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Frequently Asked Questions About EB-5 Regional Center Investments

 

What is an EB-5 Regional Center?


An EB-5 Regional Center is an organization, designated and regulated by USCIS, which facilitates investment in job-creating economic development projects by pooling capital raised under the EB-5 immigrant investor program. Regional centers can be publicly owned, (e.g. by a city, state, or regional economic development agency), privately owned, or be a public-private partnership.

What do Regional Centers do?
 
•     Identify investment opportunities that will create jobs in local communities, often in partnership with economic development agencies.
 
•   Assist in marketing those investment opportunities to investors from around the world.
 
•   Ensure that the investment offering complies with federal and state securities laws and SEC regulations as well as specific EB-5 requirements.
 
How are EB-5 investments affiliated with Regional Centers structured?
 
EB-5 investments that are affiliated with EB-5 Regional Centers are made through private placements - the sale of securities to a relatively small number of select investors. Like all private placements, which are used by companies to raise capital in a number of contexts, EB-5 private placements are governed by federal and state securities laws and regulations.
 
A private placement memorandum is developed that details the investment offering, including detailed explanations of the project that will be funded along with disclosures of risk and material information consistent with all applicable federal and state laws. The economics of the project related to EB-5 specifically – the expected job creation – are also detailed in the memorandum. In some cases, the issuer of the private placement memorandum is an EB-5 Regional Center itself. In other situations, the issuer is business entity that will be receiving the investment funds and is affiliated with a Regional Center.
 
What risks do investors face in EB-5 regional center investments?
 
By law, EB-5 investments must be “at risk” in the same way that any equity, stock or other type of investment carries inherent risk. Regional centers, like other entities that market investment opportunities, cannot guarantee a return on investment. Regional Centers also cannot guarantee return of the investment principal to the investor.
 
 

What kind of financial commitment do EB-5 investors make?
 
By law, an EB-5 investor is required to invest a minimum of $1 million, unless the investment is located in a Targeted Employment Area (TEA) – a rural area or area of high- unemployment designated by USCIS. Regional Centers funding projects in TEA’s can accept a minimum of $500,000 from each EB-5 investor.
 
Immigration Opportunities for Foreign Investors
 

Prior to the Immigration Act of 1990, a foreign national could not qualify for permanent immigration to the United States based upon an investment, no matter how large. Investors had to qualify, if at all, as employees of U.S. companies, family members of U.S. citizens or permanent residents or, in the alternative, obtain non-immigrant (temporary) visas. As a result of this policy, many foreign investors immigrated to countries such as Canada and Australia, which have provided substantial incentives to foreign investors.
Presently, 10,000 immigrant (permanent) visas per year are available to foreign investors and their family members who meet certain, very specific criteria. These criteria are interpreted very strictly by the U.S. Citizenship and Immigration Services (USCIS).  This FAQ will address how foreign investors can obtain permanent resident status in the United States.

What is a "targeted employment area?"
 

A targeted employment area is a rural area or a geographical area that has experienced unemployment at a rate of at least 150% of the national average rate. Individual states are authorized to designate geographical areas within the state that qualify as targeted employment areas.

What is included in calculating the investment amount?
 

The entire amount of the investment need not be in cash. Assets transferred to the U.S. investment can be included at fair market value. Amounts borrowed by the investor can be included in the required minimum investment amount but only to the extent that the debt is secured by assets owned by the investor, and the investor is personally and primarily liable. The assets of the business in the United States in which the investment is made cannot be used to secure any of the indebtedness.

Must the investor have any specific relationship with the U.S. business in which the investment is made?
 

The investor need not own any specific percentage of the business, be an officer of the business or be an employee of the business. However, the investor must be engaged in some way in the business, whether through actual day-to-day managerial control, by being a member of the board of directors, by being a limited partner, or the like.

Must the investment result in the creation of employment for U.S. workers?
 

The investment must create full-time employment for at least 10 U.S. citizens or immigrants (permanent resident aliens and other specified immigrant categories). The required 10 positions cannot include the investor or the investor’s spouse or children. The 10 jobs must be for employees of the enterprise in which the investment is made and cannot include independent contractors. However, for approved regional centers, the creation of employment can include indirect and induced employment.
 
When must the employment be created?
 

The EB-5 petition must document that the required 10 jobs will be created within a 2 1/2 year period immediately following the approval of the EB-5 petition.

May two or more investors qualify for immigration based upon a pooled investment in a single business?
 

There is no limit to the number of investors who may qualify for immigration based upon an investment in a single business. However, each investor must invest the required minimum amount, and the number of jobs created must be equal to ten times the number of qualifying foreign investors. For example, if five investors each invest $1 million in a business, they can each qualify for immigration if 50 jobs are created in the business.

