Congress created the fifth employment-based preference (EB-5) immigrant visa category in 1990 for immigrants seeking to enter to engage in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs. The basic amount required to invest is $1 million, although that amount may be $500,000 if the investment is made in a "targeted employment area.”

Of the approximately 10,000 numbers available for this preference each year, 3,000 are reserved for entrepreneurs who invest in targeted employment areas and through a Regional Center Pilot Program*.

Statutory Requirements

To qualify under the EB-5 category, the new enterprise must demonstrate the following:

• Investment:  The statute requires an EB-5 petitioner to have invested or be in the process of investing.  The term "invest" means to contribute capital. The regulations define "capital" as cash and cash equivalents, equipment, inventory, and other tangible property.
  To show that the petitioner has invested (or is actively in the process of investing) the required amount of capital, the petition must be accompanied by evidence that the petitioner has placed the required amount of capital "at risk." A mere intention to invest will not demonstrate that the petitioner is actively in the process of investing. The investor must show actual commitment of the required amount of capital. Such evidence may include: bank statements showing deposits in the U.S. account of the enterprise, evidence of assets purchased for use in the enterprise; evidence of property transferred from abroad; evidence of funds invested in the enterprise in exchange for stock, except for stock redeemable at the holder’s request; or evidence of debts secured by the investor’s assets and for which the investor is personally and primarily liable.
  
  Merely putting cash into the corporate account of a business does not show that the capital is "at risk" for the purpose of generating a return.  
   
• Investment in a New Commercial Enterprise: To qualify an enterprise as a “new commercial enterprise” an investor must establish a business in one of the following ways: 
  
  1. Starting a new and original business;
  2. Purchasing an existing business and restructuring its organization or operations enough to create a new business;
  3. Expanding, and thereby substantially (40%) change the net worth or number of employees in a business;  or
  4. Invest in a troubled business and maintain the pre-investment number of employees of the business for at least two years.
  
• Job Creation: The investment must create full-time employment for at least 10 US citizens, lawful permanent residents, or other immigrants lawfully authorized to work in the US.  Neither the investor nor the investor’s spouse and children count toward the 10-employee minimum.
   
• Management:  An investor must maintain more than a passive role in the new enterprise.  The regulations require an EB-5 immigrant to be involved in the management of the new commercial enterprise. The petitioner must either be involved in the day-to-day managerial control of the commercial enterprise OR manage it through policy formulation. 
   
• Legal Acquisition of Capital:  The regulations define "capital" as only those assets acquired through lawful means and require filing the following types of documentation to establish that capital used in the new enterprise was acquired by legitimate means: Personal & business tax returns for the previous five years; Foreign business registration records; or Documents identifying any other source of money.
   
• The investment must benefit the U.S. economy.

Federal regulation of foreign investments is extensive. Some regulations restrict foreign investments in aviation, banking, shipping, communications, land use, energy resources, and government contracting. Additionally, Congress has imposed several disclosure and data requirements on foreign investments. An investment may not be deemed beneficial to the U.S. economy if it runs afoul of any statutory limitation on foreign investment.

Pooling Arrangements

The regulations specifically allow immigrant investors to pool their investments with others seeking EB-5 status. Each investor must invest the applicable statutory amount. All of the new jobs created by the new commercial enterprise will be allocated among those within the pool seeking permanent investor visas.

Troubled Businesses

Special rules govern investments in "troubled" businesses. A troubled business is one that has been in existence for at least two years, has incurred a net loss for accounting purposes during the 12- or 24-month period before the petition was filed, and the loss for such period is at least equal to 20 percent of the business’s net worth before the loss. To establish an investment in a troubled business, the petitioner must show that the number of existing employees will be maintained at no less than the pre-investment level for at least two years. Thus, this provision includes a significant incentive in that it does not require the creation of 10 new jobs. Instead, it requires only that the business maintain the number of existing employees during the conditional status period. As a caveat, if the troubled business does not remain afloat for two years after the investment, the investor might lose his or her conditional residency status.

EB-5 Procedures: Initial Evidence

The investor files for EB-5 classification using Form I-526 including all supporting evidence.  Once the USCIS approves an investor’s I-526 petition he/she becomes a conditional resident and receives a conditional Green Card.  A conditional Green Card is a temporary Green Card valid for two years. One year and nine months after it is issued, a three-month window opens up during which an individual must file another application with the CIS to verify that all of the funds have been invested and employment created. When the conditional resident status has been lifted, full resident status is granted and a permanent Green Card is issued.

The entire process takes approximately 4 years, sometimes longer.  Once the investor obtained a permanent Green Card, he is free to sell his business or share of business.

*The Pilot Program

To encourage immigration through the EB-5 category, Congress created a temporary pilot program in 1993.

The regular EB-5 program and the pilot program have similar requirements to begin the process. The distinction between the two processes is that under the EB-5 pilot program must be made in a commercial enterprise located within a "regional center" approved by USCIS and the Pilot Program does not require that the immigrant investor’s enterprise itself employ 10 U.S. workers.  Instead, it is enough if 10 or more jobs will be created directly or indirectly as a result of the investment. 

The capital investment requirement for any EB-5 investor, inside or outside a Regional Center is $1 million.  If the investment is located within a Targeted Employment Area (TEA) or Rural Area (RA) the required minimum capital investment is $500,000.

TEA is a geographic area or political subdivision located within a metropolitan statistical area or within a city or town with a population in excess of 20,000 with unemployment level of at least 150% of the national unemployment rate. 

RA is a geographical area that outside a metropolitan statistical area, or part of the outer boundary of any city or town having a population of 20,000 or less.

Examples of Regional Center Investments include:

1. A limited partnership program that makes low interest loans to businesses in a Philadelphia. 
2. A real estate limited partnership program that offers an investment in industrial
   properties in Washington.  This program involves purchasing low-yielding warehouse properties with invested funds and converting them into higher-value mixed used properties, including office space, retail shops and storage space.  
3. A limited partnership program that builds retirement communities in Washington. 
4. A limited partnership program (based in IL) that makes low interest loans to government agencies.