Lawyer Lidia Lawson

Lawyer Lidia Lawson answers questions about the EB-5 program

Lidia, thank you for taking the time out to talk to us. Please tell us about the EB-5 Visa and how your firm, Lawson Law LLC, can help people who are interested in applying for this visa.

USCIS administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth.

What does the minimal invested amount depend on under the EB-5 program?

Required minimum investments are:

For the general EB-5 Program, the minimum qualifying investment in the United States is $1 million. The minimum qualifying investment either within a high-unemployment area or rural area in the United States is $500,000.

What areas are deemed to be target areas?

A targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate. A rural area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more according to the decennial census. Targeted Employment Area (TEA) designation can be incredibly important for EB-5 investors. The required EB-5 investment amount is lowered from $1 million to $500,000 dollars if the EB-5 project is conducted in a targeted employment area. In order to be designated as a TEA, the EB-5 project must be located in either a rural area or in a location that has high unemployment.

Don’t such investment conditions make the project riskier?

On the contrary, investment in a project located in a TEA and run by a Regional Center is often less risky. The TEAs are not always the trouble areas in terms of the economic map of the United States and it is not uncommon for such projects to turn out to be more profitable than similar opportunities that are located in more developed areas of the country.

How can investors invest their money into the US enterprises under the EB-5 program?

There are two ways: through independent investments into a US enterprise or through investment in the projects operated by USCIS designated Regional Centers.

Which of the two approaches is the most popular?

The majority of the applicants prefer the second option: investments in the programs operated by Regional Centers because of the benefits it offers such as support of the Regional Center throughout the entire process of receiving not only the conditional immigrant visa but also the permanent one and due diligence by the Regional Center to provide a worthy and less risky project.

Where are the Regional Centers located? Do they have investment projects located in the TEAs you mentioned?

Regional Centers are located all over the country. They do offer various investment projects within rural areas or areas with high unemployment rate. The investor selects the project of their choice located anywhere in the country.

Another benefit of using a Regional Center is the extensive and complex documentation that is already prepared for the Application by experts in economics and immigration law.

Why do investors prefer the programs managed by Regional Centers to independent projects? What benefit may an investor get from applying to such a center?

In a Regional Center project setting «indirect» jobs may counted to meet the minimum 10 full-time job creation requirement per investor. Additionally, if a project is located in a targeted employment area or rural area, the required amount of investment is reduced to $500,000 over $1 million. Additionally, an EB-5 investor is generally a limited partner or member in the project and does not manage the project directly. It gives an EB-5 investor an opportunity to reside anywhere in the US and engage in other legal activities, such as other business activities, school, retirement, or other activities.

I see, so investors who invest via a Regional Center are not engaged in the everyday management of the enterprise. Does the Regional Center provide all documentation regarding the EB-5 projects?

Correct, it is a passive investment. Another benefit of using a Regional Center is the extensive and complex documentation that is already prepared for the Application by experts in economics and immigration law. Qualified professionals working with the Regional Center prepare everything from a proper business plan to an ROI study on the required job creation. Sometimes it is comforting for an investor to know that a Regional Center has be approved by USCIS first.

Are investors able to review the project documentation prior to investment?

Yes, of course. In order for an investor to make an informed decision, the Regional Center provides an opportunity to review the project documentation prior to making their final decision.

Are there any requirements for the investor to qualify for the participation in a EB-5 program?

Yes, most importantly, an EB-5 investor must show that the money they are investing in the United States was lawfully obtained. There are a variety of ways to prove lawful source of funds. The key is good documentation showing both the source and path of the money.

In order to qualify as an EB-5 investor, you either must have earned income over $200,000 per year for the past 3 years or have the assets over $ 1 million.

Which funds relate to this category?

A qualified investor can use the funds obtained from the following sources: Earned income – (investor should present proof of their salary, employment certificates, affidavits from past employers, income tax records, and bank statements showing deposits over time); Investment proceeds – the investor should show: (1) that the money used to make the initial investment were obtained lawfully; (2) that the investor owned the investment; and (3) receipt of the capital from the investment proceeds; Sale of property – the investor should show the lawful source of the money used to buy the property; Property loans: the investor should include documentation of the loan or mortgage contract, the notation of the lien on the ownership documents, evidence of the value of the property compared to the value of the loan, and any relevant bank records; Ownership in a company – the investor should show the lawful source of the money used to buy an ownership interest in the company; Company loans – the investor must show that the company has enough assets to make the loan to the investor; and Gifts – the donor must show how they lawfully obtained the money to give the money to the investor. For example, if a parent earned money over years, the documentation described above concerning earned income would apply here to show that the parent lawfully earned the money to give it to his or her child to make an EB-5 investment

Is there anything else an investor needs to be aware of?

