EB-5 (EB5) CAPITAL INVESTMENT VISA
The United States Citizenship Immigration Services administers an immigrant investor program known as the Employment-Based Fifth Preference Visa Program (EB-5).
Under the EB-5 program, investors (their spouses and their unmarried children under 21) whose commercial enterprises create 10 permanent full-time jobs for legal workers are eligible for permanent residency.
The EB-5 immigration investor program was established in 1990 to stimulate job creation and capital investment by foreign investors. In 1992, Congress formed the Regional Center Program, which sets aside EB-5 visas for those who invest in businesses in targeted regional centers approved by the USCIS for economic growth.
Eligibility Requirements
Commercial enterprises formed after November 29, 1990, are eligible for EB-5 visas. Exceptions to the November 29, 1990, requirement:
- New businesses formed through the restructuring of a previous company.
- Commercial enterprises expanded through investment (resulting in a 40% increase in a business’ net worth or number of employees).
1. Sole proprietorships
A sole proprietorship is a business run by one individual or proprietor. It is simple to form and operate and enjoys management flexibility, fewer legal controls, and generally fewer taxes. On the downside, the proprietor is responsible for all the debts incurred by the business. Sole proprietorships include lawn maintenance companies, freelance writers, information technology (IT) consultants, photographers, and freelance graphic designers.
2. Partnerships
A partnership is a formal arrangement between two or more persons to operate a business and share its profits and liabilities. There are three main types of partnerships:
a. General Partnership
A general partnership is created by signing a partnership agreement without forming a business entity with the state. Profits and liabilities are shared equally among partners. Airbnb and Flipboard, and Bonne Belle and Dr. Pepper are examples of general partnerships.
b. Limited Partnership (LP)
Limited partnerships are formal commercial entities authorized by the state. They usually comprise one general partner and one or more limited partners who provide money but do not actively manage the business. Limited partners share in profits but cannot lose more than they have invested. Real Estate entities are often limited partnerships.
c. Limited Liability Partnership (LLP)
A limited liability partnership is similar to a general partnership, with all members managing the business; however, liability for one another’s actions is limited. Doctors, lawyers, and accountants usually form limited liability partnerships.
3. Holding Companies
A holding company is a corporation or limited liability company that buys and possesses controlling stock or shares in other companies. Apple Inc. and Berkshire Hathaway are examples of holding companies.
4. Joint Ventures
A joint venture (JV) company is a commercial enterprise in which two or more parties agree to pool their resources for a business activity. Each participant shares in the profits, losses, and costs of running the business. Microsoft and General Electric, Boeing and Lockheed Martin, and Fiat and Google are joint venture enterprises.
5. Corporations
Corporations are commercial entities that are separate and distinct from their owners. They are often referred to as “legal persons” under the law since they possess many of the same rights and responsibilities associated with individual persons. Corporations, like persons, can enter contracts, hire employees, own assets, loan and borrow money, and pay taxes. Coca-Cola, Google, Apple, Microsoft, and Toyota are corporations.
6. Business Trusts
A business trust is a commercial enterprise where a trustee manages a business on behalf of beneficiaries. The W.K. Kellogg Foundation and the Ford Foundation are examples of business trusts.
7. Limited Liability Companies
A limited liability company (LLC) is a commercial enterprise that protects its owners from personal responsibility for its debts and liabilities. LLCs are hybrid companies that combine traits of a corporation with those of a partnership or sole proprietorship. Pepsi-Cola, Sony, Nike, and IBM are limited liability companies.
Job Creation Requirements
- EB-5 investors must create full-time positions for at least 10 legal workers employed no less than 35 hours per week for a minimum of two years.
- For a business not located within a regional center, the employer must directly generate and maintain full-time positions for qualifying legal employees.
- For a business located within a regional center for economic development, the employer may directly or indirectly create full-time positions. If indirectly created, 90% of indirect full-time jobs may be produced as a consequence of and outside the new business venture.
- For business ventures in existence for at least two years and suffering from hardship (a net loss of 20% for a minimum of 12 months), an EB-5 investor’s eligibility may be maintained by relying on job maintenance—the number of existing employees remains and is retained at no less than pre-investment levels.
Capital Investment Requirements
The capital investment requirement pertains to all real, personal, and tangible assets owned and controlled by the EB-5 investor. The minimum investment is $1,050,000 for high-employment areas and $800,000 for targeted zones such as rural or high unemployment districts (150% of the national unemployment rate).
An EB-5 investor may choose to invest in an infrastructure project (maintaining, improving, or constructing public works projects) in a targeted center as long as it is administered by a government entity like a Federal, State, or local agency or authority.
Immigrant Visa Set-Asides
The EB-5 program sets aside a certain percentage of visas for immigrants that invest in specific areas. Twenty percent of visas are set aside for rural development, 10% for high unemployment areas, and 2% for infrastructure projects.
Mutual Benefit
The EB-5 program benefits immigrants and the United States. Immigrants are blessed with the benefits of permanent residency and economic opportunity, and the United States profits from wealth investment and growth, particularly in its most vulnerable regions.
Source: USCIS. U.S. Department of Homeland Security. https://www.uscis.gov/working-in-the-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/about-the-eb-5-visa-classification/.
