Currently, the capital investment amount required under the EB-5 green card program is $1 million; however, that amount may be decreased to $500,000 provided that the investment is made in a commercial entity located within a designated Targeted Employment Area (TEA).
Note: On July 23, 2019, the new EB-5 regulations were published:
As of November 21, 2019, investment amounts will rise substantially, as per the new rule published by the U.S. Department of Homeland Security. The TEA investment amount is rising 80% to $900,000. And the non-TEA amount is also rising 80% to $1.8 million.
The capital investment can include cash, inventory, equipment, tangible property, or secured indebtedness. The non-cash investments are valued at fair-market prices in U.S. Dollars.
Currently, to qualify for TEA designation, the EB5 project must be located within a rural area or within an area of high unemployment.
A high unemployment area is one wherein the local unemployment rate is at least 150% of the national unemployment rate at the time of the EB-5 investment.
Rural areas are defined as geographic regions that are outside of a city with a population of at least 20,000 residents. Rural areas can also be geographic regions that are outside of “metropolitan statistical areas,” as designated by the U.S. Office of Management and Budget.
Note: as of November 21, 2019, new regulations will impact TEA designations. Designation will then be made on the federal level and not by individual states.
The new criteria will be much more strict, with fewer urban EB-5 projects in particular and fewer projects overall receiving such status. Most projects will require an increase from $500,000 to $1.8 million (a 260% increase).
The new TEA requirements will also be more challenging to define than they are at present, and will likely require an economist to accurately determine.
While the majority of EB-5 applicants today are invested in lower-cost TEA projects, potential investors and EB-5 stakeholders can expect a considerable shift as of November 21, 2019.
For EB-5 investors, proving the primary source and path of their investment capital is critical. They must, as per United States Citizenship and Immigration Services (USCIS), provide documentation to prove that this capital was earned lawfully.
An EB-5 applicant may have various potential sources of the money they invest. Salaried income may be one. Stocks, securities, and bank account deposits are other potentially lawful sources. For any and all sources, all investment funds must clearly show their original source.
To combat money-laundering and address security concerns, USCIS thoroughly examines where an applicant’s money came from as well as the path of that money. This means investors and their immigration lawyers must be strategic in deciding what funds to use. Documentation must be complete and valid. If an applicant’s documents are not in English, they should ensure their documentation provides a translation.
Most often, a loan for an EB5 investment comes from a financial institution. The collateral for the loan must be cited. Contrary to an earlier regulation, USCIS now only allows a loan as a source of funds if the investor is primarily liable for the loan. Also, the value of the collateral must be at least equal to the loan amount. An applicant can expect USCIS to make a request for evidence (RFE) if the value of the collateral is close to amount of the loan. Best practices advise that the loan amount is no more than 70% of the value of the collateral property.
An applicant must have individual and corporate/partnership tax returns filed in any jurisdiction for the last five years. When an applicant’s preceding years’ tax returns indicate higher income, he or should should also submit tax returns for the three years with the highest income.
Sometimes a petitioner investing in an EB5 project has received their investment capital by means of an inheritance. In such a case, the applicant must provide all documents related to that inheritance, including estate settlements of the deceased.
Gifts are another potentially valid source of funds. All documents related to that gift must be shared, including the registration of the gift money for tax purposes, and the source of income of the gift giver.
Money derived from divorce and other legal proceedings may be used. This includes alimony, and proceeds of civil lawsuits, along with official court judgments.
Sometimes an investor in pursuit of an EB5 visa cannot obtain certain documents. In such cases, the applicant can file a declaration with a thorough explanation of why they cannot provide the missing documentation.
Though USCIS has, on occasion, accepted declarations of missing documents, this practice should be avoided wherever possible.
For the immigrant investor program, USCIS requires that each EB-5 investment result in the creation or preservation of at least ten (10) full-time jobs for U.S. workers. These jobs must be created within a 2-year period after the immigrant investor has received his or her conditional permanent residency.
In some cases, i.e. a direct investment into the EB5 project, the investor must be able to prove that his or her investment led to the creation of direct jobs for employees who work directly within the commercial entity that received the investment.