In order to qualify as an EB-5 investor, you either must have earned income over $200,000 per year for the past 3 years or have the assets over $ 1 million. Thus, if you do not have $1 million in assets, you need to show that you have earned income over $200,000 per year for the past 3 years. Also, please note that $500,000 investment into an EB-5 project is an exception to the rule for investing $1 million. This exception is valid only if the project is located within a TEA (150% over the national average of unemployment). Certain Regional Center investments will require an investor to have an accredited investor status. Rather, it is a U.S. securities law requirement, in order for the ‘issuer’ (the U.S. business selling investment opportunities to the immigrant investors) to sell those opportunities without registering the sale with the U.S. government (specifically, the Securities and Exchange Commission). For the issuer to rely on the registration exemption provided by ‘Regulation D,’ practically speaking all investors solicited to invest need to be accredited investors. This would mean each investor needs to satisfy the Regulation D requirements, either as to net worth or annual income. For all intents and purposes issuers relying on Regulation D will only offer their investments to prospective investors who satisfy the accredited investor definition.

What conditions need to be fulfilled to obtain this status?

In this context, to be an accredited investor, you must meet either one of the following requirements: (1) have an individual net worth, or joint net worth with your spouse, of more than $1million at the time you purchase an interest less the value of your primary residence (i.e. your main home), or (2) have an annual individual income of more than $200,000 or annual joint income with your spouse of more than $300,000 in each of the preceding 2 years and a reasonable expectation of the same level of individual or joint income in the current year .

Let us now speak in detail about the procedure by which an investor can participate in the investment program and obtain the EB-5 Visa. What does an investor need to do first?

First, he or she needs to decide between making an independent investment and establishing a new enterprise or investing money in a Regional Center program already approved by the USCIS.

The decision is made. What’s next?

After the investor selects the project of their choice, together with their attorney or legal representative, the investor should begin collecting the necessary set of documents required for the EB-5 Petition (CIS Form I-526).

Does your firm specifically deal with the immigration of investors?

Yes. We are well versed in assisting foreign investors with the entire EB-5 process: from the conditional green card to the permanent residence. Our knowledgeable staff will support and guide our clients through the muddy waters of this complex immigration process.

NEXUS GLOBAL, LLC

Let’s get back to the process. An application is submitted and the investor is awaiting the adjudication. What happens next?

Upon approval of the I-526 Application, the investor’s funds are released into the project and the investor either submits an Adjustment of Status Application on CIS Form I-485 or goes through a process of obtaining the green card through the US Consulate in their home country. The green conditional green card is issued for two years. Consular process includes obtaining medical clearance, police clearance, providing various background documentation to the Consulate and attending an interview.

How should the investor proceed with the process of obtaining the conditional green card if they are already in the US at the time of approval?

If an investor is already in the US in another legal status, the investor can file an Adjustment of Status Application with the USCIS and avoid the consular processing.

How long will the application process take?

At this time the processing time for EB-5 Petitions is approximately 14 months. Processing times may change and vary throughout the year.

What happens upon approval of the I-526 Application and successful consular process?

An investor and his/her immediate family members (spouse and unmarried children under the age of 21) are granted conditional permanent resident status for two years.

A total of 10,000 immigration visas are issued in total each year under the EB-5 program, and 3,000 of these are intended for applicants who invest through the Regional Centers

Is there a time limit for the investor to enter the US upon approval?

If the visa is issued at a U.S. Consulate in the investor’s home country, the investor has 180 days to enter the US.

What should be done upon arrival to the US?

Investors should continue to comply with the EB-5 visa requirements such as job creation. For an independent project all ten jobs must be direct, but for a Regional Center project indirect employment also counts towards the requirement. Investors should also provide evidence of their intention to reside in the US as US Permanent Residents and not violate the status.

Please, provide an example. What should an investor exactly do?

Investor should maintain their LPR status by complying with all requirements for the investment such as job creation. Investor and their immediate family members should also obtain a US bank account, residence, pay Federal and State taxes and otherwise comply with all state and federal laws and regulations.

May an investor work abroad while living in the U.S. with the Conditional Residency status?

Yes, certainly. An investor may work outside the States if this is required by his/her business or profession.

What should an investor do to obtain their Permanent Resident Status when the initial two years have come to an end?

90 days before the end of the two-year visa duration, an investor should submit an Application to remove conditions on CIS Form I-829. A total of 10,000 immigration visas are issued in total each year under the EB-5 program, and 3,000 of these are intended for applicants who invest through the Regional Centers.

What should be done upon approval of such an application?

After the conditions are removed, investor and his/her immediate family members included in the application will receive the Permanent Resident Card. In addition, they will be entitled to submit an application for US citizenship approximately three years later.

After the conditions are removed, investor and his/her immediate family members included in the application will receive the Permanent Resident Card.

How many visas are allocated under the EB-5 program each year?

A total of 10,000 immigration visas are issued each year under the EB-5 program in compliance with federal legislation, and 3,000 of these are intended for applicants who invest through the Regional Centers.

Thank you for your time and for clarifying some of the complexities of the EB-5 visa.

You are welcome. I hope that my answers shed some light on the EB-5 process and made it more attractive for foreign investors. While the process is complex, an experienced immigration professional can help an investor navigate the US immigration law and achieve the end goal – US Permanent Residency.

Lawson Law, LLC

Lawson Law, LLC