Congress created the EB-5 Immigrant Investor Program in 1990 to encourage job creation and investment. Immigrants invest in a qualifying commercial enterprise to acquire lawful permanent residence, the Green Card. EB-5 investors invest by investing in a Regional Center, or investing directly in a new commercial enterprise.
The immigrant investor makes a capital investment of $500,000 or $1,000,000 in the U.S. enterprise. The required minimum investment is $500,000 if the enterprise is located in a Targeted Employment Area (TEA), which is a rural area or an area that has experienced high unemployment at least 150% of the national average; if not in a TEA, the minimum investment is $1,000,000. Most Regional Centers are located in TEAs.
The U.S. Citizenship and Immigration Services (USCIS) designates a Regional Center (RC), which is an economic entity, either public or private. A list of designated Regional Centers is available on the USCIS website.
If the immigrant invests in a “troubled” business, then the jobs that were saved and continued to be maintained by the investment can be counted to meet the 10-job creation requirement. A “troubled” business is defined as having incurred a net loss in the one to two-year period prior to filing the immigrant petition with the USCIS, equal to at least 20% of the business’s net worth prior to the loss.
A non-RC, or direct EB-5 investment, must be in a “new” commercial enterprise, which generally means that the enterprise was established after November 29, 1990. Exceptions exist.
The investor’s capital is placed “at risk,” for the purpose of generating a return to qualify for EB-5 approval. If there is a guaranteed rate of return to the investor, or a redemption agreement with the investor protects against the risk of loss of capital, then the investment is not “at risk.” However, in the RC context under current USCIS policy, a guarantee from the job-creating entity to the new commercial entity (i.e. the RC) is permissible. Further, the investor may receive a return on his or her capital, for example a distribution of profits, during or after approval of residency.