I have been reading a lot lately about the EB-5 Investor Visa. What is this? 

The EB-5 Visa program was created in 1990 by the US Congress to give foreign nationals a means to seek permanent residency by investing in the US economy. The program has an annual quota of 10,000 visas per year for foreign nationals and their family members. Of those, 5,000 visas are specifically reserved for investments made in regional centers.

What is the difference between a general investment and an investment in a regional center? 

Generally, a $1,000,000 investment is required to apply for an EB-5 visa. But, if an investment is directed into a government-designated Regional Center then the required investment amount is only $500,000. A Regional Center is defined as a target employment area – one which faces a higher than normal unemployment rate or an economically depressed area. There are strict requirements for developers to get a project approved as an EB-5 Regional Center.

Who is eligible to apply for an EB-5 visa? 

Anyone who has the required funds and documented proof that the funds were earned or obtained legally is eligible. When applying for the EB-5 Visa I-526 petition, the investor must be able to provide detailed records demonstrating the financial transactions through which he/she acquired the funds as well as how he/she managed, moved and sustained the required funds during the entire period of ownership by the investor. The investor should also expect to provide at least five years of individual tax returns with proof of payment of all taxes due to all countries that assert tax obligations on the investor.

What is an example of illegally obtained or earned funds? 

Income from any illegal activity (drugs, smuggling, theft etc.) is the most obvious example. Funds earned or obtained in the US while the investor was on unlawful immigration status are also deemed to be unlawfully acquired.

I heard that the funds must be “at risk.” What does this mean? 

This means that there can be no guarantees on an EB-5 investment. The funds must be used by the business enterprise to create employment. Funds used to pay administrative costs or other obligations undertaken to promote the investment (advertising) are not considered to be “at-risk.” Any commitment by the enterprise to the investor that is deemed to transform the relationship from an investment to a debt arrangement (for example, a promise to pay a fixed rate of return or to repay some or all of the investment on a date certain, or to repay some or all of the investment regardless of the financial performance of the project) will not be considered “at-risk.”

You mentioned job creation as another requirement. Please explain. 

Each EB-5 investor must create at least 10 direct or indirect full time US jobs as a result of their investment. If the investment is made outside of a regional center, there must be evidence that the 10 jobs were created directly from the investment.

 

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This article is made available by Lee & Lee, PS for educational purposes only. The intent is to give the reader general information and a general understanding of the law. The article does not provide specific legal advice. Readers of this article should understand that there is no attorney client relationship between you and the writers. Furthermore, the article is not a substitute for competent legal advice from a licensed professional attorney in your jurisdiction.