How Do EB5 Investments Work

If you are wondering on where to get free consultation on how EB-5 investments work, we’ve prepared a detailed account of how they work.

Created in 1990, the E- 5 Visa, or EB5 Immigrant Investor Visa Program allows foreign investors a chance to get an authentic green card by means of secured legal processes through investing in any US business registered under the program.

It then creates employment for US citizens.

For your immigration consultation please call us at 407-910-4770 or email us at [email protected]. 

What EB-5 Investors Need To Invest For an EB-5 Visa

1. Current minimum is $500,000$1.8 to invest, but immigration laws are changing fast.
2. Ability to prove the source of the money available is lawful;
3. Ability to pay fees to the different service providers including immigration attorney’s the Regional Center Sponsor, the USCIS etc. Discounts might be available depending on the case;
4. Willingness to wait about  a year and a half to get approval for the I-526 and another 6 months for the green card;
5. Make the investment in a for-profit U.S. commercial entity
6. Ability to pass the usual government background checks for financial, political, or criminal activities in your personal history;
7. Accredited investor status.

The program also has a requirement regarding the investment being “at-risk” which means that there is no guarantee with regards to return on the investment.

The US Department of Homeland Security has added a new rule which modernizes the EB-5 program by:

• Giving certain EB-5 investors priority date retention;
• Reforming particular targeted employment area (TEA) jobs;  
• Clarifying USCIS procedures to remove conditions on permanent residence;
• Making other conforming and technical revisions and
• Increasing the required minimum investment amounts due to inflation;

Benefits of the EB-5 Visa

After knowing what an EB-5 investment entails, if you are wondering whether it is worth investing, here are a list of benefits of doing so:

• Visa application includes principal applicant, his/her spouse and all unmarried children under 21 years of age
• Freedom to live, study, travel anywhere and work within the United States
• One of the most convenient ways to get permanent residency in the United States
• U.S. Citizenship after a minimum of 5 years of permanent residency in the U.S is possible.
• With state residency, green card holders may have access to public schools, colleges and universities at U.S. resident tuition fees
• No visa sponsorship required
• No minimum skills, education or business experience requirements

Steps

The following are steps you need to follow to get the EB-5 investment done:

1: Locating an EB-5 Project

As an applicant, you must first find a business project you want to invest in. EB-5 business projects are usually in the form of either regional center projects or new commercial enterprises. Overseas migration agents can help locate the best project for you.

2: I-526 Petition and Capital Investment

After choosing the project, the applicants need to make the required capital investment amount in the chosen project. The investment must be $1.8 million or $900,000 if the project is situated in a Targeted Employment Area (TEA). The investments are normally made into an escrow account. An immigration attorney then has to provide proof of the investment by filing an I-526 petition with USCIS. Most regional centers refund your investment upon denial of your I-526.

3: Two Year Conditional Permanent Residency

This step is so the applicant can be a two year conditional resident of the U.S. and implement the project funded by their EB-5 investment. EB-5 investors become eligible to be U.S. residents after their I-526 petition’s approval by USCIS. They can attain residency in these ways:

1. They must file form I-485 to change their status to conditional permanent resident if the EB-5 investor already has lawful status in the U.S.
2. If the investor doesn’t already have lawful status in the U.S., then they must file for an immigrant visa by submitting the DS-230 form to the National Visa Center and it should be processed through the U.S. embassy or consulate in their home country.
3. Both of these steps usually require the immigrant visa being issued and the assistance of an immigration attorney, on average, in 6-12 months. During the two year conditional residency period, the investor needs to fulfill physical presence requirements, and cannot stay outside of the U.S. for more than 1 year without getting a re-entry permit.

4: The I-829 Petition and Unconditional Permanent Residency

The last step in the process is so that applicants can become unconditional permanent residents by removing their two year conditional status. The I-829 petition is submitted to USCIS 90 days before the 2 year anniversary of the date of the applicants first receiving their conditional residency. This application proves that the investor has met all requirements of the EB-5 visa program. USCIS often issues a permanent green card 6-8 eight months after submission of the I-829. The investor, their unmarried children under the age of 21, and their spouse, can then permanently work and live in the United States and have the option to become U.S. citizens after completion of 5 years from the date of their initial conditional residency.

Before starting this investment, you should be able to answer the following questions:

Are you patient and thorough? 

The EB-5 process requires a lot of patience as well as extensive due diligence and loads of research.

Most experts advise interested businesses to get in touch with USCIS approved EB-5 Regional Center for their area. Regional Centers allow the investments to be matched with individual projects and work well within the program.

Be extra careful and as complete as much as you can. Remit the proper payment. Be thorough.

If a project or business were to utilize a Regional Center to obtain its foreign investment, the center would oversee and handle the “moving parts” for it.   

