Visa Classification Description
USCIS administers the EB-5 program, created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a program initially enacted as a pilot in 1992, and regularly reauthorized since then, investors may also qualify for EB-5 classification by investing through regional centers designated by USCIS based on proposals for promoting economic growth. On February 9, 2018, the President signed Public Law 115-123; extending the Regional Center Program through March 23, 2018.
USCIS policy on EB-5 adjudications is contained in Volume 6, Part G of the USCIS Policy Manual.
All EB-5 investors must invest in a new commercial enterprise, which is a commercial enterprise:
- Established after Nov. 29, 1990, or
- Established on or before Nov. 29, 1990, that is:
1. Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or
2. Expanded through the investment so that at least a 40-percent increase in the net worth or number of employees occurs
Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to:
- A sole proprietorship
- Partnership (whether limited or general)
- Holding company
- Joint venture
- Corporation
- Business trust, or
- Other entity, which may be publicly or privately owned.
This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.
Note: This definition does not include noncommercial activity such as owning and operating a personal residence.
Job Creation Requirements
An EB-5 investor must invest the required amount of capital in a new commercial enterprise that will create full-time positions for at least 10 qualifying employees.
- For a new commercial enterprise not located within a regional center, the full-time positions must be created directly by the new commercial enterprise to be counted. This means that the new commercial enterprise (or its wholly owned subsidiaries) must itself be the employer of the qualifying employees.
- For a new commercial enterprise located within a regional center, the full-time positions can be created either directly or indirectly by the new commercial enterprise.
- Direct jobs are those jobs that establish an employer-employee relationship between the new commercial enterprise and the persons it employs.
- Indirect jobs are those jobs held outside of the new commercial enterprise but that are created as a result of the new commercial enterprise.
- In the case of a troubled business, the EB-5 investor may rely on job maintenance.
- The investor must show that the number of existing employees is being, or will be, maintained at no less than the pre-investment level for a period of at least 2 years.
A troubled business is a business that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to the priority date on the immigrant investor’s Form I-526. The loss for this period must be at least 20 percent of the troubled business’ net worth prior to the loss. For purposes of determining whether the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.
A qualifying employee is a U.S. citizen, lawful permanent resident or other immigrant authorized to work in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or a person residing in the United States under suspension of deportation. This definition does not include the immigrant investor; his or her spouse, sons, or daughters; or any foreign national in any nonimmigrant status (such as an H-1B nonimmigrant) or who is not authorized to work in the United States.
Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. In the case of the regional center program, "full-time employment" also means employment of a qualifying employee in a position that has been created indirectly that requires a minimum of 35 working hours per week.
A job-sharing arrangement whereby two or more qualifying employees share a full-time position will count as full-time employment provided the hourly requirement per week is met. This definition does not include combinations of part-time positions even if, when combined, the positions meet the hourly requirement per week.
Jobs that are intermittent, temporary, seasonal, or transient in nature do not qualify as permanent full-time jobs. However, jobs that are expected to last at least 2 years are generally not considered intermittent, temporary, seasonal, or transient in nature.
Capital Investment Requirements
Capital means cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. All capital shall be valued at fair-market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act.
Note: The immigrant investor must establish that he or she is the legal owner of the capital invested. Capital can include the immigrant investor’s promise to pay (a promissory note) under certain circumstances.
Required minimum investments are:
- General. The minimum qualifying investment in the United States is $1 million.
- Targeted Employment Area (High Unemployment or Rural Area). The minimum qualifying investment either within a high-unemployment area or rural area in the United States is $500,000.
A targeted employment area is an area that, at the time of investment, is a rural area or an area which has experienced unemployment of at least 150 percent of the national average rate.
A rural area is any area not within either a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more according to the most recent decennial census of the United States.
TARGETED AREA
A targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate.
EB-5 program requires that an investor seeking lawful permanent residency through investment to make a $1,000,000 investment into a new commercial enterprise that will create at least ten U.S. jobs per investor. The $1,000,000 investment threshold can be reduced to $500,000 if the EB-5 project is located in what is known as a “Targeted Employment Area,” commonly referred to as a “TEA” in EB-5 lingo. A TEA is defined by federal immigration regulations as either a rural area or an economically distressed area that has experienced an unemployment rate of at least a 150% of the national average. The unemployment data used in a TEA designation can be based on state, county, city or census tract data.
Understandably, most foreign nationals looking to obtain lawful permanent residency in the U.S. through the EB-5 program are interested in realizing this goal for a lower price tag- the logic being why pay $1,000,000 for a green card when I can get it for $500,000? It is because of this demand in the market that most EB-5 regional center projects are located in TEAs.
