EB5 Comprehensive Overview

EB-5 refers to classification under the fifth preference category of employment-based immigration as an immigrant investor. This classification was created through the Immigration Act of 1990’s Immigrant Investor Program.

The Immigrant Investor Program was created by Congress to stimulate the U.S. economy via job creation and foreign capital investments. The pilot program started in 1992. Due to its success, the program has been renewed and reauthorized ever since. Currently, the program is due to expire on September 30, 2015, but this date may again be further extended.

Classification under EB-5 is a very attractive option for those who have the financial means to be eligible. EB-5 eligibility does not require an employer sponsor to act as the investor for the investor and does not require going through the labor shortage attestation process, which is usually required for other preference categories and can be a time-consuming process. In addition, there is no visa backlog for this category, priority dates are current, and the quota for EB-5 status is often higher than the number of investors for EB-5 classification. This means more immediate consideration and processing of an EB-5 petition.

For purposes of an EB-5 petition, the investor is the investor. If the investor’s EB-5 petition is approved, the investor and her dependents may apply for conditional two-year resident status. If the investor satisfies all EB-5 requirements during the conditional two-year period, she and her dependents may apply for removal of conditions. Upon approval of removal of conditions, the investor and her dependents may then apply for permanent resident status.

I.         STATUTORY REQUIREMENTS UNDER INA 203(b)(5)(A)
II.        WHAT QUALIFIES AS AN ENTERPRISE?
III.       HOW TO EVIDENCE AN ENTERPRISE
IV.       WHAT QUALIFIES AS LAWFUL SOURCES OF FUNDS?
V.        HOW TO EVIDENCE LAWFUL SOURCES OF FUNDS
VI.       WHAT QUALIFIES UNDER THE JOB CREATION REQUIREMENT?
VII.      HOW TO EVIDENCE JOB CREATION REQUIREMENT
VIII.     EB-5 DOCUMENTS AND PROCEDURE
IX.       WHAT CAN YOU EXPECT FROM VISATOPIA?

I.          STATUTORY REQUIREMENTS UNDER INA 203(b)(5)(A)

Under INA 203(b)(5)(A), the investor is eligible for EB-5 classification if she seeks to enter the U.S. with the purpose of engaging in a new commercial enterprise in which (1) she has invested or is actively in the process of investing a certain amount of capital, and that (2) will benefit the U.S. economy and create full-time employment for at least 10 U.S. citizens, lawfully admitted permanent residents, or other immigrants lawfully authorized to be employed in the U.S. The investor must also engage in a managerial or policy-making capacity in the new commercial enterprise, unless she is investing in a regional center.

The first requirement may be satisfied by a minimum investment of $1,000,000. Investment funds must come from a lawful source. Of the total visa numbers granted, 3,000 are reserved for beneficiaries who invest in “targeted employment areas.” If an investor qualifies as an investor in a targeted employment area, she may satisfy the first requirement with an investment of $500,000. A “targeted employment area” is an area that is (1) a rural area outside the boundary of any city or metropolitan area that has a population of 20,000 or more, or (2) an area experiencing an unemployment rate that is at least 150 percent of the national average rate at the time the investment is made.

The second requirement, job creation, may be satisfied by creating or preserving at least 10 full-time direct or indirect jobs for qualifying U.S. workers within 2 years. The number of jobs created or preserved excludes the immigrant’s spouse, sons, and daughters. The 2 year job creation period begins 6 months after the USCIS approves Form I-526 (Immigration Petition by Alien Entrepreneur).

The following is an in-depth overview of how to show that the investor meets the EB-5 eligibility requirements.

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II.        WHAT QUALIFIES AS AN ENTERPRISE?

An EB-5 investor may be eligible if she invests in one of three enterprises: (1) a new commercial enterprise, (2) a regional center, or (3) a troubled business.

A commercial enterprise is defined as any for-profit activity created for ongoing conduct of lawful business, which may include a sole proprietorship, a limited or general partnership, a holding company, a joint venture, a corporation, a business trust, or any other business entity. Businesses may be publicly or privately owned. A new commercial enterprise is a commercial enterprise that was either established after November 29, 1990, or established on or before November 29, 1990 and is (1) purchased and restructured in a way that is similar to the creation of a new commercial enterprise, or (2) expanded via the investment to the point where a 40% increase in net worth or number of employees results.

A regional center is a USCIS-approved designation for enterprises that propose economic growth in a particular geographic area. The investor must define the specific geographic area that the regional center serves, as well as provide a thorough description of how the investor’s investment will create jobs and encourage further investment.

