Basic Requirements of the EB-5 Program

Posted on Oct 31, 2023 by Chris Prescott and Jacqueline Trevino

The EB-5 visa program was created in 1990 by Congress to promote job creation and capital investment by foreign investors in the U.S. economy. The EB-5 program is administered by United States Citizenship and Immigration Services (USCIS). It enables foreign investors (as well as their spouses and unmarried children under 21) to obtain U.S. permanent residency as a green card holder if they comply with the following program requirements:

  1. Make a qualifying investment of capital
  2. Investment must be made in a U.S. new commercial enterprise (NCE)
  3. Investment must result in the creation of 10 full-time jobs to be filled by qualified workers in the U.S.

Standalone Investment vs. Regional Center-Sponsored Investment

Standalone investments are made directly into an NCE by only one investor. Investments sponsored by regional centers involve pooling the funds of more than one investor through a USCIS-approved economic unit. Investments sponsored by regional centers, however, tend to be the most popular due to their increased flexibility in fulfilling the EB-5 program’s job creation requirement. 

An investor need not be located in a particular place to participate in the EB-5 program, as investors can be located outside the U.S. or inside the U.S. on a non-immigrant visa. Qualifying non-immigrant visas include, but are not limited to, H-1B, F-1, L-1, and the dependent visas related to those categories.

Qualifying Investment

The minimum capital investment required depends on the location of the project being invested in. If the investment is made in a project located in a Targeted Employment Area (TEA), the minimum capital investment amount is only $800,000.00. The minimum capital investment amount for a project located in a non-TEA is $1,050,000.00. 

Targeted Employment Area (TEA)

A TEA is defined as a rural area or an area that experiences a high unemployment rate, at least 150% above the nation’s average. A rural area is any area located outside of a metropolitan statistical area (MSA) or not bordering a municipality with more than 20,000 residents.

USCIS is responsible for designating whether an area qualifies as a TEA by using reliable evidence submitted by investors. Such designation should be sought before an investor makes their investment and files Form I-526, Immigrant Petition by Standalone Investor, or Form I-526E, Immigrant Petition by Regional Center Investor, with USCIS.

New Commercial Enterprise (NCE)

For EB-5 purposes, a qualifying investment must be made into an NCE, which is any for-profit business formed on or after November 1990. An NCE is responsible for gathering funds from EB-5 investor(s) and placing such funds into the Job Creation Entity (JCE). While JCEs are responsible for creating and maintaining the jobs that result from the investment, the NCE and JCE are often the same entity.

If the business was formed before November 1990, an investor’s investment in such is eligible under the EB-5 program only if the business has been reorganized or restructured in a way that results in an increase of net value or number of employees by at least 40%.

Examples of NCEs include sole proprietorships, limited or general partnerships, holding companies, joint ventures, corporations, business trusts, and other publicly or privately held entities.

Lawful Source of Funds (SOF)

Although investors may use multiple sources of funds to make their investments, they must prove they are the lawful owners of such funds and were obtained legally. Investors must provide various documents to illustrate where the funds originated from. Viable sources of funds include income, savings, gifts, loans, sale of assets, inheritance, and more. Documents verifying that such funds were obtained legally include bank statements, tax returns, investment portfolios, gift affidavits, business registration records, and more. These requirements apply to both direct investments and regional center-sponsored investments.

Job Creation

Regardless of whether a standalone or regional center-sponsored investment is made, ten full-time jobs for qualifying workers must be created as a result of each investment. Only direct jobs will satisfy the job creation requirement for a standalone investor. Direct jobs are those created in response to the project itself. The project is the direct employer. Direct jobs vary across industries. Examples, such as in hospitality projects, may include front desk assistants, waiters, waitresses, and managers. 

Regional center-sponsored investments, however, can use direct, indirect, and induced jobs to satisfy the requirement. Unlike direct jobs, indirect jobs are supporting jobs that are not directly related to the core function of the project but are essential to support its successful operation. Examples include jobs related to construction materials and labor, operational machinery, technology support, building maintenance, and accounting services. Induced jobs are created in response to the increased economic activity produced by an EB-5 project. Induced jobs provide employment opportunities for others in surrounding project areas. Examples of induced job positions include childcare workers, grocery store clerks, and retail associates.

Conclusion

The EB-5 visa program is one of the fastest methods to obtain permanent residency in the U.S. Meticulous planning and documentation is required in every step of the application process, especially when tracing sources of funds. To learn about the recent resurgence of the EB-5 visa program, click here: https://patel-law-group.local/whats-causing-the-resurgence-of-eb-5/.

If you have any questions regarding the EB-5 process, please email us at rpatel@patellegal.com and jtrevino@patellegal.com.