Obtaining lawful permanent U.S. residency under the EB-5 Immigrant Investor Program is more complex than it seems. To qualify for permanent resident status, or a green card, under the EB-5 program, entrepreneurs must meet two basic criteria: they must invest the required amount in a commercial enterprise in the United States ($500,000 or $1 million, depending on project location) and create 10 permanent, full-time jobs for U.S. workers through this investment.
The investment must also meet certain requirements: First, it must stem from lawful funds, so investors must provide evidence showing the source of the investment funds. Second, the investment must be “at risk.” Although no official statutory or regulatory definition of “at risk” exists, it is understood to mean that the investment is subject to either loss or gain and that the investment is made without any guarantee of redemption or returns.
While the basics of the EB-5 program seem fairly simple, it is important for entrepreneurs who wish to follow this route to U.S. residency to understand the requirements and complexities of each step in the process to ensure that they make informed decisions that fully meet their needs. The process can be broken down into five steps that begin with finding the most suitable investment and end with obtaining U.S. permanent resident status.
Step 1: Research EB-5 Investment Options
As is the case when making any type of investment, research is key when making an EB-5 investment. Investors can meet the investment requirements through direct or regional center investments, with each type of investment holding distinct advantages and disadvantages. Moreover, projects located in targeted employment areas (TEAs) qualify for the lower required investment amount of $500,000, while those outside TEAs are subject to the full $1 million minimum investment amount.
Investing in a regional center project located within a TEA is a popular choice with investors, as it allows the inclusion of direct, indirect, and induced job creation in meeting the EB-5 job-creation requirement. Investors can also assume a passive role that does not require involvement in the daily management responsibilities of the new commercial enterprise (NCE). Finally, EB-5 capital typically constitutes a relatively small portion of the total project capital, which leads to a large “job cushion.” In other words, although several EB-5 investors might invest in a project, the project might be large enough to exceed the number of jobs required by all investors.
Step 2: Select an EB-5 Investment Project and Begin the Investment Process
To begin the EB-5 visa application process, an investor must make a qualifying investment in a new commercial enterprise in the United States. Investors must make informed decisions during this step, and an essential aspect of this is obtaining and reviewing comprehensive, transparent project memorandums and documentation.
For example, if a potential investor decides to invest in a regional center project sponsored by an EB5 Affiliate Network USCIS-approved regional center, EB5AN will perform a free EB-5 evaluation to determine whether the person qualifies for the program as an accredited investor. If the person qualifies, EB5AN will provide a complete investment memorandum and related materials to allow the prospective investor to investigate the requirements of the investment, its suitability for them, the associated risks, and the overall investment opportunity.
Once an investor decides to proceed, the investor will be required to complete and execute all subscription and escrow documents and to submit the required capital contribution of $500,000 or $1 million, depending on the location of the investment project, together with an additional administrative fee amount. The source of these funds must be documented to establish that they are lawful funds.
Step 3: File an I-526 Petition and Await Processing
After making their at-risk EB-5 investments, investors and/or their legal counsel must file Form I-526, Immigrant Petition by Alien Entrepreneur, with USCIS. The form and the supporting documentation must show that the investor invested the required amount of capital, which was legally obtained, in a qualifying project or NCE expected to generate 10 full-time permanent jobs for U.S. workers for each investor. Thus, the I-526 petition must include documentation relating to the funds invested and to the project.
Documentary evidence submitted as part of the I-526 application includes evidence showing that the
- investor has committed the investment capital to the project,
- capital invested in the project was obtained legally,
- NCE qualifies for the EB-5 program,
- NCE will create the required number of jobs, and
- investor will be suitably engaged with the daily management of the NCE.
If USCIS deems any information incomplete or missing, it may issue a Request for Evidence (RFE), which will delay processing of the application. To avoid receiving an RFE, it is best to work with EB-5 professionals who can assist with the filing of Form I-526 and its supporting documentation.
Depending on demand for EB-5 program visas, approval can take 12 to 24 months. Investment funds are usually placed in escrow pending the outcome of the I-526 petition, with investments being returned to investors if their applications are unsuccessful and released to the investment entities when investors’ applications are successful. However, because of the delays in I-526 processing, the market standard escrow release terms for the investment of capital in EB-5 projects are changing to allow for the release of EB-5 capital before the approval of I-526 petitions.
Step 4: Apply for Conditional Permanent Resident Status
Once USCIS has approved the I-526 petition and the required number of visas are available, the investor and his or her qualifying family members can apply for two-year conditional permanent resident status. Those who are already lawfully residing in the United States can do so by filing Form I-485, Application to Register Permanent Residence or Adjust Status.
Those living outside the United States must obtain visas through consular processing, which involves becoming documentarily qualified and submitting Form DS-260 via the Consular Electronic Application Center (CEAC) once a notification has been received that the case has been created on the system. Consulting an immigration attorney is crucial when filing either application.
The conditional permanent residence period expires after two years, and investors cannot reapply for this status. During this period, investors must reside in the United States, and while they may travel abroad, travel limitations apply. For example, investors cannot remain outside the United States for more than one year.
Step 5: Apply for Permanent Resident Status
Ninety days before the end of the conditional permanent residence period, investors must file Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status, to legally remain U.S. residents. Once this application is approved, investors and their qualifying family members obtain permanent resident status, and after five years, they can apply for U.S. citizenship.
To qualify for the removal of conditions, the applicant must show that he or she has met the conditions for permanent residency set out under the EB-5 program. Therefore, the I-829 application must be accompanied by evidence documenting that the investor has met these conditions.
Examples of documentary evidence in support of an I-829 petition include
- federal tax returns that show an NCE was formed;
- state and federal tax returns, licenses and certifications, contracts, bank statements, and similar documents that show that the NCE existed and operated throughout the two-year conditional permanent residency period;
- bank statements or audited financial statements demonstrating that the required capital was invested; and
- tax and legal payroll records that show that the job-creation requirement was met.
This list is by no means exhaustive, and it is best to work with EB-5 professionals or immigration counsel when preparing the I-829 application pack.
Work with EB-5 Professionals to Avoid Delays and Denials
Because of the complexity of the investment options available to EB-5 investors—and of the EB-5 visa application process itself—it is important to consult and work with immigration counsel and EB-5 professionals. The EB5AN team includes securities experts, finance professionals, and economists, and we offer combined EB-5 regional center coverage in up to 27 states and Washington, D.C. Contact us today to learn how we can help you.