Is your business located in the right area? 

EB-5 has 2 different minimum requirements for investments that qualify for the program. 

Foreign investors can invest anywhere in the U.S. if they invest $1 million or more. If they invest less than $1 million, however, they will be restricted to particular areas defined by the EB-5 guidelines. 

The minimum qualifying investment for the program is $900,000 and must be invested in one of two areas. This requirement aims to stimulate economy in rural areas. Other areas that the program focuses on are targeted economic areas, often known as TEA zones.

Each state has its own TEA policy. Certain states have pre-determined TEA zones, and other states allow you to request or apply for a certain zone.

Can you prove your business will create enough jobs?  

Each foreign investor needs to demonstrate that their investment has created 10 jobs. As the program aims to stimulate the U.S. economy, preserving 10 jobs in troubled businesses works as well. 

The troubled business label carries a certain stigma, but investing in a new business rather instead of a troubled one is not necessarily safer.  Both have the intended economic impact, a visible economy impact regarding jobs. If the investors are well informed about the business before making their decision, it’s like any other venture.   

Overall, most projects deal with new job creation instead of job preservation.

Is your business plan viable? 

By evaluating submitted proposals, the USCIS determines whether EB-5 visa requesters meet the requirements of the program. The USCIS hires economists and does not just rely on those with immigration background to conduct these evaluations. 

If you want an EB-5 investment, the center is responsible for helping you create an EB-5 compliant business plan.  

Applying for an EB-5 visa without investing through a Regional Center is possible, but would require the applicants to write their own business plan. Specialized EB-5 consultants can assist in the writing of these plans.

If you are wondering how long it takes to get my money out of the EB-5 investment, you need examine that question from three main perspectives: 1.) immigration legal requirements for how long the investment must be maintained; 2.) market, economic obstacles to cashing out of the investment and 3.) Contractual legal restrictions.

Apart from the legal requirements, investment funds are tied up due to market forces and contractual obligations. EB-5 investments are typically either equity-based or loan-based. “Loan-based” refers to the EB-5 investor investing the $900,000 into an entity like a limited partnership, and that entity loans the funds out to a project developer that spends the money on doing the project which creates jobs. The EB-5 investors own the lending entity, but they do not have ownership interest in the project business, although the entity which is lending might have a security interest in an asset, which is normally real estate, owned by the project business. “Equity-based” refers to the fact that the place the EB-5 investor invests, is actually owned by the project business, or the commercial building where the project business is operating.

In an equity-based project the EB-5 investor typically owns a share in an entity that owns a functioning business or large commercial property with production equipment and business premises. When a commercial property is involved, it is necessary for the property to be sold so that the investors can cash out, and the time frame for the commercial property being sold is open-ended. Alternatively, with production equipment and facilities, the EB-5 investors’ shares could be subject to transfer restrictions for a minimum holding period during which the shares cannot be sold. Additionally, after the transfer restriction period is over, the investors still have to wait for the amount of time it takes to find a buyer for individual shares or for the entire business.

With loan-based projects, investment funds are used for the entire loan’s term, which is how the deadline for the borrower’s repayment of the loan is determined. Loan-based EB-5 projects usually have loans with terms which range from 4 to 6 years. The loan term starts to count down only after loaning out of the funds. The time the funds are loaned out depends on whether the funds invested go directly into the investment and are loaned to the project borrower or developer straight away or whether the regional center holds the funds in escrow pending approval of the I-526 petition. When the funds are being held in escrow, the loan term does not begin to count down until the funds are removed or can be removed from there, which usually happens after the I-526 petition’s approval. In the event of no escrow, the funds are typically loaned out straight away, and thus the loan term would begin to count down immediately. Ultimately, with escrow the EB-5 investor’s funds are tied up for the time it takes to process the I-526 petition along with the loan term, or, without escrow, the EB-5 investor’s funds are generally loaned out sooner and hence the loan term will start counting down sooner without regard for the I-526 petition’s processing time.

The time period for the EB-5 investment being cashed out depends on the time it takes to complete the EB-5 immigration process, with equity-based investments, the time that it takes to sell the business or property and the time restrictions faced by the investor by contract. Generally, the shortest possible time period for the investment to cash out is after 3.5 to 4 years, which is the time taken to complete the EB-5 immigration process. Loan-based projects, given repayment of the loans on time, have the most potential for repayment in a short amount of time, given that they have a specific repayment date, usually after a loan term ranging from 4 to 6 years. Equity-based programs tend to have open-ended time periods for cash out, and hence should be entered into by those investors who are willing and able to make a longer-term investment only.

For your immigration consultation please call us at 407-910-4770 or email us at [email protected].