EB-5 Investors

Overview of EB-5 Immigrant Investor Category

In 1990, Congress created the employment based 5th preference (EB-5) immigrant visa category. The EB-5 offers 10,000 “green cards” (permanent resident status) annually to immigrants who invest in U.S. businesses that benefit the economy and create or save jobs. While the normal required minimum investment is $1 million, that amount is reduced to $500,000 if the investment is made in a high unemployment area.

The immigrant may invest in a new start-up business or in an existing entity. After the immigrant moves forward with the investment and is approved by Citizenship and Immigration services (CIS), s/he obtains conditional residence status for two years. After two years, if s/he proves that s/he maintained the investment and created or saved at least ten jobs, the conditional status will be removed and s/he will become a full-fledged lawful permanent resident.

Private Regional Center (PRC)

A PRC is a private business entity that is pre-approved by the U.S. government for an EB-5 and that satisfies certain geographical, growth of economy and employment criteria. Once the government has approved a PRC, a foreign investor identifies the right opportunity and invests the $500,000 in the regional center’s project. A positive return on investment coupled with U.S. permanent resident status provides more than enough incentive for the foreign investor.

Over 25 EB-5 regional centers exist around the United States, including in Texas, California, Pennsylvania, Vermont, and Hawaii. Other applications are pending from such states as Iowa and New York. Examples of PRC projects include urban development, providing bridge loans to companies for renovations, purchasing, renovating and managing industrial properties, purchasing land and harvesting export crops.

The minimum investment for an EB-5/PRC project is $500,000. The money is released for project use when the immigrant is conditionally approved for the green card and refunded if s/he is denied. The investment vehicle is usually a limited partnership (pooled investments) with a General Partner receiving fees. Rates of return on the investment vary, of course, but current real estate projects average 4-5% on renting and a portion of profits on sale. In addition to a positive return, the foreign national is able to obtain U.S. permanent resident status through the investment.

It should be noted, however, that investments into qualified PRCs are not restricted to intending immigrants. The projects have universal appeal to all investors, including U.S. citizens. In fact, through discussions with principals of operating PRCs, I have learned that many U.S. citizens prefer these investment projects because they offer cash on cash returns with low risk inherent in real estate. In addition, the projects are exclusive equity deals because no bank financing is necessary.

Positive Outlook for the EB-5

For a variety of reasons, the EB-5 program has always been underutilized. At its height in 1997, only 1,300 people obtained green cards through the EB-5 program. This represented only about 13% of the annual limit. Then, in 1998, the former Immigration and Naturalization Service (INS) changed its interpretation of the EB-5 program, making it extremely difficult for new investors to qualify.

The good news is that Congress recently signaled its continued interest in the EB-5 program by extending the EB-5 regional center pilot program. This subset of the EB-5 program allows the government to set aside up to 3,000 of the 10,000 EB-5 green cards each year for investors who invest in designated governmental or private regional centers. EB-5 petitions filed through regional centers only have to show indirect, not direct, job creation.

The recent extension and revisions to the EB-5 category is evidence of a commitment by the U.S. to attract and encourage foreign investors. There has been no better time than now for foreign nationals to invest in the United States and utilize the EB-5 category to attain their immigration goals.


Fifth Preference: Up to 10,000 visas a year may be issued to persons who have between $500,000 and $3 million to invest in a job-creating enterprise in the U.S. At minimum of 10 U.S. workers must be employed by each investor. The amount of investment needed can vary depending on which area of the country will benefit from the investment. An investor’s permanent residence status may be lost if all specified conditions are not met.

1. Basic Program

An EB-5 allows for conditional residency for person who invests $1,000,000 (or under certain circumstances $500,000) in a new commercial enterprise that employs 10 United States Citizens or authorized immigrant workers full-time and engage in the business through day-to-day management or policy information.

2. Must invest in a New Commercial Enterprise

Eligibility– To qualify as a “new” company it must have been formed after Nov. 29, 1990. Establishment of a “new” enterprise is no longer necessary. However, a company formed before Nov. 29, 1990 will be considered “new” if: (a) it was reorganized so that a new commercial enterprise results; or (b) the company has been expanded so that a substantial change in the net worth or number of employees has occurred.

Initial Evidence– A petition must be accompanied by evidence that the alien has invested or is actively in the process of investing lawfully obtained capital in a new commercial enterprise. Petitions submitted under the Immigrant Investor Pilot Program must be accompanied by evidence that the alien has invested, or is actively in the process of investing, capital obtained through lawful means within a regional center designated by the Service.