A troubled business is a one that (a) has existed for at least two years, (b) has incurred a net loss over the two-year period immediately prior to the investor’s priority date on her Form I-526, and (c) the loss has been measured to be at least 20% of the business’ net worth prior to the claimed loss. Successors to a troubled business will be considered to have been in existence for however long the business they succeeded was in existence.

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III.       HOW TO EVIDENCE AN ENTERPRISE

Evidence demonstrating the establishment of an enterprise should include either the articles of incorporation, certificate of merger or consolidation, partnership agreement, certificate of limited partnership, joint venture agreement, business trust agreement, or another type of organizational document for the enterprise.

Evidence should also include any required certificates allowing the enterprise to conduct business in the specific state or city. If not required, the investor must include a statement from the respective authority stating that such a requirement does not exist.

Finally, evidence should show that the required amount of capital ($1,000,000 or $500,000) has been transferred to an existing business and that the investment resulted in or will result in a substantial increase in net worth and the number of employees. This may be demonstrated through stock purchase agreements, investment agreements, certified financial reports, payroll records, a business plan, and other similar documentation of the investment and its effects.

A regional center must include at least five pieces of supplemental information with the investor’s proposal: (1) a description of how the regional center focuses on a specific geographical region in the U.S. and how it will promote growth through more export sales, better regional productivity, creation of jobs, and more domestic investment of capital; (2) a description of how the regional center will create indirect jobs through increased exports; (3) a statement about the amount of sources of capital that have been invested in the regional center, along with a plan for promotional efforts; (4) a predictive statement about how the regional center will have a positive impact on the regional and/or national economy through increasing household earnings, increasing demand for certain services, etc.; and (5) feasibility studies, foreign and domestic market analyses for the specific good or service, multiplier tables, or other forecasting tools. The investor should also include a letter from the USCIS designating the regional center.

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IV.       WHAT QUALIFIES AS LAWFUL SOURCES OF FUNDS?

The first requirement for EB-5 eligibility requires investment or being actively in the process of investing capital from a lawful source. To be actively in the process of investing, the investor must have more than just an intent to invest or future investment plans without any commitment.

Any capital obtained by unlawful means (e.g., fraud, theft, etc.) will not be considered capital. In adjudicating this requirement, the USCIS applies a “reasonable” standard.

Capital refers to cash, inventory, equipment, or other tangible property and cash equivalents. Capital may not be borrowed by the enterprise and is measured at fair-market value in U.S. dollars. Debt secured by the investor’s assets, however, may also constitute capital if she is personally and primarily liable. The debt must not be secured by any of the new commercial enterprise’s assets.

Capital funds must also be placed “at risk,” meaning the investor must bear at least some level of risk in making the investment with the goal of yielding a return. This means that if an investment agreement contains a redemption clause guaranteeing any part of the investor’s investment to be repaid in full, the respective part of the investment will not be considered at risk. This also means that any part of the agreement that guarantees future ownership of a specified asset of the new commercial enterprise does not fall within the scope of being “at risk.”

Finally, the investor must also prove that she has a level of income or wealth that allows for the investor to invest the stated amount.

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V.        HOW TO EVIDENCE LAWFUL SOURCES OF FUNDS

To show that the investor has invested or is actively in the process of investing capital, the investor should provide thorough, detailed evidence that includes bank statements showing amounts deposited into the enterprise’s business account; documentation of assets that have been purchased for use in the enterprise, such as invoices, sales receipts, purchase contracts, etc.; documentation of property transferred from abroad for use in the enterprise, such as commercial entry documents, transit insurance policies, etc.; documentation of money transferred to the enterprise for shares of stock; and documentation of borrowing secured by the investor’s personal assets, such as loan or mortgage agreements, security agreements, promissory notes, etc. These documents should also include any relevant wire transfer receipts, deposit receipts, and bank statements. Ultimately, all evidence submitted should clearly demonstrate lawful paths of funds used to invest in the enterprise, as well as a pattern of income that is consistent with an ability to invest the required amount of money.

To show that the sources of funds were lawful, the law requires that the investor provide either foreign business registration records; 5 years’ worth of filed corporate, partnership, and personal tax returns; evidence identifying other sources of capital; or documentation of any relevant pending court cases or judgments.

The investor need only show where and how she obtained the minimum $500,000 or $1,000,000 required for EB-5 eligibility. Proof of any other income or money obtained is unnecessary.

