Is there a magic number that is acceptable and anything lower than that is rejected? Generally speaking, a higher job cushion provides some assurance that job creation estimates will be met — but EB5 investors need to look deeper than just the job cushion numbers.
Job Cushions from 155 EB-5 offerings
Based on our review of 155 EB-5 offerings, job cushion has ranged from 0% to 900%. Seventy five percent (75%) of the projects have a job cushion of 25% or more and thirty percent (30%) of the projects have a job cushion of 100% or more. The median job cushion is 51%.
CMB recently published a blog titled EB-5 Due Diligence - Third Party Websites: Considering one of the many independent EB-5 due diligence services? in which they dismiss the notion that investors are served by retaining a due diligence firm before selecting an EB-5 investment.
