Q: What is the Regional Centre Investment Programme?
In 1990, the United States Congress established the EB-5 as the fifth employment-based preference category for immigrants seeking to enter the United States, by enacting the Immigration and Nationality Act, which is intended to benefit the U.S. economy by generating new economic activity and increasing employment in targeted areas.
The key section of the legislation (section 203(b)(5)) makes foreign nationals eligible for permanent residency by engaging in a commercial enterprise that will benefit the American economy and directly create at least 10 full-time jobs for U.S. citizens, lawful permanent residents, and other immigrants lawfully authorized to be employed in the United States.
The minimum qualifying investment amount is $500,000 for commercial enterprises located within a rural area (or a targeted employment area), whereas the minimum is otherwise $1,000,000.
In the simplest terms, this means that as a foreign investor you have the choice to invest either USD $500,000 or USD $1,000,000 into the development of a business or project in the US if you can provide evidence that your investment creates at least 10 jobs for US permanent residents (not including yourself or family) in the US economy. You will also need to become a “limited partner” in this new business and share in the profits of this company based on an agreed upon percentage of ownership.
These investment funds must be invested into the operations of the business and the funds must be “at risk” with no form of guarantee. This is not a passive investment (such as purchasing shares of stock) however you are also not required to have a day to day involvement in the business.
Congress allocates 10,000 immigrant visas annually for this employment-based preference, the EB-5 category. At least 3,000 of these visas are set aside each year for those who utilize a designated Regional Centre or TEA status, although in practice most investors choose the USD $500k Regional Centre route.
The EB-5 program does not discriminate on the basis of education or prior experience and does not require a sponsor. Additionally, there is no requirement to speak English or pass an English exam, and the EB-5 category allows the family (including any children under 21 years old) to be part of the process.
As an EB-5 Investor, you are also free to reside anywhere in the United States that you choose.
Q: What are the EB-5 investment guidelines?
The law requires that the foreign applicant to have invested, or be in the process of investing, the necessary capital into an approved EB-5 project.
These investment funds must be invested into the operations of the business and the funds must be “at risk” with no form of guarantee.
This is not a passive investment (such as purchasing shares of stock) however you are also not required to have a day to day involvement in the business.
Q: What are the capital investment amounts required?
The basic EB-5 Visa investment amount is USD$1,000,000. However, the required investment is USD$500,000 for an established business in a Targeted Employment Area (TEA).
This is defined as an area with an unemployment rate of 150 or more above the U.S. national average or in a rural area (defined as being within the boundary of a city or town with a population of 20,000 or less).
Q: What types of capital can be invested?
▪ Investment in the EB-5 Visa program can be made in the form of cash, cash equivalents, equipment, inventory or other tangible property
▪ Capital does not include loans made by the investor to the venture, however, the investor may borrow the investment money if it is secured by assets owned by the investor, provided the investor is personally liable for repayment of the loan
▪ The investor may receive a gift of funds if all applicable taxes required by law have been paid. Source of capital
▪ When the investment is made into the respective project the USCIS is notified. The current guidelines indicate a required investment for a TEA at USD$500,000. Prospective investors are eligible to invest the required amount alone, create a qualifying business with other foreign investors and/or with a U.S. citizen or other people not seeking classification as a foreign investor. In these types of cases, all persons seeking classification as a foreign investor must have invested the required amount of USD$500,000, however, each investor can use the same employees to reach the required 10 new positions
Q: What does it mean that funds must be “at risk”?
The USCIS requires validation that all capital investments are classified as “at risk” with no guarantees being made by the project to the investor.
This is to confirm that the capital will actually be used for the purpose of creating jobs and profit-generating activity.
Proof of actual business activity is also required and the use of capital investment for expenses or reserve accounts unrelated to job creation does not constitute “business activity”.
In practice, investors may use legal and financial strategies to minimise these risks. However, it is imperative that you seek professional advice to ensure your strategy is not so aggressive (or, conservative) as to fall foul of the "at risk" rule.
Q: What does verification of the lawful source of funds entail?
Proof that the capital has been invested by the actual investor is required. The documentation should trace the capital from the investor directly to the investment
The USCIS also requires that the investor provide documentation that proves the source of their investment funds was obtained legally. Proof of documentation is provided through previous tax returns and financial statements.
Q: What are the EB-5 job creation guidelines?
A requirement of the EB-5 visa is that each investment of either USD $1million or USD $500k must help to create jobs.
If the money is invested in an approved Regional Centre, then the project must be located in a targeted area (also known as a TEA) and must create or sustain 10 full-time jobs for US citizens, lawful permanent residents or other immigrants legally authorised to be employed in the United States.
An important advantage to investing in a Regional Centre designation is the “indirect” nature of the job creation, which is less difficult to achieve than the “direct” creation of 10 new jobs. The requirement of creating at least 10 new full-time jobs can be satisfied by showing that as a result of the investment and the activities of the new enterprise at least 10 jobs will be created indirectly in the region through an employment creation multiplier effect.
These Jobs do not have to be directly related to the project and can now include certain construction jobs during the construction phases of the project. Jobs can also be counted that were created by the investment and located in the region...