Because of the importance of determining the investment amount that they will be subject to, one of the first things that EB-5 investors often ask me as counsel is to explain to them the nuances of determining whether their project is in fact located within a TEA. It is at this point that I explain to clients the process by which TEAs are issued, as well as when they are effective.
Although, a regional center may obtain a TEA designation at the time that it applies for its designation from the USCIS, the actual TEA is not adjudicated by USCIS until the time that the investor submits their I-526 (EB-5) petition or makes their investment in the new commercial enterprise, whichever occurs first. If the regional center uses an escrow to hold funds until EB-5 petition approval, the TEA is determined at the time of filing the I-526.
This is an important point to understand. A regional center may become designated as a regional center one year but if the unemployment data changes the next year when investors actually begin to file their EB-5 petitions, the project may no longer be considered to be in a TEA and USCIS may come back and tell the investor that they must make a $1,000,000 investment in order to qualify for the EB-5 visa. For this reason, it is always important that immigration counsel and their clients request that the center provide them with their most current TEA designation letter. If the letter is more than a year old, counsel should inquire as to whether they will receive an updated letter from the appropriate agency prior to filing their I-526 petition.
Another critical point that investors must understand with respect to TEAs is that there is no uniform process for granting them. A state may have an agency that issues a TEA certification letter but it is not required to. Timing of issuance of the letters- annually, bi-annually or even monthly may also differ by state making the process uncertain depending on the location of the project. In certain instances, where a state does not issue a TEA designation at all, the regional center may have to apply directly to USCIS to receive TEA designation status, as under the regulations the agency is also permitted to issue a designation.
Nonetheless, there are certain steps that investors can take in performing their own research to determine if a project qualifies for a $500,000 investment:
Investments in Rural Areas:
To demonstrate that a project is located in a rural area, the regional center must demonstrate that:
- It is not located within a metropolitan statistical area (MSA); and
• It is not located within any municipality that has a population of 20,000 or greater as defined in the most recent U.S. census.
The Census Bureau has two websites to assist investors in determining if the project is located in a rural area. These websites provide maps of MSAs by each state.
Likewise, the American Fact Finder permits EB-5 investors to look up a street address to determine if the project that they are considering for investment is in a rural location.
High Unemployment Area
To show that the project is located in an economically distressed area, investors will need to show that the project is
- Located within a MSA; and
• Is in an area that has experienced an unemployment rate of 150% of the national average.
National and state unemployment rates can be found on the Bureau of Labor Statistics’ website. Some state agencies also list unemployment data by either county, city or census tracts on their websites. Where the information is not located online, a regional center’s economist will contact a designated state agency for a TEA certification letter or apply directly to USCIS for TEA designation. USCIS has also stated that they will accept the aggregation of contiguous census tracts commonly referred to as “gerrymandering” to create a high unemployment area if accompanied by a state designation.
A few other important things for investors to remember with respect to TEAs are that:
States are not obligated to issue TEA designation letters. For example, earlier this Spring, California introduced a new web page which lists the qualifying state TEAs that include certain counties, cities, MSAs and census tracts. California stated that the goal of this new approach was to allow investors to know immediately if their project is located within a TEA. Projects that are not listed on the website will not be eligible to receive a formal certification letter from the state of California.
On the other end of the spectrum, states that want to encourage EB-5 investment cannot designate TEAs that do not meet the regulatory definition of a TEA.
Regional center projects cannot circumvent EB-5 rules by making their headquarters in a TEA and doing business in other locations. The job creating project must be principally doing business in a TEA. USCIS will no longer question or challenge a state’s TEA designation.
DOCUMENTS REQUIRED
- Bank statements
- Passport (current & expired) & I-94
- Tax return for last five (5) years (with English translation)
- Birth Certificate for principal applicant (with English translation)
- Household registration (with English translation)
- Marriage certificate (with English translation)
- Business card
- Chronology of Status while in the U.S. with supporting documentation
- Form W-8 BEN Certificate of Foreign Status of Beneficial Owner
- The source of funds documents will depend on the history of the capital you are using for the investment. For example, if it is the sale of a home, you will need the bill of sale and the property deed. For the money trail you will need the banking documents that show the funds enter your personal account and relevant wire out.
There are many other factors at play, such as the length of time you owned the home, which may require more documentation than this illustration. Source of funds documents will be sent to USCIS as supporting evidence for your I-526 petition