EB-5 Immigration Investor Visa
EB-5 Immigrant Investor Visa: Is it the right vehicle to fund your business?
The Immigrant Investor Visa, generally referred to as the “EB-5” program, is administered by USCIS (formerly known as INS). The EB-5 program was first created by Congress in 1990 to stimulate the U.S. economy through job creation and to procure foreign investment by offering U.S. Permanent Residency (Green Card) to qualified foreign investors. The EB-5 category requires an investment of $1,000,000, or $500,000 in high unemployment or rural areas. In return for their investment, a qualified foreign national is offered a green card for his/her entire family: Investor, Spouse, and children under 21. The investment has to be at risk, and must create at least 10-jobs for U.S. workers within the first 2-years of the investment.
The EB-5 pilot program, first enacted in 1992, has been extended regularly due to its proven track record in stimulating U.S. economy, and creating jobs, especially in economically distressed areas; President Obama signed the Public Law 112-176 on September 28, 2012, which among other immigration benefits, extended the EB-5 Pilot program through September 30, 2015.
There are two different ways for a foreign investor to apply for an EB-5 Visa: Direct (or Individual) EB-5 where the investor directly invests into his/her own commercial enterprise or in a commercial enterprise owned by other parties. The second way is for the foreign investor to invest into a pre-approved “Regional Center.”
Regional Centers are government-approved entities, most of which are located in high unemployment or rural areas. As a result of the potential that the EB-5 program presents to U.S. businesses, the number of EB-5 Regional Centers has grown rapidly in the recent years. To date, there are 400 Regional Centers available to foreign investors. Majority of these centers are located in California and Florida, which were hard hit during the financial crisis in the recent years. Connecticut appears to be a late starter in this area; New England Federal EB-5 Regional Center was announced as the first CT Regional Center earlier this year.
The EB-5 program, though still underused, since its inception has created over a billion dollars of investments, and created tens of thousands of jobs in states and communities across the country. This is why a number of senators, including Senator Patrick Leahy, D-Vt, are proponents of making this program a permanent one.
Although the EB-5 program may provide for a low interest financing, US businesses must fully evaluate all aspects before proceeding. This evaluation should always involve an EB-5 Attorney, Corporate Attorney, Tax Consultant, and an Economist, fully versed on all aspects of this complicated area of practice. In addition, there are SEC concerns which need to be addressed when offering this vehicle as an investment option.
Furthermore, Regional Centers are expected to have what is called an “Exit Strategy.” This refers to the manner in which the foreign investor withdraws from the given project. Most Regional Centers are structured in a way so that the foreign investor can withdraw his or her investment after five to six years. While the investment is “at risk,” a prudent foreign investor looks for the likelihood of the return of the principal after said period of time. Therefore, having a sound exit strategy is a key factor to most investors, and to the Regional Center’s prolonged success.
From a foreign investor’s perspective, while the EB-5 program offers the promise of a green card, it certainly is not cheap. By law, the investment must be “at risk.” Therefore, a foreign investor is advised to proceed only if the amount of investment represents a fraction of his or her net worth. Furthermore, the investment (whether Direct or Regional Center) must produce 10 full-time jobs (both direct and indirect jobs may be considered with Regional Centers). Therefore if the job requirement is not met, the investor faces not only the risk of loss of the investment, but also the very real possibility that he or she may not obtain a green card. This is where an experienced EB-5 Attorney may play a key role in attempting to preserve the client’s ability to obtain his or her green card.
With the U.S. lending market still recovering, the EB-5 program creates a plausible opportunity for businesses, by providing low-interest loans for companies or developers. With a cap of 10,000 visas available annually to EB-5 applicants, over $5 billion (assuming the lower $500,000 investment) is available for investment into U.S. businesses every year. However, both foreign investors and US businesses must proceed with caution, and only after a full professional evaluation.
Attorney Marjan Kasra heads up the immigration practice at the Law Office of Marjan Kasra, LLC in Stamford, CT. Attorney Marjan Kasra specializes in EB-5 practice, and actively counsels foreign investors, as well as local businesses. Attorney Marjan Kasra is an active member of AILA (American Immigration Lawyers Association), and a regular contributor to EB5Investors.com.