The investor must provide evidence of the source of funds used towards the enterprise. The evidence should focus on tracing where the funds originally came from. If the investor obtained the funds in their entirety on her own, then the investor need only evidence her acquisition of those funds including any relevant documentation. If, however, the investor obtained funds as a gift, through a sale of property, by a loan, from lawsuits, or from an inheritance, she should provide additional documentation of the sources of those funds.

If all or part of the funds were obtained as a gift, the investor should include evidence such as any gift tax returns, documentation of the transfer of funds from the donor to the investor as a gift, a statement from both parties to the gift, and documentation of how the donor obtained any funds gifted to the investor (e.g., income tax returns and salary reports with respect to the donor and her funds).

For any funds obtained through a sale of property, the investor should include documentation such as any deeds, purchase agreements, or closing statements; any relevant business bank account statements or registration documents; proof of transfer of funds; any relevant tax returns; documentation of transfer of title; and any letters or statements regarding the sale and purchase of the property.

If all or part of the funds were sourced from a loan, the investor should include evidence such as promissory notes, loan agreement documents, and the lender’s income tax returns. As previously mentioned, the loan must not be secured by the new commercial enterprise.

For any part of the funds acquired from a lawsuit, such as divorce-related funds or other civil or criminal judgments, the investor should include evidence such as settlement documents, relevant judgments or decrees, documentation of monetary remedies or compensation, and a detailed statement of the nature and resulting obligations of the lawsuit.

If all or part of the funds were obtained as part of an inheritance, the investor should include evidence such as the grantor’s death certificate, thorough documentation or a detailed statement of the relationship between the grantor and the investor, the grantor’s estate settlement, and any inheritance tax receipts.

Additional evidence should include organizational documents for all businesses in which the investor is involved, showing the investor’s role within the business’ structure and ownership, as well as auditing and evaluation reports by an accountant for any businesses in which the investor has a substantial interest.

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VI.       WHAT QUALIFIES UNDER THE JOB CREATION REQUIREMENT?

Generally, the investor must consider several aspects to the second requirement for EB-5 eligibility in counting whether the investment has created or preserved 10 jobs, including: (1) qualified employees, (2) full-time employment, (3) job-sharing arrangements, (4) direct and indirect jobs for regional centers, and (5) troubled businesses.

A qualified employee is a U.S. citizen, permanent resident, or other immigrant authorized to work in the U.S. The individual may be a conditional resident, a refugee, an asylee, or under suspension of deportation. A qualified employee does not include the investor, any foreign nationals with nonimmigrant status or who are not authorized to work in the U.S., or the investor’s spouse, son, or daughters.

Independent contractors are not employees and do not count towards the job creation requirement. Whether a worker is an independent contractor or employee turns on three primary factors: (1) behavioral control, or the right of the business to direct or control how work is conducted through supervision, training, or other means; (2) financial control, or whether the business has a right to direct or control the business and finances behind the worker’s job; and (3) type of relationship, or how the worker and business owner view their relationship. More behavioral or financial control by the business over the worker suggests an employer-employee relationship.

Full-time employment entails employment of a qualifying employee in a position that requires a minimum of 35 hours per week. Full-time employment also includes employment of a qualifying employee created indirectly from the investment. Employment should be permanent, not temporary or seasonal.

Job-sharing arrangements exist where two or more qualifying employees share a full-time position that amounts to a minimum of 35 collective hours per week. The full-time position must be permanent and constant. The two or more qualifying employees sharing the job must be permanent and must share the benefits associated with any permanent, full-time position. These benefits may include worker’s compensation and unemployment premiums by the employer for the position.

If the investor invests in a regional center, she may count direct and indirect jobs towards satisfying the job creation requirement. A direct job is an identifiable job for qualified employees within the commercial enterprise in which the investor directly invested capital. An indirect job is a job that was demonstrably created collaterally or as a result of capital invested by the investor in a commercial enterprise associated with an authorized regional center.

If the new commercial enterprise is, however, a troubled business, the requirement to create or preserve 10 jobs does not apply. Instead of the 10-job requirement, the investor must preserve jobs and provide evidence that the number of employees will remain at least at the same level as it was before the investment for at least two years.

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VII.     HOW TO EVIDENCE JOB CREATION REQUIREMENT

If the investor has already created the 10 qualifying jobs, the EB-5 petition must include relevant tax records, Form I-9’s, and other evidence and documentation of the 10 qualifying employer-employee relationships.

