EB-5 Immigrant Investor Program
The EB-5 Immigrant Visa Program is a unique pathway for foreign nationals to obtain permanent residency and an attractive financing option for U.S. businesses and project sponsors. Through the EB-5 Program, foreign investors can secure lawful, permanent residency in the United States for themselves, their spouses, and their minor unmarried children by making a qualifying capital investment and generating or preserving jobs.
General Requirements
To achieve permanent residency through the EB-5 Program, a foreign national must meet the following criteria:
1. Investment: Make a minimum investment of $800,000 or $1,050,000 in a new business or investment entity (referred to as the “New Commercial Enterprise” or “NCE”). The lower threshold of $800,000 applies to investments in “Targeted Employment Areas” (TEAs), which are regions characterized by higher unemployment or rural areas.
2. Source of Funds: Prove the lawful source of the investment funds. This includes providing evidence of the legal acquisition of the investment capital and the transfer of these funds to the New Commercial Enterprise.
3. Job Creation: The New Commercial Enterprise must create 10 full-time jobs, either directly or indirectly. Direct job creation involves hiring employees directly by the NCE, whereas indirect job creation stems from an economic model based on the expenditures of the EB-5 project, typically used by investments managed under the Regional Center Program.
Types of EB-5 Investments
EB-5 investments can be categorized into two types: Direct Investments and Regional Center Investments. Most EB-5 investors choose to invest through a Regional Center.
Direct Investment
In a direct EB-5 investment, the foreign national must invest at least $800,000, or $1,050,000 if the business is outside a targeted employment area, into a U.S. business. The investor must demonstrate the creation of at least 10 full-time jobs for qualified U.S. workers (U.S. citizens or green card holders) within two years of receiving their conditional green card.
Regional Center Program
Regional Centers are entities designated by USCIS to manage EB-5 investments in specific geographic areas to promote economic growth. Regional center investments resemble traditional private equity structures, where EB-5 investors become limited partners in a special purpose investment vehicle. The pooled EB-5 investments are then directed to a project entity known as the “Job Creating Enterprise” (JCE) as either a loan or preferred equity. The JCE utilizes the EB-5 funds to develop or operate its intended business.
Unlike direct EB-5 investments, regional centers can satisfy the job creation requirement through indirect jobs. These jobs are estimated by an EB-5 economist using an input-output model, which evaluates the project’s expenditures and their impact on regional job creation.
Regional center investments are typically managed as private placement securities offerings, exempt under Regulation D of the Securities Act of 1933. Prospective EB-5 investors usually receive a subscription package that includes:
- Subscription Agreement: Details the procedure for subscribing to the offering as an EB-5 investor.
- Operating Agreement/Limited Partnership Agreement: Defines the rights and responsibilities of the EB-5 investor as a member or limited partner.
- Private Placement Memorandum (PPM): Outlines essential facts and risks associated with the offering.
- EB-5 Business Plan: Describes the project’s intended operations and includes supporting documents for the feasibility of its goals.
- Economic Study: Conducted by an EB-5 economist, detailing the methods used to predict job creation.
Origin Law excels in guiding regional centers and developers through the complexities of the EB-5 program. Our legal expertise in U.S. immigration, corporate law, and securities equips our clients with the necessary tools to structure EB-5 compliant offerings. Our team has also represented a diverse array of investors worldwide and possesses the expertise to navigate even the most complex source of funds petitions.