- A Full-time position is defined as working a minimum of thirty-five hours per week
- Two employees may share a full-time position, however, part-time employment will not qualify. Therefore, a combination of two or more part-time positions will not fulfil the necessary requirement of the guidelines, even if the positions created jointly meet the 35-hour per week minimum.
- The jobs must be proven to exist at the time of application or there must be proof that the required jobs will be created before the end of the two-year period of Conditional Permanent Residence.
- If the jobs are expected to be created during the two-year period a comprehensive business plan outlining the need and purpose of the 10 new positions must be included with the investor’s application
Q: What are the conditional permanent residence guidelines for the EB-5?
In an effort to dissuade fraud, the EB-5 foreign investor, their spouse and any dependent children are subject to a Conditional Permanent Residence status for a two-year probationary period.
The EB-5 primary applicant is required to file a petition to remove these probationary conditions during the last 90-days of this 2-year term (prior to the second anniversary of the investor’s official admission as a permanent resident).
Upon the conclusion of the two-year period, the USCIS will then examine the business investment to determine whether or not the investor has complied with all necessary requirements.
Submission of the foreign investor application to the USCIS is required to include the following:
- Verification that a new commercial enterprise has been established, such as a business license, articles of incorporation and/or evidence of transfer of initial capital investment required to purchase or invest in an existing business.
- Verification that the necessary amount of capital has been placed at risk through bank statements validating deposit of funds into the business account, purchase of business equipment, transfer of property or evidence of funds transferred to the business account in exchange for shares of stock.
- Proof that the capital invested was legally gained, such as foreign business registrations, tax returns or certified copies of civil or criminal judgements.
- Proof that the foreign investment created the necessary 10 full-time employment positions, through tax returns, Forms 1-9 or if employees have yet to be hired a detailed business plan which demonstrates that the business will require a minimum of 10 new full-time employees within two years.
If the investment is made in an existing business experiencing financial difficulty, the foreign applicant must also submit proof that current employment positions will be secure for at least two years.
Q: Are my family members eligible to qualify for an EB-5 visa?
The parameters under which family members of the investor can qualify for the Conditional Permanent Residence or as a Lawful Permanent Resident are as follows:
Spouses of the investor are permitted to accompany or follow the investor who has been granted their Conditional Permanent Residence. This is provided that the investor and their spouse who is deemed a derivative beneficiary were married at the time the investor’s original admission to the United States as a Conditional Permanent Resident or at the end of the two-year conditional period when citizenship status will adjust to Lawful Permanent Resident.
It should be noted that Common Law marriages will not be recognized for the purpose of permitting a spouse to qualify as a derivative beneficiary. A relationship considered to be Common Law, will not permit the ‘spouse’ of the investor to acquire a Lawful Permanent Residence on account of the status of the relationship.
Children and/or Step-Children of the investor are permitted to accompany or follow the investor who has been their Conditional Permanent Residence. This is provided that the investor can establish legitimate parent or step-parent lineage at the time of the investor’s original admission to the United States as a Conditional Permanent Resident or at the end of the two-year conditional period when citizenship status will adjust to Lawful Permanent Resident.
NB: Failure to comply with these requirements upon the initial application process may result in the separation of a child from the investor or the investor’s spouse for an extended length of time and in some cases years at a time, while alternate immigration opportunities are explored in an effort to reunite the family.
The US Government considers a ‘child’ as someone who is under the age of 21 and who not married. If a child of the investor reaches the age of 21 or marries prior to admission to the US under the Conditional Permanent Residence or prior to the conclusion of the two-year conditional period when citizenship status will adjust to Lawful Permanent Residence, the former child, now considered a son or daughter, may not be eligible to accompany or follow the investor to the US. In some instances, the Child Status Protection Act may assist a son or daughter to qualify as a ‘child’ by reducing their age to less than 21 years.
If the requirements of the Child Status Protection Act are not met, it may result in the separation of a child from the investor or the investor’s spouse for an extended length of time and in some cases years at a time, while alternate immigration opportunities are explored in an effort to reunite the family
Circumstances where a child who turns 21 years of age or who married while the investor is within the Conditional Permanent Resident time period and in cases where the spouse and the investor become divorced, the child or the spouse may be eligible to remove conditions by being included in the investor’s I-829 petition or by filing a separate I-829 petition. Meeting the US Government qualifying conditions may not be within the control of the child or divorced spouse.
As a result, the child or divorced spouse may become involved in removal proceedings through the US courts or be required to depart the United States. In the case of death
In the unfortunate case of death to the investor holding Conditional Permanent Resident status the spouse and qualifying holding the same status are entitled to seek removal conditions by submission of the same evidence which demonstrates compliance under the same required criteria in which the investor would seek to remove conditions. Failing to establish these criteria will result in the denial of an application to remove conditions, place family members in removal proceedings through the US courts and mandate immediate departure from the U.S.
The USCIS does not clearly outline if a child who becomes a son or daughter before the death of the investor is entitled to request removal conditions. If it is found that the USCIS does not extend this benefit, the son or daughter would be denied an application to remove conditions and would be placed in removal proceedings through the US courts and be required to depart the United States.