If the investor has not yet created 10 qualifying jobs, the EB-5 petition must include a comprehensive business plan that outlines the strategy and need for employing at least 10 employees within the next 2 years, including estimates of hiring dates and timelines. A comprehensive business plan should be “Matter of Ho compliant,” which means the business plan should include at least:

  • A description of the business, its products and services, and its objectives;
  • An analysis of the relevant market, competitors (including their strengths, weaknesses, products, and pricing structures), and the target market;
  • A list of required permits and licenses;
  • A description of the production or manufacturing process, including materials and suppliers;
  • Any contracts with suppliers or distributors;
  • A marketing strategy, including pricing and advertising;
  • The business’s organizational structure and experience requirements for personnel;
  • The business’s staffing requirements and hiring strategy; and,
  • Sales, cost, and income projections;

A comprehensive business plan should also aim to include:

  • A detailed schedule for business development and a corresponding detailed development budget;
  • A timeline for the business or project to reach specific milestones or overcome certain hurdles;
  • A description of how the EB-5 investment will directly translate into the creation of the forecasted jobs;
  • The amount, source, form, terms, and planned use of EB-5 investments and non-EB-5 investments or capital commitments;
  • Indicate the location of the business or project, as well as the location of job creation;
  • Evidence of the proposed location meeting the definition of a targeted employment area, if applicable;
  • Evidence of a purchase or lease at the business or project’s location;
  • Verifiable evidence of industry standards and how sales, cost, and income projections were reached; and,
  • Reasonable projections of demand and pricing based relevant market analysis.

About two-and-a-half years after the investor’s Form I-526 petition has been approved, the investor must file Form I-829 (Petition by Entrepreneur to Remove Conditions) to change her status from conditional permanent residence to permanent residence. This petition should include evidence that 10 qualifying jobs have been created, evidenced by payroll records, W-2 forms and other tax-related documents, and properly completed Form I-9’s.

For regional centers, the job creation requirement may be satisfied by both direct and indirect jobs through revenue generated from increased exports from the regional center. Indirect job creation may be demonstrated through an economic impact analysis, evidencing the direct effects and indirect effects of the project. The analysis should include as much concrete documentation and evidence as possible, showing that market research suggests that similar projects or businesses produced indirect results similar to those proposed by the investor. Other methods, such as multiplier tables and feasibility studies, may be used to show that 10 or more jobs will be created by the business.

For troubled businesses, the investor must include evidence that the number of existing employees is at and will be at the same level before any investment was made for a period of at least two years. Evidence may include tax records, Form I-9’s, or other relevant documentation of the qualifying employees, or a comprehensive business plan.

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VIII.    EB-5 DOCUMENTS AND PROCEDURE

The investor’s EB-5 I-526 petition package should include the following forms and documents:

  • Form I-526 (Immigration Petition by Alien Entrepreneur);
  • Form G-28 (Notice of Entry of Appearance as Attorney or Accredited Representative);
    • Only required if the investor is represented by an attorney.
  • Petition letter; and,
    • The petition letter acts as a comprehensive summary of the investor’s evidence and the reasons why the evidence demonstrates that the investor meets the requirements for EB-5 eligibility.
  • Supporting documentation, which may include:
    • Business plan, including a market impact analysis, marketing strategy, structural organization, etc.;
    • Evidence of job creation, including W-2’s, I-9’s, employment offer letters, salary reports, etc.;
    • Evidence of lawful capital and  investment, including personal income tax returns, bank account statements, transfer documents, etc.;
    • Business registration documents, which may include articles of incorporation, licenses, permits, etc.; and,
    • Business financial documents, which may include bank account reports, cash flow analysis, etc.

If the investor is applying for regional center designation or requesting approval of an amendment to a previously designated regional center, the investor must file Form I-924 (Application for Regional Center Under the Immigrant Investor Pilot Program) along with supporting documents.

The investor can expect the following general timeline for the EB-5 process:

1.  Investor gathers and drafts necessary documents.

2.  Investor submits the petition package to the appropriate USCIS Service Center.

3.  USCIS issues official Notice of Receipt.

  • Usually 1-2 weeks after submission.

4.  USCIS processes I-526 petition.

  • Generally 6 to 12 months, but varies greatly depending on the case and the Immigration Officer processing the case.

5.  USCIS issues one of four possible actions after initial review:

a.  Notice of Approval,

  • Allows adjustment of status (Form I-485).
  • Allows application for visa through consular processing overseas.

b.  Request for Evidence (RFE),

  • Immigration Officer requests additional evidence to address and support specific parts of the petition.
  • Investor may have up to 84 days after the date of the decision to respond.

c.  Notice of Intent to Deny (NOID), or,

  • Immigration Officer gives notice that case will be denied unless certain extra documentation is provided.
  • Petition may have up to 84 days after the date of the decision to respond.

d.  Notice of Denial.

