EB-5

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Immigrant Investor and Job Creation Program

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Overview of the EB-5 Program

The Immigrant Investor visa program, commonly called “EB-5" which refers to the Fifth Preference Employment Based Immigrant Visa category of the United States Immigration and Nationality Act, was created by Congress in 1990 to stimulate the U.S. economy and promote job growth through direct foreign investment in the United States.

The program is designed for foreign nationals who seek to live in the United States permanently and have sufficient personal (not corporate) funds at their disposal to invest in a new or existing commercial enterprise and thereby create 10 new fulltime, permanent jobs for U.S. workers.

EB-5 简介EB-5签证是为欲透过投资而移民美国的外国人而设。现时有关法例的投资额要求为US$500,000,用作投资在一项美国政府核准的项目,投资者需要在其投资项目为美国工人创造十个永久全时间工作职位。投资者要证明其投资的金钱并非来自不法之途。由于申请众多,现在投资移民的申请时间要大约十三个半月。若一切顺利,投资者可以在五至六年内取得居留绿卡,即居留权。而居留权附有居留要求,持有人必须在美国居住。居留绿卡首发时有效两年。到期时持有人要申请永久居民绿卡,并证明其参与投资项目已经符合创造十个全时间职位的要求。EB-5的签证法例于二零一五年九月三十日到期,届时美国国会将再议决此例会否延续,及投资的金额要求是否提高。一般移民侓师相信此法例将获得延续,但投资金额的要求会被提高!如对投资移民有兴趣,请电邮谘询。

IMMIGRATION LAWYERS

BIRGIT G. NOMURA

Attorney at Law

Nomura Law LLC

ELLEN F. NG

Attorney at Law

Law Office of Ellen Ng

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Direct and Indirect Investment

There are several ways in which a foreign investor may invest in a U.S. commercial enterprise and the final choice depends both on the investor’s current circumstances and his or her long term plans and preferences. The principal difference in investment approaches is between direct and indirect investing.

In a direct investment, the investor owns and operates the commercial enterprise either alone or with other parties who may be additional EB-5 investors or regular, non EB-5 commercial owners/managers. In the case of several EB-5 direct investors, each EB-5 investor will have to prove the creation of 10 jobs; however, the jobs created from the pooled investment by non EB-5 owners will be credited to the EB-5 investors. This business model will appeal to foreign investors who are experienced entrepreneurs and want to lead and grow their new commercial enterprise once they move to the United States. Direct EB-5 investors in particular are cautioned to consider their choice of investment object carefully and focus on the required job creation more than on the investment amount. For instance, investing $1,000,000 in residential real estate and renting it out will not create the mandated 10 full time jobs and therefore, the EB-5 visa will be denied.

In an indirect investment, the EB-5 investor typically invests in a limited partnership with many other limited partners for a specified time and has no day-to-day management responsibilities or control over the investment enterprise.  Control and management of the EB-5 enterprise will be exercised by the general partner of the investment partnership.  For this investor, the chance to obtain permanent residence in the United States relatively quickly is the prime motive, often spurred by the desire to send his children to school in the United States. This investor may be operating other businesses in his home country or globally which are his main focus of activity and means of support. Conversely, the indirect investor may not be a business person at all and may have no personal interest in the operational aspects of his or her investment property. Nevertheless, it is important that the EB-5 investor either has investment experience or obtains expert professional advice and carefully analyzes the business plan and financial feasibility of the investment object itself as well as the financing terms and investors’ rights and obligations set forth in the partnership and financing agreements before deciding on an investment.

 

Regional Centers

Within the indirect investment structure a separate investment vehicle has evolved—the Regional Center—which is now the U.S. recipient of choice for 95 percent of the EB-5 investment funds.


Regional Centers are public and/or private entities that are formed to promote economic growth, capital infusion and employment creation in defined geographic areas. They have submitted detailed proposals and projections to the U.S. Citizenship and Immigration Services (USCIS) for advance approval as a promoter and organizer of commercial activity and development which meet the EB-5 program requirements. Geographically, they may range from a city neighborhood to large regions or even entire states. Nearly all Regional Centers cover areas which have been designated as local or state enterprise zones, have been identified by state government as a “targeted employment area (TEA),” or are classified as rural areas. Legally, they are entities approved by the U.S. government to utilize foreign investor funds to partially or wholly finance commercial and industrial projects as well as academic institutions, schools and research centers, to name a few. EB-5 status will be granted to the foreign investors provided the required job creation is realized in the numbers and within the time frames as projected. In addition, the investor individually has to meet stringent regulations regarding the source of the investment funds and other criteria.

 

The Regional Center offers three major benefits to the investor in addition to the general comfort of knowing that USCIS has reviewed and approved the overall concept and methodology for projecting job growth:

Reduced Investment Amount

Nearly all Regional Centers are located in Targeted Employment or in Rural Areas and therefore require an investment of only $500,000 USD instead of the standard $1 million USD. (These amounts may increase to $800,000 and $1.2 millon, respectively, if proposed legislation is passed. Also likely is a substantial redefinition and redesign of TEA clusters as presently used to delineate Regional Centers).

 

Job Count Using Multiplier Effect

The required employment creation of 10 full-time permanent jobs per EB-5 investor may be achieved by adding to the direct employees of the enterprise the indirect jobs (from goods and services provided to the EB-5 commercial enterprise) and the induced jobs (caused by increased spending activity by the new wage earners) resulting from the EB-5 investment. Any other investment outside a Regional Center will only be credited with the jobs created by the development or the operation of the EB-5 project itself.

Limited Involvement in the U.S. Investment Project

Investors in Regional Center projects are periodically apprised of Center developments and financial conditions of their investment and have some input in decisions affecting the commercial property, especially if they are equity investors, but as a general rule their role is limited and investors are able to be out of the country for extended periods of time.

The EB-5 Investment

Source of Funds

The EB-5 program imposes extremely strict rules on the permissible sources of the investor’s funds and the amount of detail and lookback required to document the lawful acquisition of funds by not only the investor but by previous holders of such funds if they include gifts, loans or inherited assets. As noted before, all funds must be the investor’s (and spouse’s) personal funds and may not include corporate funds from a company which the investor owns or controls. Clearly, employment income as well as distributions of company profits to the investor, documented by five years of corporate and personal income tax returns, represent the easiest and cleanest way to document source of income. In many cases, however, the investor’s funds derive from several sources, including loans which have complex collateralization rules, and depending on the investor’s home country, documentation is nonexistent or difficult to track. As a result, the preparation of the Source of Funds section of the investor’s EB-5 application has become the most complex and labor intensive effort for the investor and his or her immigration attorneys and financial advisers, and should be discussed with the attorney right at the outset.

 

Investment and Immigration Risks

A ground rule of the EB-5 program is that the investor’s funds must be at risk during the required investment term, meaning, there can be no assurance that the investor recovers all or any of the investment funds. In addition to the investor’s financial exposure, there is the risk that his EB-5 status may not be approved. Below are some of the risk elements that the investor needs to be aware of:

 

 

Financial

Feasibility

Regional Center

Default

USCIS Denial

of Petition

Conditional
Status

Permanent
Residence

Financial Feasibility; Project Default

In a construction loan investment, the permanent private and/or government financing may not go through; bridge loans raise total development costs; the economy changes; interest rates change. Developer backs out of the EB-5 financing agreement. In an equity investment, demand projections for the project were too optimistic; overall economic downturn; companion investments do not materialize; projected sales or rental returns to the investor run short.

Regional Center Default

The Regional Center may encounter solvency problems or may lose its certification by USCIS. It is important to look closely at the RC’s track record. There are several RC’s in operation with stellar records of EB-5 approvals and 100% returns of capital to their investors.

USCIS Denial of Investor’s EB-5 Petition

Regional Centers already pre-screen potential EB-5 investors before admitting them into their investor pool, but occasionally investors are being denied by USCIS, usually based on source of funds and security grounds.

USCIS Denial of Removal of Investor’s Conditional Status

Investors file an initial Form I-512 Immigrant Petition by Alien Entrepreneur with USCIS and upon approval, adjust their and their family’s status if they are already in the United States in another valid status or apply for an immigrant visa overseas. The permanent resident status they receive is conditional and valid for two years only. Conversion to unconditional permanent resident status requires a second Petition by Entrepreneur to Remove Conditions, Form I-829, in which the investor documents that (1) all funds have been invested and (2) the required 10 jobs have been created or will be created within a reasonable additional time. If the investor is unable to demonstrate that these two conditions have been met, everyone’s “green card” expires and they have to leave the country.

Loss of Permanent Resident Status

Investors file an initial Form I-512 Immigrant Petition by Alien Entrepreneur with USCIS and upon approval, adjust their and their family’s status if they are already in the United States in another valid status or apply for an immigrant visa overseas. The permanent resident status they receive is conditional and valid for two years only. Conversion to unconditional permanent resident status requires a second Petition by Entrepreneur to Remove Conditions, Form I-829, in which the investor documents that (1) all funds have been invested and (2) the required 10 jobs have been created or will be created within a reasonable additional time. If the investor is unable to demonstrate that these two conditions have been met, everyone’s “green card” expires and they have to leave the country.

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The Right Solution

We love the EB-5 Immigrant Investor Program and are excited about presenting it to our clients. Nevertheless, it is not for everyone and there are many immigrant and non-immigrant alternatives that may be more suitable or at least less costly. We will always explore all of your circumstances and short and long term goals and discuss the advantages and disadvantages of other visa programs for which you may qualify as well.

 

Please fill out the form to set up an initial email consultation for further information.

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Ellen F. Ng

Law Office of Ellen Ng

3355 Lenox Road, Suite 1000

Atlanta, Georgia 30326 USA

 

Mailing Address:

Ellen F. Ng

P.O. Box 956122

Duluth, GA 30095 USA

 

+1 678.646.0938 (p)

+1 770.662-0938 (f)

Birgit Gerdes Nomura

Nomura Law LLC

3355 Lenox Road, Suite 750

Atlanta, Georgia 30326 USA

 

+1 404.588.9116 (p)

+1 404.504.7056 (f)

 

 

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