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How to Make an EB-5 Investment in a Troubled Business

How to Make an EB-5 Investment in a Troubled Business

Thousands of foreign nationals have received U.S. permanent resident status after participating in the EB-5 Immigrant Investor Program. Obtaining an EB-5 visa is undoubtedly the best way to relocate to the United States—successful EB-5 investors gain the opportunity to live and work anywhere in the country. Moreover, EB-5 investors who obtain green cards can eventually apply for U.S. citizenship. The EB-5 program offers investors the chance to enjoy the United States’ thriving economy, delightful culture, and political stability. Since every EB5 investment must create or preserve a minimum of 10 jobs, the program also strengthens the U.S. economy.

Most foreign nationals who participate in the EB-5 program invest in new commercial enterprises (NCEs)—that is, for-profit organizations that were created or restructured after November 29, 1990. Still, EB-5 investors can also choose to invest in troubled businesses. United States Citizenship and Immigration Services (USCIS) defines a troubled business as an enterprise that has existed for at least two years and experienced a net loss of at least 20% in the 12 or 24 months before the investor filed Form I-526.

Even though the vast majority of EB-5 investments are made in NCEs, investing in a troubled business is also acceptable and can result in gaining U.S. permanent resident status.

Benefits of Investing in a Troubled Business

As of August 2021, the COVID-19 pandemic has not ended, and the U.S. economy is still recovering from the devastating effects of the widespread lockdowns and travel restrictions enforced in 2020. Numerous businesses across the United States saw a sharp decrease in profits during the peak of the pandemic, and many of them have yet to regain solvency. This financial crisis means that there are likely many more U.S. businesses that can qualify as troubled and that sorely need EB-5 investment capital—EB-5 investors looking for troubled businesses now have many options at their disposal.

In addition, an important change in EB-5 regulations took place on June 22, 2021. The controversial EB-5 Modernization Rule was invalidated by a U.S. district court, and the minimum investment amounts were thus lowered to $500,000 for projects located in a targeted employment area (TEA) and $1,000,000 for non-TEA projects. Since USCIS or the Department of Homeland Security (DHS) might raise the required investment amounts once more, interested foreign nationals should act quickly and take advantage of the valuable opportunity to make an EB-5 investment at only $500,000.

Preserving Employment in a Troubled Business

EB-5 investments made in NCEs are typically expected to create at least 10 new jobs for qualifying U.S. workers. In contrast, EB-5 capital invested in a troubled business does not necessarily have to generate new employment. For instance, an EB5 investment made in a troubled business with 10 employees would not have to create new jobs—it would only have to preserve the 10 existing positions. If the troubled business had nine employees, then the EB-5 investment would have to preserve the nine positions and create at least one new job, thus fulfilling the requirement of creating or preserving at least 10 jobs.

Now is the ideal time to make an EB-5 investment at $500,000. Experienced EB-5 consultants can make the investment process smoother and more efficient—for example, EB5 Affiliate Network offers the most reliable and low-risk EB-5 projects in the industry.