Is the immigration status granted to the investor valid indefinitely?
 

The permanent resident status granted to the investor is actually a "conditional permanent resident status" that is valid for a period of up to two years. The investor and family members are required to remove the condition by filing an application during the 90 day period preceding the second anniversary of obtaining this status. The petition must demonstrate the establishment of the business, the investment of the requisite amount of capital and the creation of the required number of jobs.

Do all family members get conditional permanent residence status at the same time?
 

The investor, his or her spouse and any unmarried, under 21 year old children can obtain permanent residence at the same time and through a single investment of the mother or father.

Is the investor free to travel after obtaining conditional permanent resident status?
 

The investor is free to travel in and out of the United States subject to the rules generally applicable to permanent residents. Specifically, the investor must maintain a residence in the United States and must not be outside the United States for a continuous period of one year or more, unless she has obtained a reentry permit.

What is the procedure for an investor to qualify as an immigrant based upon the investment?
 

Form I-526, "Immigrant Petition by Alien Entrepreneur," must be filed with USCIS.  The petition must be supported by a substantial amount of documentation proving that the investor meets all of the requirements. Once the petition is approved, the investor may either apply for an immigrant visa at a U.S. Consul or, if the investor is in the United States, apply for adjustment of status to permanent residence.

Where is the application filed?
 

Form I-526 is filed with the USCIS. The application for conditional permanent residence is filed with USCIS if the investor is in the U.S. or through the National Visa Center if the investor will be outside of the U.S. and attending an interview at the U.S. Consulate in the home country. The condition removal petition, Form I-829, is filed with the USCIS.

What is the timing of this process?
 

The I-526 petition is generally reviewed within three to six months for a direct EB-5 and often more than a year for a regional center EB-5. The conditional permanent residence process generally takes between six and twelve months depending upon whether the investor is in the U.S. or, if outside of the U.S., which consulate will be interviewing the investor.

What documents must be filed with the petition?
 

The basic rule is that there must be documentation to establish each of the requirements set forth above.  Specifically, documentation must prove the actual transfer or commitment of funds; the lawful source of the investor's funds; the location of the investment in a targeted employment area (if the investment is less than $1 million); the investment in a new commercial enterprise; the involvement of the investor in the business; and the actual creation of 10 full-time positions or a comprehensive business plan showing the need for the 10 employees and the approximate dates when they will be hired.  Specific additional documents will be required depending upon the details of the investor and the investment being made.

What documentation must be presented to prove that the investor's funds came from a lawful source?
 

Generally, the investor will present some combination of individual and/or business tax returns, employment records, documentation regarding sale of or dividends from a business, documentation regarding gifts or inheritance, and documentation regarding securities or real estate transactions.

Can all of the invested funds be a gift?
 

Yes. However, in that case, the person giving the gift must prove the lawful source of the gifted funds.

Is an investment in a regional center guaranteed?
 

No. There is both an immigration risk and a financial risk. Regional centers may have a number of different projects. It is possible for a regional center to obtain pre-approval of a specific project. Even if a project is pre-approved, there is an immigration risk as to whether the necessary jobs will be created in order to obtain removal of conditions. There is also financial risk in every investment. For these reasons, it is critical for the investor to choose both the regional center and the regional center project very carefully.

What must be proven in order to obtain removal of conditions on permanent residence?
 

The investor must prove that the investment has been sustained – not withdrawn – and that the requisite jobs have been created.
 
What happens if the necessary jobs are not created?
 

If the necessary jobs will not be created, the investor will not be able to obtain removal of conditions on permanent residence and will lose any legal status in the U.S. If there will be a change or delay in creating the necessary jobs, it may be necessary for the investor to file a new I-526 petition and obtain a new two year period of conditional permanent residence status. It may not be necessary to do this if the investor can prove at the time of filing of the I-829 petition that all of the necessary jobs will be created within a "reasonable time" (defined as one year).

When is it possible to apply for U.S. citizenship?
 

Four years and nine months after obtaining conditional permanent residence status if the investor meets physical presence and residence requirements. Applying for U.S. citizenship is optional.

 

What are the benefits of investing in Regional Center projects?

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  • Investing in an approved project satisfies all the requirements for the EB-5 visa program. The investor does not have to worry about presenting a business plan for approval from the U.S. Citizenship and Immigration Services as Empire State EB-5 Regional Center has already completed that task.
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  • It is easier to satisfy the job creation requirements in a Regional Center, which is important to ensure that the condition is removed after the two-year period. Regional Centers are permitted to count both jobs that were created as a direct result of the investment (e.g., manufacturing jobs), and as an indirect result (e.g., suppliers of materials for the manufacturing process).
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  • The investor is not required to take an everyday role in the management of his investment.
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  • The investor may live and work anywhere in the United States; he or she is not obliged to live in the area where the investment is situated.

