Investment Based Immigration

 

INVESTMENT BASED IMMIGRATION

 

 

Investment Based Immigration forms the Fifth Preference (EB-5 Employment Creation) of the Employment Based Immigration category for persons who want to be granted immigrant status in the United States for the purpose of engaging in a new commercial enterprise.

For this, an alien may apply for a Green Card or Permanent Residency Visa, if he/she is willing to invest as capital, a sum of $ 1 million in a business that employs ten or more people. This figure may be decreased to $ 500,000 if the business is located in an economically depressed area (known as targeted employment areas). Targeted employment areas include:

  1. rural areas, defined as any area other than one within a metropolitan statistical area or within the boundary of a city or town with a population of 20,000 or more; and
  2. areas having an unemployment rate that is at least 150% of the national average.

Investment is defined as the contribution of capital in the form of equity or long-term debt financing.

 

Capital is defined as cash, cash equivalents (deposits, treasury bonds, etc.), equipment, inventory, other tangible property and indebtedness secured by assets personally owned by the alien.

This investment that the alien makes regarding a commercial enterprise, could include the starting of a new business, the purchase of an existing business or the expansion of an existing business.

If an existing business is purchased, the company must be reorganized so that a new commercial enterprise is formed. If money is put in towards expansion of a business, an increase of at least 40% must result in the net worth of the company or its employer strength.

The application must be accompanied by supporting documents showing the nature of the profession, the purpose of entry, educational qualifications, licenses of the business, membership in professional organizations, etc.

 

The business must benefit the U.S. economy and create employment for lawful U.S. residents. The alien must also be actively involved in the day to day running of the business and may not be only a ‘sleeping partner’.

 

An Immigrant Investor Pilot Program has been introduced to allow investments in a Regional Center. All the requirements remain the same as above, other than a less restrictive job creation requirement, allowing for direct or indirect job creation. Read here for Regional Centers.

 

SINGLE ENTERPRISE WITH SEVERAL INVESTORS

USCIS regulations allow that a single business may be used as a basis for a permanent resident status application by more than one petitioner, but each of them have to invest the full required amount for the area in which the business is located, and ten full time positions must be created for qualifying employees, by each individual investor.

 

FILING OF PETITION

The petition for permanent resident status under this category must be filed on Form I-526, ‘Immigrant Petition by Alien Entrepreneur’ with USCIS.

 

Along with the application, a very detailed business plan must be prepared and supporting documents must be submitted to show that the petitioner has invested or is actively in the process of investing the amount required for this category.

These documents include:

  1. Bank statement(s) showing the amount(s) deposited in U.S. business account(s)
  2. Evidence (invoices, receipts, etc.) of assets, which have been purchased for use in the new business.
  3. Evidence (U.S. Customs entry documents, bills of lading, insurance policies) of property transferred from abroad for use in the new business.
  4. Evidence of purchase of stocks in the business.
  5. Evidence of assets of the petitioner, other than those required for the business mentioned in the application.
  6. Articles of incorporation, certificate of merger, partnership agreement, business trust agreement or other similar document for the new enterprise.
  7. A certificate showing the authority to do business in a particular area.
  8. Photocopies of relevant tax records or other documents for the ten employees, if they have already been hired.
  9. Copy of the business program, showing that not fewer than ten employees will be employed.
  10. Evidence of the petitioner’s position in the new business and a description of his/her duties.
  11. Any other evidence that may prove the applicant’s genuineness.

 

Note: USCIS has allocated 10,000 EB-5 visas a year. As not many applications are received under this category, the USCIS has made it easier for investors to qualify for permanent residence. However, USCIS has become increasingly concerned that there are certain organizations that are offering to obtain permanent residence for individuals under schemes that are debt instruments rather than genuine investments. Participation in such a scheme does not qualify an individual for permanent residence.

 

FAQs answered by the USCIS

               

  1. Do investment plans that involve guaranteed interest payments, buy and sell options at a fixed price other than fair market value, and other debt features comport with the statutory and regulatory requirements?

 

No.  Such plans appear in fact to constitute ‘loans’ or other debt agreements, and therefore fail to meet the definition of ‘invest’ in our regulations.  The regulations expressly prohibit the use of debt arrangements as part of contributions of capital being invested.

 

  1. Do investment plans involving different combinations of provisions designed to reduce or eliminate the risk to the alien’s capital by limiting the amount of capital actually available for the operations of the job-creating enterprise comport with the statutory and regulatory requirements?

 

No.  Such plans impermissibly prevent the alien from placing the required amount of capital at risk of loss in the employment-generating business.  This is equally true where the new commercial enterprise is in the business of lending capital to job creating businesses and acting as a mere conduit between the alien and the job-relating business.  Such plans use a number provisions to shield the alien’s capital from risk including the deposit of cash in bank accounts to guarantee repayment of the alien’s money, the use of promissory notes with large final ‘balloon’ payments combined with the option to ‘sell’ the alien’s investment in the business at a fixed price and guaranteed returns on the alien’s cash outlays.  Such plans appear to continue to allow the alien to withdraw his or her capital prior to the time the balloon payment is due.  In addition, the use of promissory notes in such plans fails to meet the requirement that an alien invest ‘capital’ having a fair market value equal to or greater than the amount required in the statute.

 

  1. Do investment plans that allow an alien to earn a fixed return on his investment at the same time that he or she continues to make installment payments on a promissory note comport with statutory and regulatory requirements?

 

No.  These plans effectively permit the alien to reinvest his or her return on the initial cash contribution in the new commercial enterprise. Therefore the alien is not infusing new capital into the enterprise or the U.S. economy in the statutorily required amount.

 

  1. Should the Service request that the Department of State cease issuing visas and return petitions for revocation based on investment plans involving these terms.

 

Yes, for the reasons stated in summary conclusions 1, 2 and 3.

 

  1. Do plans like those reviewed by our office comport with existing law?

 

No.  Based on our review of a number of approved and pending petitions filed with the Texas Service Center, we have concluded that they fail to meet the requirements of the statute or the Service’s regulations.  Any plans that involve similar terms would also fail to meet current statutory and regulatory requirements.

 

  1. Is the Service stopped or otherwise precluded from denying or revoking petitions filed by aliens investing in the plans like those under review based on past approval of petitions, earlier policy statements or informal statements by Service officials?

 

No.  Under the Administrative Procedure Act and relevant cases, the Service is not bound by its previous decisions in adjudicating visa petitions.  We recommend, however, that the Service issue a memorandum to

the field consistent with this memorandum and publish that memorandum in the Federal Register.

 

  1. Is the Service stopped or otherwise precluded from terminating the status of a conditional resident alien who has invested in plans like those under review based on past approval of petitions, policy statements or informal statements by Service officials?

 

No.  Under the Administrative Procedure Act and relevant case law, the Service is not bound by its initial grant of a petition when terminating conditional residence status based on a visa petition that was granted in error or based on the fact that the alien is subject to termination under section 216A of the Act.  We recommend, however, that the Service issue a memorandum to the field consistent with this memorandum and publish that

memorandum in the Federal Register.

 

Read the changes applicable to the EB-5 category in the ‘‘21st Century Department of Justice Appropriations Authorization Act’’.

 

 

 

The information in this article is of a general nature and may not apply to any specific or particular circumstance. It is not to be construed as legal advice and does not establish an attorney-client relationship between Jethmalani &  Nallaseth PLLC and the viewer.