  • USCIS includes explanation of why application denied.
  • Investor has 30 days after the date of the decision to file:
    • An appeal, if investor thinks USCIS’ denial was wrong.
    • A motion to reconsider, if investor wants another Immigration Officer to review the case.
    • A motion to reopen, if investor has evidence absent in the original application or response to an RFE that existed at the time of original filing.

Once the USCIS receives the investor’s response to an RFE or NOID, further action will generally occur within 60 days, but may take longer. The investor should ask for an update if none is provided by the USCIS within 60 days.

Once the USCIS receives the investor’s appeal or motion to a Notice of Denial, the appellate authority may render one of three possible decisions: (1) agree with the appeal and amend the original decision; (2) disagree with the appeal and affirm the original decision; or, (3) remand the case back to the original reviewing office for further action. This adjudication process may take up to 270 days depending on whether the case is reviewed by a single appellate member or is referred to a three-member panel of the Board of Immigration Appeals.

If the petition is approved, and if the investor is already in the U.S. under another valid status, the investor will also need to file Form I-485 (Application to Adjust Status). Otherwise, the investor must go through consular processing with the U.S. Department of State. Processing through either method is between 6 months to 1 year.

After the investor receives a visa through either adjustment of status or through a foreign consulate, the investor will have a two-year status as a conditional permanent resident. The investor and her spouse and unmarried children under 21 years old at the time the petition was filed may all receive conditional permanent resident status, which is valid for 2 years.

Within 90 days of the expiration of the investor’s conditional permanent resident status, the investor must file Form I-829 (Petition by Entrepreneur to Remove Conditions) to change status from conditional permanent residency to permanent residency. Processing occurs within 90 days of either filing Form I-829 or the associated interview. The investor will still have valid status during processing time. The investor must demonstrate that she has fulfilled the requirements for EB-5 status according to what was petitioned for two years prior in Form I-526. If the petition to remove conditions is approved, the investor may then continue to live in the U.S. as a permanent resident for an indefinite period of time.

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IX.       WHAT CAN YOU EXPECT FROM VISATOPIA?

Needless to say, filing a petition for an EB-5 can be daunting and confusing. Visatopia will ensure that your petition is filed efficiently and is at its strongest when it reaches the reviewing immigration officer’s hands.

Visatopia strives to handle its clients’ immigration matters with the utmost integrity, care, and professionalism. With a 95% approval rate and nearly a decade of experience in employment-based and business-oriented immigration issues, we are deeply committed to helping our clients obtain the best possible results every step of the way on their journey to achieving the American Dream.

Four features distinguish Visatopia from other firms:

  1. Our exceptional legal credentials, extensive knowledge, and breadth of experience enable us to outmatch our major competitors’ services;
  2. Our contingent flat fees, free initial consultation, and encouragement of open client communication without ever getting charged are all ways in which we keep ourselves accountable to our clients and deliver the best possible results at lower costs;
  3. Our policies of promptness and diligence allow us to provide a personal, attentive, and strategized approach in our clients’ immigration matters; and,
  4. Our firm is by immigrants and for immigrants. We are committed to our clients’ successful immigration and, accordingly, provide all-encompassing services to our clients to ensure that we take care of our clients from start to completion.

For the EB-5 process, you can expect at least the following services from Visatopia:

  1. Advise whether an EB-5 is appropriate for your immigration plan;
  2. Guide you in collecting and organizing the proper “lawful source of investment fund” documentation and evidence to enhance your application;
  3. Assist in drafting comprehensive business plan;
  4. Document transaltion;
  5. Review, edit, and refine relevant documentation to best strengthen your application;
  6. Draft a probative petition letter that cohesively presents the strength of your case along with its supporting evidence;
  7. Provide frequent updates and communication;
  8. Submit your complete application, after your review and approval, to the appropriate USCIS Service Center;
  9. Track your case and update you on the processing status of your case;
  10. Ensure that you respond to any additional requests for evidence or information related to your case;
  11. Provide guidance on whether an appeal or motion is appropriate if your case is not approved; and,
  12. Follow through with work related to appeals and motions if you choose to pursue those routes.

Please refer to the EB-5 Flow Chart for a step-by-step guide to what you can expect from Visatopia throughout the representation and the EB-5 process.

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Read more about EB-5 status and Visatopia’s EB-5 services:

Links to more EB-5 information and memos: