Understanding the EB-5 visa program can be challenging, but each year, thousands of immigrants living in the U.S. use it to obtain their green cards. To assist applicants, Carofin, a sponsor of EB-5-eligible investments, provides answers to some of the most common questions.
What is the EB-5 Program?
The EB-5 Program, created by the U.S. Congress in 1990 and expanded in 1992, helps foreign investors and their immediate families obtain green cards through investment in the U.S. which creates jobs. Immigrants have invested over $50 billion and created 1.35 million jobs through this program. Each year, 10,000 visas are available for qualifying applicants.
Key Elements of the Program
- Money must be invested;
- The investment must be in a “new commercial enterprise” (NCE); and
- It must create and maintain new jobs.
How much does the applicant need to invest?
The investment amount depends on the project’s location. Typically, an individual or family invests US $1,050,000. However, if the project is in a rural area of high unemployment, the amount drops to US $800,000. Funds can be raised from parents and relatives.
Who is eligible to become permanent residents through this program?
An EB-5 investor can include their immediate family members (spouse and children under the age of 21 at the time of the application). Only one investment is needed for the entire family.
How does an investor participate in an EB-5 investment?
There are 3 methods:
Most immigrants invest through government-approved “regional centers” (RC) which act as agents for EB-5 investors and project developers. These manage investors’ funds and must be approved by the US Citizenship and Immigration Services (USCIS) which runs the program. Investors are passive and do not play a role in the investment. An investment made through a regional center still requires thorough due diligence by each investor surrounding the project, as well as qualifications of the RC. Processing time for a conditional green card takes 12-16 months.
- Direct Investment:
If the EB-5 applicant wants to build and run a business,3 the direct investment method is the better option. Here, the applicant must be directly involved in decision-making and supervision of the new commercial enterprise. One benefit to note is that the I-526 processing time is generally much faster than those through regional centers, often taking less than 6 months.
- Off-the-Shelf:
This passive investment approach does not require the investor to create a business plan or manage the entity.
What is a New Commercial Enterprise (NCE)?
When an RC finds a feasible project, it files an application for approval of an investment through a new commercial enterprise that the regional center intends to sponsor. This is any form of a lawful commercial business in any form, e.g., a sole proprietorship, general partnership, or corporation.
What is a Job Creating Enterprise (JCE)?
Once the investment is placed in an NCE, the NCE invests or loans the money on the applicant’s behalf into a JCE.
How many jobs must the project create?
If the project is sponsored by a regional center, the business plan’s analysis must show that each investor is creating at least 10 direct (W-2 employees) or indirect jobs. The plan must indicate that the jobs will be maintained for at least 2 years prior to the end of the investor’s conditional residency.
In the case of a direct investment project, the same number of direct jobs must be created as a result of the investment. In effect, the investment should be made before hiring and maintaining these jobs.
What can an applicant invest in?
EB-5 investments offer a wide range of legal, for-profit opportunities in the U.S. These projects have included hospitals, real estate, alternative energy plants, schools, infrastructure and manufacturing plants; they have advanced medical technology, sold aircraft parts, grown agricultural products, among others.
Deciding which investment to choose is important, as an applicant’s permanent residency depends on the ability of the project to create jobs and follow the required legal criteria. Note that USCIS requires EB-5 investors to maintain their investment for at least 2 years after receiving conditional permanent residency.
Does the investor always get the investment back?
Each investment must be “at risk,” as with any other investment, for the duration of the loan period, which can range from five to seven years. While these projects aim to generate positive returns, there are no guarantees. Sometimes, the investor may not recover the full principal due to reasons such as business failure or fraud, so investors should make sure that this type of investment fits their risk profile.
What steps are necessary to obtain a Permanent Residence (Green Card)?
While there are many nuances that an investor must follow on the advice of their immigration attorney, there are 4 principal steps:
Locate an EB-5 Project: These can be found via regional centers or in the form of a new commercial enterprises that investment banks like Carofin offer. Note: if you are a U.S. resident, an EB-5 offering should involve a FINRA-registered broker-dealer, and the investor must be accredited.
Invest the Capital and File the I-526 Petition: The immigration attorney will file the form on the investor’s behalf with the USCIS. The petition often takes 3-4 years to be accepted. Note: if the petition is denied, most RCs will return the invested capital.
Conditional Permanent Residency: Before investors can file for permanent residency, their I-526 petition must be approved by USCIS. Once approved, if in the U.S., their attorney files form I-485 to adjust their status. If not in the U.S., they file form DS-260 to the National Visa Center and process through the U.S. consulate or embassy in their home country. Certain conditions apply; their immigration attorney can guide them.
Unconditional Permanent Residency and the I-829 Petition: The I-829 petition is filed 90 days prior to the second anniversary of the date that the applicant first received their conditional residency. It often takes 2-4 years to receive a green card to enable the family members to permanently live and work in the U.S. Five years after they received their initial conditional residency, they can apply to become U.S. citizens.
Can Carofin recommend reading material to help in the investment decision?
Carofin suggests reviewing articles and white papers in its Knowledge Base for questions about private investing. Here are some recommendations:
- Seven Key Questions for Evaluating a Private Company
- Understanding Private Securities
- Investing in Commercial Real Estate
- Five Elements of Private Investing
Additionally, for EB-5 specific investments, consider these questions:
- Will the investment and related fees be refunded if the I-526 petition is denied?
- Does the project already qualify? Is the business plan consistent with the program’s requirements?
- Once I have obtained permanent residency, how will I get a return on my investment?
- Has the investment bank/broker-dealer on a real estate project reviewed the property’s title, topography, construction or rehab costs, zoning, and environmental studies? Have they conducted a physical inspection, analyzed leases, uncovered existing debt, reviewed easements, permits, licenses and utilities, building codes, and environmental issues?
Carofin (and affiliate), an investment bank since 1997, specializes in private finance for small-to-medium businesses for EB-5 program participants, offering full-service, in-house capabilities. This includes investment bankers, sales, compliance, FINOPS, operations and technology. To better support investors, Carofin continually monitors and supports each investment it offers for as long as the investment remains outstanding. For more information, please visit Carofin EB-5 Investors.