However, those investors who invested through a regional center may only have to show that ten (10) full-time direct, indirect or induced jobs were created with their investment. Indirect jobs are those created in businesses that supply goods or services to the EB5 project. Induced jobs are jobs created within the greater community as a result of income being spent by EB5 project employees.
The EB-5 visa applicant is permitted to invest in several different types of business entities. Generally, the applicant can directly invest in a New Commercial Enterprise (NCE) or else within an approved EB-5 regional center. An NCE is a lawful U.S. for-profit entity that can take one of many different business structures; they include corporations, partnerships (general or limited), sole proprietorships, business trusts, or other privately or publicly owned business structures.
All New Commercial Enterprises must have been established after November 29, 1990. However, older commercial enterprises may qualify under certain conditions, for example, if the capital investment leads to a 40% increase in the number of employees or the company’s net worth. If an older business is restructured in such a way that a new commercial enterprise result that entity may then qualify, as well.
Besides investment in business enterprises, the applicant may also invest in a designated regional center which will administer the EB5 project. Generally, it is more advantageous for an immigrant investor to invest in an EB5 project through an EB5 regional center. Otherwise the investor would have to independently set up the EB5 project and ensure that all USCIS EB5 project requirements are satisfied.
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AN EB-5 OFFERING IS AN INVESTMENT IN A PRIVATE PLACEMENT OF SECURITIES CREATED SPECIFICALLY FOR APPLICANTS TO THE UNITED STATES CITIZENSHIP AND IMMIGRATION SERVICES (“USCIS”) FIFTH PERMANENT WORKER VISA PREFERENCE (“EB-5 PROGRAM”) AND ARE SPECULATIVE INVESTMENTS INVOLVING A HIGH DEGREE OF RISK. INVESTORS MUST BE PREPARED TO BEAR THE ECONOMIC RISK OF SUCH AN ILLIQUID INVESTMENT FOR A LONG PERIOD OF TIME AND BE ABLE TO WITHSTAND A TOTAL LOSS OF THEIR INVESTMENT. THERE IS NO GUARANTEE THAT AN INVESTOR’S EB-5 APPLICATION WILL BE APPROVED BY THE USCIS. SEE OFFERING DOCUMENTS FOR COMPLETE DETAILS.
EB5 Marketplace provides information about investment projects throughout the United States that are offered pursuant to the EB-5 program administered by the U.S. Citizenship and Immigration Services ("USCIS"), created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a program initially enacted as a pilot in 1992, and regularly reauthorized since then, investors may also qualify for EB-5 classification by investing through regional centers designated by USCIS based on proposals for promoting economic growth.
Investment products are offered through Dalmore Group, LLC, member FINRA/SIPC (“Dalmore”). The USCIS, EB5Marketplace.com, EB5Diligence.com and their respective affiliates are independent from and not corporate affiliates of Dalmore. All investment services offered by EB5 Marketplace and associated persons are conducted in their capacities as registered representatives of Dalmore.
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“EB-5 investments” refer to a type of private placement investment, typically created by developers or sponsors in the construction, hospitality, or other job creating industries, that are designed to meet the requirements of the fifth among five Permanent Worker Visa Preference Categories (EB-1 through EB-5) established by the USCIS. Its official title, the Employment-Based Immigration: Fifth Preference (EB-5 Immigrant Investor Program - https://www.uscis.gov/eb-5 to find out more) offers high-net worth non-U.S. persons, including members of their immediate families, the opportunity to obtain U.S. “green-cards” or permanent residence status. One of the requirements of this specific visa category is that the applicant must invest (typically USD $500,000) in a new commercial business that generates 10+ jobs per investment for U.S. workers. Accordingly, the construction, hospitality, and other similar industries, have responded by designing private placements that raise capital for EB-5 compliant projects. EB-5 private placement investments are high risk investmentswith a holding period of at least five to seven years and are generally illiquid. The immigrant investor would make such an investment with the placement issuer while simultaneously submitting, typically through their immigration attorney, the EB-5 application to the USCIS.