Investment Base Visa

Fifth Employment-Based Preference for Alien Investors - EB-5

 Generally

 The new law makes available approximately 7.1% of worldwide visas per year (10,000 visas) for immigrants seeking to invest (after November 29, 1990), or who are actively in the process of investing, in a new business in the United States with a capital of at least one million dollars, so long as the business benefits the U.S. economy, and provides at least ten full-time jobs for U.S. workers.

Lower Investment Amount - Targeted Employment Areas

The amount of investment may be decreased to no less than $500,000 if the business established is in a rural area or area of high unemployment, called ``targeted employment areas.''  Three thousand of the ten thousand available visas are set aside for these "targeted employment areas."  

A targeted employment area is determined through the petition providing both evidence of the statistical area of the proposed investment and a letter from the state agency that that particular area is one of high unemployment.  

An area of high unemployment is defined as

(1) a rural area (an area outside of a metropolitan statistical area or outside of a city or town with 20,000 or  
      more people) or
(2) an area experiencing an unemployment rate of at least 150% of the national average.
      Agencies that are approved to designate high unemployment areas are:
* Alabama Department of Economic and Community Affairs
* Arizona Department of Economic Security, Research Administration - 733!, P.O. Box 6123, Phoenix, Arizona 
   85005
* Connecticut Employment Security Division
* Connecticut Department of Labor
* Massachusetts Department of Employment and Training
* New Jersey Department of Labor, Raymond L. Braucci, commissioner, CW 110,       Trenton, New Jersey 
   08625-0110
* New York State Department of Economic Development
* North Carolina Department of Economic and Community Development, Bruce       Strickland, Director, 430
   North Salisbury Street, Raleigh, North Carolina        27603
* Commonwealth of Puerto Rico, Alfredo Salasar, Jr., Administrator, Economic       Development
   Administration, P.O. Box 362350, San Juan, Puerto Rico  00936
* Texas local mayors of citizens and towns located within a metropolitan       statistical area or within a city or
   town with a population of 20,000 or       more 

The amount of required investment may be increased, however, to three million dollars if the business is opened in an area with a high employment rate.

 New Commercial Enterprise or Troubled Business

 "Commercial Enterprise"
A commercial enterprise is defined in a broad manner, including holding companies,  their wholly owned subsidiaries and for profit business operations.  An investment fund may qualify as a commercial enterprise for the purposes of the fifth preference category so long as the investor is engaged in the direct management of the enterprise.   If the investment fund is organized as a partnership, then the alien must also be engaged in the management or policy-making activities of the partnership. 

"New Commercial Enterprise"
For the purposes of this section, new is defined as either (1) the creation of an original business established at the hand of the alien and established after November 29, 1990, (2) the purchase and reorganization of an existing business so that a new enterprise results, or (3) the expansion of an existing business so that the net worth or the number of employees increases by 40%.  For the third option, the investor must still prove that the minimum amount of investment has been met, and that ten jobs have been created, however the 40% increase can be achieved by adding together the capital invested by others, including LPRs and USCs.

"Troubled Businesses"
A troubled business is one that has been in existence for at least two years and has sustained a net loss of at least 20 percent of the company's net worth.  These investments do not have to create new jobs, but rather to show that the current number of employees will be maintained.

Requirements of Investment

Investment Amount
The amount of investment required is flexible in that in "high employment areas," investors are required to invest 3 million dollars, whereas in "targeted employment areas," investors are only required to invest $500,000.  If the investment does not take place in either of these areas, the required amount of investment is 1 million dollars.

A "high employment area" is defined as one that is not a targeted employment area and that has unemployment rates that are significantly below the national average.

A "targeted employment area" is defined as a rural area (outside of a city or town with 20,000 or more people) or an area experiencing unemployment of at least 150% of the national average.

The full amount of the required investment amount must be made available to the commercial enterprise for the purpose of generating profit.  Therefore any capital that is used for any other purpose does not count toward the requisite investment amount.

