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The all-inclusive investor program in the US

2020-03-16 18:05:46
The all-inclusive investor program in the US
The EB5 investor visa allows investors to acquire the status of a US permanent resident through this investor program. While this all-inclusive visa may present itself as an attractive option for investors, it would require you to fulfill a certain set of requirements that are stricter than most visas. Read on to find out more about this visa

While an E2 is a nonimmigrant investor visa, the EB5 is an immigrant investor visa. Also, this visa is not restricted to any nationality compared to the E2 visa which is only applicable to nationals of a country that has signed a relevant treaty with the US.

 

EB5

The EB-5 visa is an immigrant visa for investors, entrepreneurs, and anyone who is looking to start a business in the USA. The EB-5 visa is an immigrant visa classification, so it leads to a green card for successful applicants. The EB5 visa also allows your spouse and children to get their green card as well.

 

To qualify for an EB-5 visa, you are required to invest a minimum of $1,800,000 in a US business. If your investment is located in an economically depressed area called a "targeted employment area," you may be eligible to invest a reduced amount of $900,000.

 

In addition to investing the minimum amount required, the business invested in must create 10 full-time jobs for US workers.

 

The business must also be a commercial business that is for-profit. Real estate investments and non-profit enterprises do not qualify for EB-5.

 

To get an EB-5 visa, an investor can make a direct investment or they can invest in a regional centre.

 

1. A regional centre is a business entity regulated by USCIS, that is able to pool capital from multiple EB-5 investors to develop a project.

2. A direct investment is any investment not made in a regional centre. Examples of direct investments are if you start your own business or purchase an existing business.

 

Requirements

To qualify for an EB-5 visa:

· You must invest in a "new commercial enterprise."

· You must engage in the management of the new commercial enterprise

· You must invest at least $1,800,000 in the new commercial enterprise. (You may qualify to make a reduced investment of $900,000 if the investment is located in a "targeted employment area.")

· Make a direct investment or invest in a regional centre

· Your investment must lead to the creation of at least 10 full-time jobs for US workers.

· Your investment funds must be "at risk."

· The funds used for your investment must have been lawfully obtained

 

New Commercial Enterprise

EB5 applicants' investment must be directed towards 'new commercial enterprises', as defined by USCIS. This does not mean investors must set up a business from scratch, but the business receiving investment must meet certain conditions. These are:

 

· Having begun trading either on or after November 29th 1990; 

· Having been taken over and undergone extensive restructuring; or 

· Having gained either 40% net worth, or 40% more employees as a result of the EB-5 investment

 

The activity conducted by a new commercial enterprise also must be commercial, so owning and operating a piece of residential real estate won’t qualify

 

To qualify for an EB-5 visa, you can:

 

· Start a new business;

· Invest in an existing business;

· Buy an existing business; or

· Invest in a regional centre

 

 

Management of enterprise

To qualify for an EB-5 visa, you must engage in the management of the new commercial enterprise. You cannot be a passive investor in the business.

 

You can meet this requirement by either forming the policies of the business or by handling the day to day management of the business.

 

If you are investing in a regional centre, you will likely be a limited partner in the business. You can meet the management requirement here by showing that you have the rights normally given to limited partners, such as voting rights.

 

Another way to show sufficient engagement in the management of the enterprise is by submitting a statement of your job title and duties, with your EB-5 petition.

 

Targeted Employment Areas

EB-5 investors need to invest a minimum of $1,800,000 of investment outside of a Targeted Employment Area. However, If the location of the investment is deemed to be a Targeted Employment Area (TEA) that amount drops to $900,000.

 

Targeted Employment Areas fall into 2 categories:

 

· Rural TEAs To be designated a rural TEA an area must be outside of the U.S. Office of Management and Budget's designated metropolitan statistical areas (MSA). The exact definition of such areas is often unclear, but essentially the TEA they must not be near towns or cities with more than 50,000 residents

· High unemployment TEAs are areas with 20,000 or more residents with an unemployment rate of at least 150% of the national average unemployment rate.

 

 

Regional centre versus direct investment

To qualify for an EB-5 visa, an investor can either make a direct investment or they can invest in a regional centre.

The primary differences between direct investments and regional centre investments have to do with the investors level of control in the investment and the way the jobs get calculated, to meet the EB-5 job creation requirement.

 

Control

With direct investments, the investor usually has significant control of the business and is actively involved in the day-to-day operations of the business.

 

In a regional centre investment, the investor has much less control, having very little to no involvement in the day-to-day operations of the business

 

Job calculation

For direct investments, the only jobs that count toward the job creation requirement are the jobs that are directly created by the new commercial enterprise; these are “direct jobs

 

Regional centres can count direct jobs and indirect jobs. This means that regional centres are able to take credit for jobs that they don’t directly create. This includes jobs created as a result of the project the regional centre is developing

 

Job creation

In order to gain lawful permanent residence through the EB5 visa category, investors must have created a minimum of 10 full-time US jobs within two years of entering the US.

 

For each EB-5 investment, 10 jobs must be created, so, if there are 4 EB-5 investors, at least 40 jobs must be created

 

Qualifying employees have to be US citizens, permanent residents, and/or other immigrants authorized to work in the US

 

The jobs are expected to last for at least 2 years and cannot be seasonal, temporary, or intermittent jobs.

 

At-risk

Your EB-5 investment must be "at-risk" until the time you become an unconditional permanent resident, meaning that your investment funds must actually be spent and not just sit in your business's operating account.

 

While the regulations are not very clear, here are a few things to be aware of:

 

· Your investment must be subject to either gain or loss.

· You cannot receive any guarantee that the capital you invest will be returned to you.

· You cannot be granted the right to redeem any part of your interest in the business.

· Your funds must resemble an investment rather than a loan to the enterprise.

· Your funds cannot just sit in a bank account nor can they be used as business reserves.

 

Lawful funds

Funds must have been obtained through lawful activity and cannot be obtained through any illegal conduct.

 

To prove this, you will submit many documents showing how the funds were earned, including bank statements and tax returns.

 

Some examples of lawful funds include:

 

· Income earned from employment

· Income from the sale of a property

· A loan taken against equity in real estate

· Income from the sale of a business

· An inheritance

· A gift

 

Considerations before applying

Before investing in an EB-5 project, you should do your own due diligence, like you would if you were making any other investment.

 

You should make sure that you’ve done a lot of research on the business or regional centre you are considering. Besides your own personal efforts, there are professionals that can help you choose an investment.

 

The 2 types of professionals that can help you pick an investment are Registered Investment Advisors and Broker/Dealers.

 

Registered investment advisors and broker/dealers are regulated by the Financial Industry Regulatory Authority (FINRA). Registered investment advisors usually provide investment advice in exchange for a fee.

 

Broker/dealers usually charge a finders fee to the business or regional centre for the investors they refer to a particular project.

 

You can do a lot of research on your broker/dealer or registered investment advisor using Finra’s BrokerCheck resource. Finra’s BrokerCheck site is a great way to make sure that your investment advisor is licensed. With BrokerCheck, you can also learn how many years of experience your investment advisor has, which exams they passed, and which state licenses they have

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