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Investing in a Troubled Business in the EB-5 Program

The EB-5 Immigrant Investor Program, one of the quickest and easiest paths to a U.S. green card for foreign investors, offers EB-5 visas in exchange for an investment in a qualifying project. To receive a visa, an investor must demonstrate that their investment in a new commercial enterprise (NCE) has fulfilled certain requirements, such as the creation of at least 10 new full-time jobs for U.S. workers.

In certain circumstances, however, an EB-5 investor may invest in a troubled business and work toward saving existing jobs rather than creating new ones. This less traveled EB-5 path is equally viable and leads to the same outcome: EB-5 green cards for the investor and their immediate family members.

What businesses qualify as “troubled businesses” under the EB-5 program?

According to United States Citizenship and Immigration Services (USCIS), to qualify as a “troubled business” under the EB-5 program, a business must have been established at least two years prior to the investment. Over the 12- or 24-month period before the investor’s I-526 petition priority date, the business must have suffered a net loss. The net loss must follow a decline of at least 20% in its value or net worth.

How do EB-5 investors satisfy the “job creation” requirement when investing in a troubled business?

While any job creation spurred by an EB-5 investment in a troubled business is, of course, helpful, EB-5 investors are not required to create new jobs when investing in troubled businesses. Rather, they must demonstrate that their investment has saved jobs. To fulfill this EB-5 requirement, EB-5 investors must ensure the number of employees at the troubled business at the end of their two-year investment period is not lower than what it was prior to their investment.

What is the minimum required investment amount for troubled businesses?

In terms of the investment amount required, troubled businesses are no different from NCEs. If the zone where the troubled business is located qualifies as a targeted employment area (TEA), EB-5 investors are eligible to invest the lower required amount of $900,000. Otherwise, they must invest at least $1.8 million in the troubled business.

TEAs are determined by their population or unemployment rate. A rural TEA is defined as an area with a population under 20,000 that is outside a metropolitan statistical area. High unemployment TEAs are areas with an unemployment rate at least 150% higher than the national average.