"At Risk" Investment
"Invest" is defined as the contribution of capital.  This definition does not include when the alien is acting solely as a creditor in a debt arrangement.  "Capital" includes cash, cash equivalents that are easily convertible into cash, equipment, inventory, tangible property, or debt secured by the alien's assets, for which he is personally liable.  Valuation is determined by fair market value in US dollars.

Examples of when investments are at risk:
A loan obtained by a company, secured by the assets of the corporation is not an investment of capital, since the investor's capital is not personally at risk.

The alien must show that the capital invested is at risk, for the purpose of earning a return.  The capital must be actively committed to the investment.

The alien investor cannot require the enterprise to guarantee to return his investment, and cannot receive guaranteed payments from the business while he is still indebted to the enterprise.

The capital must be fully available to the enterprise and must actually be used by the company to create or preserve jobs, in order to qualify.

"Promissory Notes"
The alien must have made almost all the payments due on a promissory note, during the two-year conditional residence period, otherwise their conditional status would not be removed, since they would not have completed the required investment amount.  In addition, the assets that secure the promissory note must be specifically identified as belonging to the investor himself.  The promissory note must have a fair market value in US dollars equal to or greater than the required amount of investment.

Multiple Investors/Partnerships
Each investor who seeks to gain LPR status from the investment must be actively in the process of making the qualifying investment.  Each investor desiring LPR status must create ten new jobs.

Job Creation Requirement
Only those persons authorized to work in the US can be considered employees for the purposes of this requirement.

"Troubled Businesses"
A "troubled business" is defined as a business which has lost 20% of its assets.
Investors in troubled businesses do not have to create ten new jobs, but rather must show that the number of existing employees will be maintained.

Full-Time Employment
The INS requires that whatever be considered by the organization to be full-time employment for that specific occupation is considered full-time for immigration purposes.  Two part-time employees may be counted as one full-time employee. 

 Investor Must be Actively Involved
The rules require that the investor either be involved in the day-to-day- management of the enterprise, or that they are policymakers with regard to their investment.  The investor may meet this requirement by showing that he is a corporate officer or director.  The investor cannot play a passive role in his investment.  Limited partners are considered sufficiently involved to qualify as a fifth preference investor, if the limited partnership confers the usual rights and obligations to the limited partner alien investor.

 Supporting Documentation

 For "New Commercial Enterprises"
1) Articles of incorporation, partnership agreements, and any other organizational documents
2) Proof of the enterprise being able to do business in the state or municipality
3) Evidence that after November 29, 1990, 1 million dollars (or $500,000 in high unemployment areas) has 
     been transferred to the enterprise and that the investment has caused an increase in the net worth or
     number of employees
4) Evidence of all property transferred from abroad
5) Tax returns of any kind filed within 5 years, foreign business registration records, evidence showing sources
     of capital
6) Copies of employee records for the ten new employees, including tax information or similar documents
7) Copy of the business plan showing the need for no fewer than ten new employees, including the dates they
     will be hired (approximation) in the next two years
8) Proof that the investor will be taking  an active role in the enterprise, through a description of their duties,
    evidence that the investor is a corporate officer or director or proof that the investor is involved in policy
    making or management (including evidence of limited partnership if applicable)
9) Evidence that the enterprise is located in a high unemployment area, if applicable 

Application Process

 The alien investor may file the Form I-526 (Immigrant Petition by Alien Entrepreneur) (dated 12/02/91) on his own behalf with the INS.  Since the final regulations have been issued, these petitions will now be reviewed and decided.  The fee for the investor petition is $350, due to the complexity of the review of these applications. 

Conditional Grant of LPR
The investor is granted conditional permanent residence for two years, and can petition for removal of the condition at the end of that period by showing compliance with the statutory conditions.

The alien investor must write a petition to the INS ninety days before the end of the two year conditional residence in order to ask that the conditions on the alien's residence be removed, and showing that the conditions of the residency have been met.  The alien investor does not need to be present in the US at the time of the filing, but may be required to return for an interview if one is scheduled.

