It was created by the Congressional Act of 1990 and has been reauthorized annually to promote U.S. economic growth. It enables businesses and real estate developers seeking capital certain designated visas to become approved to accept investments from foreign investors.
According to Seema Singh, Managing Director of Singh Law, LLC, “EB-5 is a type of immigration program for foreign families that does social good for all communities and the U.S. economy.” In its concept, it is a triple win. When traditional sources of U.S. capital are not available the EB-5 program allows for foreign investors to invest in the U.S ($500,000) upon proving that the investment will create a minimum of 10 full-time U.S. jobs, and allows eligible immigrants (and their immediate family members) to enter the U.S. on a conditional two-year green card leading to a permanent green card after 2 years. Those investments then allow communities and real estate developers to build, renew, and fortify. For the U.S. Labor market, it grows jobs.
While the profile of immigrants in the U.S. evolves, the attraction of the U.S. as the #1 global country for immigrants continues. According to Pew Research, immigrants in the entire U.S. increased from 7.9% in 1990 to 13.0% in 2012. Immigrants are living in virtually all states and the most diverse immigrants are living in 15 states including California, New York, New Jersey, Florida, Nevada, Hawaii, Texas, Massachusetts, Maryland, and Illinois. This means EB-5 investment has broad potential across the U.S. for citizens, immigrants, and communities.
There are many EB-5 components encountered like Form I-526, H-1B visa holder status, or compliance with section 203(b)(5) of the Act, financial thresholds, geographic requirements, and employee rules. There are also many hurdles—including complexity, long approval times, and unexpected in-process changes. These details in the law quickly positions most to understand that their successful immigration process and business structure will require a good and experienced attorney.
There are 3 substantial categories in EB-5 to understand at the highest levels—the type of enterprise that can be created; the job or employee profile; and the legal investment thresholds.
- Types of Enterprise. EB-5 supports new commercial enterprise or troubled enterprise business structures. The enterprises, whether new or troubled, can be any for-profit activity structured as a sole proprietorship, Partnership (whether limited or general), Holding company, Joint venture, Corporation, or Business trust or other entity, which may be publicly or privately owned. The trigger date for the type of enterprise that can operate is November 29, 1990. Businesses established before this dates has two additional requirements to meet for EB-5 compliance and businesses established after this date are considered new (unless the business is a troubled enterprise). A troubled enterprise means the business 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.
- Types of Jobs Profiles. Requirements for Job Creation. At least 10 full-time direct qualifying jobs or if the investment in a Regional Center project 10 full time indirect jobs qualify as well. Whether full-time direct or indirect or job sharing, must be created or preserved in order to be in compliance with the act. Qualifying jobs are defined as: “a U.S. citizen, permanent resident or other immigrant authorized to work in the United States. The individual may be a conditional 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 visa holder) or who is not authorized to work in the United States.”
- Types of Capital Required. Understanding the capital requirements to succeed under EB-5 might be characterized as the ‘2×2.’ There are two minimum investment levels and there are two geographic considerations to meet capital requirements. The minimum investment levels can be described as:
- General. The minimum qualifying investment in the United States is $1 million for direct projects.
- Targeted Employment Area (High Direct Unemployment or Rural Area) or through the Regional Centers. The minimum qualifying investment either within a high-unemployment area or rural area in the United States is $500,000.
Singh Law, led by Principal Seema Singh, specializes in the spectrum of Immigration Law and Business Law including the EB-5 Immigration process. Based in Princeton, N.J., we offer free 15-minute consultations for all clients. www.SSinghLaw.com or 609-454-3165.