EB5 Diligence
Categories
EB-5 basics, EB-5 process, US EB-5 program
Date
Apr 02, 2016
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Author
Kurt Reuss
Kurt Reuss
Kurt Reuss is a registered securities broker who has been specializing in EB-5 since 2012. He offers advice on investment structuring and market conditions related to EB-5 investments.

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What is a New Commercial Enterprise (NCE)?

NCE is an acronym for 'New Commercial Enterprise' and the term is used in EB-5 to identify the entity, partnership or LLC that EB-5 petitioners will invest in, and the New Commercial Enterprise is a requirement of the US EB-5 program. This entity is often a different entity from the 'Job Creating Entity' (JCE) which the NCE makes an investment into on behalf of the investors, sometimes in the form of a loan from the NCE to the JCE and sometimes in the form of equity, whereby the NCE becomes an equity partner in the JCE.

There are no restrictions on the type of business investors or an NCE can invest in, as long as it is a new business enterprise or the investment is made into a failing business to save jobs, but in both cases the investment must create or save at least ten (10) jobs per investor.

Creating an NCE is the easiest way to satisfy the EB-5 Visa requirements. Part of the investment requirement is that the enterprise be commercial. The USCIS defines commercial enterprise as any for-profit activity formed for the ongoing conduct of lawful business.

The U.S. Citizenship and Immigration Services (USCIS) provides a list of business entities that qualify including sole proprietorships, partnerships (limited or general), holding companies, joint ventures, corporations, and business trusts or other entities which may be publicly or privately owned. Thus investors are left to invest in any type of legal business entity other than a nonprofit organization.

Another requirement of the EB-5 process is that the foreign investor be engaged in the business. To satisfy this requirement the investor in a direct investment must manage the enterprise, whether through daily supervision and decision-making, but this requirement is waived if the investor invests in a project that is sponsored by an EB-5 Regional Center. By investing in and engaging in a new commercial enterprise, the foreign investor will have met one of the requirements to qualify for the US EB-5 program.

NOTE: The EB-5 investor may also restructure an already existing commercial enterprise but it is important to realize that just purchasing and managing an existing business is not sufficient to meet the job creation requirement of the EB-5 Program. 

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