When and for whom was the EB-5 visa program created?
 

The EB-5 visa program was created in 1990 under section 203(b)(5) of the Immigration and Nationality Act (INA). The program allows for qualified non-US citizens to seek permanent resident status on the basis of an investment in the American economy.

 

How many EB-5 visas may be issued per year?
 

There are 10,000 EB-5 visas available to qualified aliens each year. 3,000 of these visas are designated for aliens who invest through a program at an USCIS designated Regional Center.

How does the EB-5 visa differ from an L-1 visa (manager transfer)?
 

With an EB-5 visa, you obtain a green card for permanent residence in the United States. After 5 years, the investors and their family may obtain US citizenship, subject to meeting all immigration requirements. Other visas, such as the L-1, may never result in permanent residence, have time limits, must be renewed, and require additional filings with the USCIS or Department of State.
 
Who may obtain an EB-5 visa?
 

Any person who can demonstrate the ability to invest the required amount into the American economy, can document that the capital was legally earned, and satisfies general eligibility requirements (e.g., medical, criminal) is qualified to apply. The investor's spouse and any minor children (under 21) also qualify. The age of the minor children is "frozen" at the time of the I-526 application so, for example, a 20-year old dependent is not in danger of "aging out" during the process.

Will my investment in a Regional Center be returned if my application is denied by the U.S. Citizenship and Immigration Services (USCIS)?
 

Yes. Empire State EB-5 Regional Center has created an escrow account in which your investment is held until your application is approved by the USCIS. In the event that your I-526 application is denied, your investment will be returned to you in full minus administrative expenses.

How long is the "green card" valid?
 

The investor and dependents receive a conditional, 2-year green card. Before the expiration of the two year period, a petition is submitted to the USCIS confirming that the investment has been made and that ten direct and/or indirect jobs have been created as a result of the investment. In a non-regional center investment, job creation is limited to direct jobs only.

If I or a member of my family is already in the U.S. on another visa, is it necessary to return to my home country in order to obtain an EB-5 visa or permanent residence?
 

Probably not. In order to obtain permanent residence in the U.S. under the EB-5 program, you may not need to return to the country of your citizenship. You and the members of your family may apply to adjust status while in the United States if you are in valid, non-immigrant status.

Where can I find more information about the EB-5 visa program?
 

Further information regarding the application process, requirements, and benefits of the EB-5 visa program can be found on the website of the U.S. Citizenship and Immigration Services (www.uscis.gov).

Is it required that I have a degree of higher education?
 

No. There are no education requirements for EB-5 visa applicants.

Must I have previous business experience?
 

No, it is not required that an applicant have had any previous business experience.

What if I do not speak English?
 

It is not required that an applicant speak English.

Is it required to show that I am in good health?
 

Yes. You must prove that you and any accompanying family members are in good physical and mental health, and do not have any diseases or disorders that may present a threat to society.
 
Do I need to have earned the money for the investment myself?
 

No. For example, the money can be a gift. The only requirement would be to show that the gifted money was legally earned, and that taxes (if applicable) were paid on the gift. Another example would be using the proceeds of the sale of real estate or a prior investment to fund the investment.

May I apply for an EB-5 visa if I have previously been denied a visa to the U.S.?
 

If you have been previously denied a visa to the U.S., you may still apply for an EB-5 visa.
 

Can qualified individuals from any country apply or are there restrictions based on citizenship?
 

With the exception of individuals from countries with which the U.S. does not hold diplomatic relations, citizens of any country may apply for permanent residence in the U.S. through the EB-5 investment program. As long as the applicant is able to leave his or her home country and has sufficient investment capital, a qualified immigration lawyer can assist the applicant with the process of obtaining an EB-5 visa.

 

What is the most common reason for rejection of an EB-5 visa application?
 

In most cases when an EB-5 visa application is rejected, the applicant failed to demonstrate that he or she had legally earned his investment capital.

What other requirements are there in order to obtain an EB-5 visa?
 

To obtain an EB-5 visa, as with any other visa to the U.S., the applicant and any accompanying family members must meet all requirements
(e.g., criminal, medical) stipulated by the immigration laws of the United States.

What are the financial risks involved with the Regional Center investment projects?
 

All investments are risky by nature and the Regional Center projects are not exceptions. Under the law, the Regional Center cannot guarantee profit or the return of the principal investment.