If the petition is not submitted, the alien begins unlawful presence the date of the expiration of the conditional residence.  The alien is then subject to the three to ten year rule of inadmissibility to the US from their date of departure.

Petition to Remove Conditional Residency

 The alien must submit the INS Form I-829 (Petition by Entrepreneur to Remove the Conditions), a copy of the alien registration receipt card (Form I-551) for themselves and their family, supporting documentation and the filing fee of $345.

 Supporting Documentation:

 The petition must be accompanied by proof that the enterprise was established by the alien, that the requisite amount of capital was being invested in that enterprise, that the enterprise was sustained throughout the entire period of conditional residency, that ten full-time jobs have been or will be created in a reasonable amount of time, or that if the alien invested in a troubled business, the number of pre-investment employees remained constant over the entire period of conditional residency.  A copy of the original I-526 is also helpful in the submission of the I-829. 

Termination of Status

 If the INS determines within the first two years that certain conditions exist, the residence of the alien investor can be terminated.  If this occurs, the investor will be placed in deportation proceedings.

 The INS will terminate residency if the INS determines that the commercial enterprise was established for the purposes of evading immigration laws, that the enterprise was never established, that the alien is not in the process of investing the required capital, that the alien was not sustaining the enterprise, or that the investor obtained the capital used for investment through illegal means.

 Generally, this occurs when the alien files the petition to remove conditions, unless the INS receives information from law enforcement agencies.  The INS may also terminate residency if the alien investor fails to file the petition to remove conditions on the residency.  The filing period begins ninety days prior to the two year anniversary of the grant of residency.  If the petition is filed late, it may still be accepted, so long as an explanation is included as to the good cause of the lateness. 

 If the INS decides to terminate the conditional residence of the alien, the alien begins unlawful presence when the INS formally terminates the status of the alien.

 Labor Certification Requirement

The investor category is not subject to the labor certification requirement.

 Immigrant Investor Pilot Program

 Congress created this program in order to increase the interest in the investor category.  The pilot program relaxes the requirement of the creation of employment by allowing reasonable methods of determining the number of jobs created, including those created indirectly.  The pilot program is to continue until September 30, 2000.  The alien investor must also establish some connection to the production of exports. 

 The program requires that participants "will promote economic growth through increased export sales, improved regional productivity, job creation, and increased domestic capital investment."  The investor must still meet all the criteria of employment creation investors, except he can demonstrate that the investment will create jobs indirectly through the revenue generated by increased exports. 

 The investor invests with a regional center in order to meet the job creation requirement.  The INS has approved the following regional centers:

 * World Trade Center/Greenvill-Spartenburg, Inc., Greer, South Carolina
* Beacon US Studios, Inc., Blaine, Washington
* City of New Orleans Mayor's Economic Development Department, New Orleans, Louisiana
* North Country Alliance, Rouses Point, New York
* Aero-Space Port International Group, Tukwila, Washington
* North Texas Commission, DFW Airport, Texas
* Legacy Project, Atlanta, Georgia
* Atlanta International Center for Academic and Athletics, Roswell, Georgia
* The Gateway Freedom Fund, Seattle, Washington
* West Rand Gold Trust, Ridgecrest, California
* Miami Chinese Community Center, Miami, Florida
* CKS Western, Inc., Lake Elsinore, California
* Abacus Advisors, Inc., Weston, Massachusetts
* American Export Partners, Charleston, South Carolina
* Danou Enterprises, Trenton, Michigan
* Pueblo Economic Development Corporation, Pueblo, Colorado
* GV Development, Golden Valley, Arizona
* Unibex Global Corporation, Las Vegas, Nevada
* State of Hawaii, Department of Business, Economic Development and Tourism, Honolulu, Hawaii
* Empirical Entertainment, Hollywood, California
* State of Vermont, Agency of Commerce and Community Development
* Trading Partners International of California LLC, Santa Ana, California
* CMB Export LLC, Corona, California