By Mark I. Davies, Global Chairman, Davis & Associates
On June 30th, 2021 the EB5 Regional Center Program expired and USCIS stopped accepting new I526 Petitions for processing. At the same time USCIS continued to accept EB5 petitions for Direct EB5 applications at the USD 500,000 level.
While USCIS have stopped processing EB5 Regional Center Petitions and related I485 Petitions the processing of Direct EB5 and related Petitions continues. With work having stopped on EB5 Regional Center files it seems a reasonable assumption that the processing time for EB5 Direct cases will dramatically improve.
The EB5 Regional Center program was a “pilot program” subject to constant renewals the EB5 Direct program is permanently authorized, does not expire and is currently open for investments at USD 500,000.00.
There is a lot of misinformation concerning the Direct EB5 program. The chart which follows is intended to provide a very basic summary in an effort to dispel those myths.
|EB5 Regional Center Program |
(which Expired on June 30th)
|EB5 Direct Program|
|Investment Required||USD 500,000 in TEA |
USD 1,000,000 outside TEA
|USD 500,000 in TEA |
USD 1,000,000 outside TEA
|Are you required to invest in your own business?||No.||No but this is common.|
|Does my investment have to be cash?||While not required by law Regional Centers require cash to fund their projects.||Cash is not required**. Our firm has obtained EB-5 Direct Green Card by leveraging equipment, inventory and other assets.|
|Period of Authorization||Lapsed on June 30th, 2021.||Permanently authorized.|
|Job Creation||Can use implied and induced jobs under an economic formula to evidence ten jobs have been created.||Proof based on the preponderance of the evidence that 10 actual jobs will be created within 2.5 years.|
|Can existing jobs be used?||No, with a narrow exception for saving jobs in a financially troubled business**.||No difference**.|
|Involvement in Day-to-Day Management||Not required***.||Not Required but this is much more common than with Regional Center cases. ***|
I Have a Furniture Factory in Vietnam. Can I fund My US EB5 Investment with Stocks of Furniture?
You can establish a business in the US to sell the furniture you make in Vietnam using an L visa. As long as you have invested sufficient stocks of furniture and other capital in the US and created sufficient US jobs you are eligible to file for EB5 Investor Visa.
I Have a T-Shirt Factory in India. Can I fund My US EB5 Investment with Stocks of T-Shirts?
You can establish a business in the US to sell the T-Shirts you make in India using an L-1 visa or other visa. As long as you have invested sufficient stocks of T-Shirts and other capital in the US and created sufficient US jobs you are eligible to file for EB5.
Can I come to the US While I am waiting for my EB5 to Process?
Many of our firm’s client have established small businesses in the United States using E2 visa, L1 visa and other visas. After establishing these businesses and making them grow to the applicable level our clients have been uniformly successful in “adjusting” their status in the United States to “Permanent Resident” and “Green Card” status using EB1c, Direct EB5 and other Employment-Based categories.
A key advantage of Direct EB5 and EB1c is that they both allow a client to build their US businesses over time and qualify for a Green Card.
For example a client who obtained an E2 visa to start a small coffee shop in Miami was able to grow that business to three coffee shops thereby creating over twenty jobs. This client was able to adjust her E2 visa to a Green Card using the Direct EB5 program.
In another example an Indian client established a small two employee fashion marketing business in New York using an L-1 visa and was later able to “adjust” to Green Card status after growing his US business for 2-3 years.
While it is absolutely possible to come to the US on a non-immigrant visa and await the approval of an EB5-based Green Card this involves assessing considerations of “immigrant intent” and other complex issues of immigration law. Such considerations require careful planning and the assistance of an experienced EB5 lawyer.
Can I Count Jobs Created for my Family for Direct EB5 Purposes?
A common question to which the answer is NO – you cannot count jobs created for family members as part of meeting job creation requirements for EB5 . For Direct EB-5 you must create a minimum of 10 jobs within 2.5 years.
What Type of Business is Eligible for Direct EB5?
This is a very common question. All types of businesses in any industry qualify for EB5 so long as the requisite jobs are created and the applicable investment has been made. Our clients have established businesses including but not limited to the following industries and later “adjusted” to Green Card status through EB5 or other employment-based categories:
- Oil & Gas
- Medical Devices
- Heath Care
- Information Technology
- Hair and Beauty
* The amount of investment for both EB5 programs had been increased to USD 900,000 to USD 1,800,000 depending on the location of the project but this amount was reduced as a result of court action in June 2021. See Behring Regional Center v. Wolf, Case No. 3:20-cv-09263 (N.D. Cal)
** 8 C.F.R. § 204.6 (e). Capital means cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien investor, provided that the alien investor is personally and primarily liable and that the assets of the newcommercial enterprise upon which the petition is based are not used to secure any of the indebtedness. All capital shall be valued at fair market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act.
*** 8 C.F.R. § 204.6 (g)(4)(ii). In our experience Direct EB5 investors can be very quick to look for opportunities to invest in a “troubled business” in order not to have to create ten new jobs. This can often lead to commercial losses, a failure to maintain the jobs and the denial of the EB5 immigration benefit sought. We suggest conducting a proper business and financial review with a licensed financial or business advisor before acquiring or forming any business.
**** 8 C.F.R. § 204.6 (j)(5) provides rules for “petitioner engagement” which are as follows:
To show that the petitioner is or will be engaged in the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, the petition must be accompanied by:
(i) A statement of the position title that the petitioner has or will have in the new enterprise and a complete description of the position’s duties;
(ii) Evidence that the petitioner is a corporate officer or a member of the corporate board of directors; or
(iii) Evidence that the petitioner is engaged in policy making activities. For purposes of this section, a petitioner will be considered sufficiently engaged in policy making activities if the petitioner is an equity holder in the new commercial enterprise and the organizational documents of the new commercial enterprise provide the petitioner with certain rights, powers, and duties normally granted to equity holders of the new commercial enterprise‘s type of entity in the jurisdiction in which the new commercial enterprise is organized.
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