Evidence of Creation– To show that a new commercial enterprise has been established, the petition must be accompanied by:

a. As applicable, articles of incorporation, certificate of merger or consolidation, partnership agreement, certificate of limited partnership, joint venture agreement, business trust agreement, or other similar organizational document for the new commercial enterprise;

b. A certificate evidencing authority to do business in a state or municipality or, if the form of the business does not require any such certificate or the State or municipality does not issue such a certificate, a statement to that effect; or

c. Evidence that, as of a date certain after November 29, 1990, the required amount of capital for the area in which an enterprise is located has been transferred to an existing business, and that the investment has resulted in a substantial increase in the net worth or number of employees of the business to which the capital was transferred.

3. Investments

A foreign national who invests (after Nov. 29, 1990) or is actively in the process of investing, capital of $1,000,000; or invests (after Nov. 29, 1990) or is in the process of investing, $500,00 if the investment is for a “targeted employment area”. Investments can be cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the entrepreneur. The investment must be in only one commercial enterprise; an investor cannot combine investments in multiple commercial enterprises.

4. Targeted Employment Area

A Targeted Employment Area (TEA) is either a rural area or an area of high unemployment at the time of the capital investment. An investment in TEA project may be a minimum of $500,000.

4. Investment (At Risk)

d. Promissory Notes. A petitioner must show that the note is secured by his or her property; an unsecured promissory note is not an investment in capital. Petitioner must “substantially complete” his payments on a signed valid promissory noted prior to the end of the 2-year conditional residency period.

e. Trust. A trust must ensure that funds are fully available from any agreement.

f. Guaranteed Interest Payments and Guaranteed Returns

g. Redemption Agreements. An investor may not enter into an agreement granting him a right to sell his interest back to the partnership.

h. Secured Loans. A loan taken from a bank with the investment as a security in not an investment.

i. Reserves. Funds set as reserves and are not available to the job-creating enterprise cannot be considered part of the contribution.

5. Source of Funds

Petitioner must show the source of the funds and that they are legitimate.

6. Multiple Investors/Partnerships

Multiple investors are allowed, including nonpetitioners. However, each investor who wishes to qualify must meet the capital and employee requirements. An investor may join a partnership. If an investor chooses to join a limited partnership, investor must be given powers and duties under the Unified Limited Partnership Act.

7. Employment Creation

An investor must create full-time employment for at least 10 qualifying United States Citizens or immigrant workers within the 2-year conditional residency period. Investment with a regional center will enable indirect job creation: jobs held by persons who work outside the newly established commercial enterprise.

8. Regional Center Pilot Program

This program allows for investors to invest through regional centers, which relaxes the job creation requirements so that jobs may be proven by direct and indirect employment.

Regional Center Proposal – A proposal must provide a framework showing how an investment with a regional center can satisfy the EB-5 eligibility requirement and create qualifying EB-5 jobs.

A proposal must include the following elements:

a. A clearly identified, contiguous geographical area for the regional center. If the center contemplates investments of $500,000 it must identify the TEA.

b. A detailed description of hose the investment will create direct or indirect qualifying jobs.

c. A detailed prediction of the center’s regional and national impact on household earnings, business services, utilities, maintenance and repair and construction within and outside the regional center.

d. Description on how the administrative structure of the center will: (1) be promoted to attract investors; (2) identify assess and evaluate investor projects; (3) structure its investment capital; and (4) oversee all investment activities.

  • A regional center must demonstrate how it will “promote economic growth through increased export sales, improved regional productivity, job creation, or increased domestic capital investment.”

10. Visa Application Process and Estimated Timeline

Step 1:

The initial application for an EB-5 Visa is the Form I-526, Immigrant Petition by Alien Entrepreneur, which must be submitted to the United States Citizenship and Immigration Services (USCIS) California Service Center with the necessary paperwork (corporate documents, proof of investment, proof of lawful source of funds, etc.) along with a Filing Fee. Approximate adjudication time: 6 months.

Step 2:

Once an approval is issued, the foreign national can either adjust status (if present in the United States) or go through consular processing (if outside the United States or unable to adjust status inside the United States). After the successful completion of either process, the foreign national will then be issued a conditional permanent resident card valid for 2 years. Approximate adjudication time: Adjustment of Status: 6 months; consular processing: 1 year.

Step 3:

Ninety days prior to the expiration of the permanent resident card, the foreign national must submit a Form I-829, Petition by Entrepreneur to Remove Conditions. Upon successful adjudication, the conditions on the foreign national’s permanent resident are removed. Approximate Adjudication time: 6 months.

10. Spouse and Children of Principle Investor

If a child becomes 21 (or marries) or the spouse obtains a divorce after conditional residency is granted, the condition may be removed. If the investor dies during the 2-year period, the spouse and child ma become LPRs if there is a showing that the investment and other necessary conditions were met.

11. Removal

If USCIS finds that the investment was not qualifying investment, the investor can be deported, if status is terminated.