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Investment Green Card – The EB-5 Visa

The fifth employment-based preference category, known as EB-5, refers to a green card process for foreign investors in a commercial enterprise that will create employment for U.S. workers. EB-5 visas are limited to 10,000 annually (although this cap is rarely met) and grant two-year residency to the investor. The investor may obtain a green card if those conditions are met during this two-year period.

The investor is expected to invest $1,000,000 (sometimes $500,000) in a new commercial enterprise that employs at least 10 full-time workers and is expected to manage the business on a day-to-day basis. The commercial enterprise might include partnerships, holding companies and their wholly-owned subsidiaries, provided they are all for profit business operations. The investor does not necessarily need to create a new commercial enterprise, only to invest in one.

The minimum investment is reduced to $500,000 if the investment is in a “targeted employment area.” A targeted employment area is a rural area with a population of less than 20,000 or an area that has experienced high unemployment. The investment can be comprised of cash, equipment, inventory, other tangible property, cash equivalents, or indebtedness secured by assets owned by the entrepreneur. All investment capital is valued in U.S. dollars and at fair market value (for non-cash portions of the investment). The investment must be made in only one commercial enterprise in order to qualify for the investor for EB-5 status. However, the investment can come from multiple investors, including individuals not applying for EB-5 investor status, such as U.S. citizens, but each investor who wishes to qualify must independently meet the capital and employee requirements.

In addition to the capital requirement, the foreign national must show that the investment will create full-time employment for at least 10 workers within the two-year period following approval of the investment application. To prove this, the investor must submit a comprehensive business plan showing the need for not fewer than 10 employees, including approximate dates of when, within the next two years, those employees will be hired. This two- year period following approval is a conditional residency period for the immigrant investor and the progress of the investment is re-assessed by the U.S. Citizenship and Immigration Service at the end of the period. Once the application to remove conditions is approved, the green card becomes permanent.

Regional Center Designation

A program related to the investment green card is called the Regional Center Pilot Program.  It requires the investor to meet all the criteria for the employment-creation investors described above, but it permits the investor to show that the investment in the regional center will create jobs indirectly (rather than demonstrating solely direct job creation as required by the traditional EB-5 program). Unless extended, this program will expire on September 30, 2013.

In order to receive regional center designation, interested regional centers must submit proposals that:

• Describe how the center focuses on a geographic region of the United States, and how it will promote economic growth in that region through increased export sales, improved regional productivity, job creation, and increased domestic capital investment.
• Demonstrate how jobs will be created indirectly through increased business.
• Document the amount and source of capital, committed to the regional center, and describe the promotional efforts to attract investors taken and planned by the sponsors of the regional center.
• Describe the manner in which the center will have a positive impact on the regional or national economy in general, reflected by such factors as increased household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and without the regional center.
• Include valid forecasting tools and methods.

In prior years, approval for regional center status was difficult to obtain. However, subsequent amendments to the law allow approval for applications with general predictions of (1) the kinds of commercial enterprises that will receive capital from investors; (2) the jobs that will be created directly or indirectly as a result of the investment of capital; and (3) the other positive economic impacts that will result from the investment of capital. Those changes should allow more approvals for Regional Center designation.