EB-5 Investment Options

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FreightTo.com (owned by World Cargo) is looking for EB-5 investors to help develop shipping software that will increase revenue as well as build jobs for US job-seekers.

If you are interested in finding out more, please contact us: CONTACT US

U.S. Department of Homeland Security Seal, U.S. Citizenship and Immigration Services

The EB-5 Investment Visa provides flexible options to obtain a permanent resident visa. Foreign investors can invest in any type of for-profit lawful business entity. The structures of the business entity can be any of the following for-profit business categories:

New Business Enterprise

Any for-profit lawful business entity is considered a commercial enterprise. There are four types of sub avenues classified as new business enterprises.

Creating a new business:
The EB-5 program defines a ‘new’ enterprise as one that was “established after November 29, 1990.” Immigrant investors can invest the required amount of capital in a commercial enterprise that was established after November 29, 1990, provided that other criteria are met. Based on a 1998 precedent, an EB-5 investor was required to be present at the creation of an enterprise. However, this was problematic for businesses created under a partnership model. A partnership is typically formed first among the main partners and then other limited partners are sought afterwards. Because of the 1998 precedent, such limited partners could not qualify for an EB-5. In 2002, Congress overruled this decision, only requiring a petitioner to show that he or she has invested the required amount.

Buying an existing business that is restructured or reorganized:
An EB-5 investor can restructure an existing business. USCIS does not consider merely changing the legal structure of an enterprise sufficient. In Matter of Soffici, a 1998 decision, the USCIS Administrative Appeals Office ruled that an investor who had purchased a Howard Johnson hotel and continued to run it as a Howard Johnson hotel did not meet the requirements of adequate restructuring or reorganization of an existing business. The AAO stated that “a few cosmetic changes to the décor and a new marketing strategy for success do not constitute the kind of restructuring contemplated by the regulations, nor does a simple change of ownership.” USCIS gives the examples of a restaurant that is converted into a nightclub or a plan that adds substantial crop production of an existing livestock farm as two examples of adequate restructured or reorganized commercial enterprises.

Expanding an existing business:
An EB-5 investor can also create a “new” business by expanding an existing one. Through this avenue, an EB-5 investor must either expand the net worth of an existing business or the number of employees by 40%. If an investor chooses to increase the number of employees, he/she could be required to create more than 10 jobs; the larger the number of existing employees, the more of a burden this becomes.

Pooling:
Multiple EB-5 investors can combine their money to invest in an enterprise. All investors must infuse the required amount into an enterprise and create at least 10 jobs each. All jobs created by a pooling arrangement will be distributed evenly among investors. For example, if there are 3 investors and only 21 jobs are created, this does not mean that 2 of the investors created 10 jobs each and the third investor only created one job. It means that all three investors created 7 jobs a piece.

EB-5 Immigrant Investor Program Visa

The Immigration Act of 1990 (“IMMACT 90”) created the Immigrant Investor Program as the fifth preference category for employment-based immigration, also known as EB-5. This was the first time a category specifically facilitated the admission of immigrant investors as lawful permanent residents and currently remains the only such category to do so. . The EB-5 Immigrant Investor Program is available to those immigrants who have invested, or are in the process of investing, at least $1 million in a new commercial enterprise employing at least 10 full-time U.S. workers. Individuals who invest in a “targeted employment area” (TEA), however, are only required to invest a minimum of $500,000. In addition, immigrant investors can invest $500,000 in a qualified and approved Regional Center.

The purpose of the EB-5 program is to stimulate the U.S. economy through job creation and capital investment by offering immigrant investors the benefits of permanent residency in the United States.

Approximately 10,000 visa numbers are allocated annually to EB-5 investors. USCIS reserves 3,000 EB-5 visas for aliens who invest in TEAs and 3,000 for aliens who invest in commercial enterprises affiliated with Regional Centers, as described below. However, participation in the investor program has traditionally been far below capacity. In the first few years after the establishment of the program, USCIS only issued 300-400 EB-5 visas. When the EB-5 visa was originally created, it did not include the Immigrant Investor Regional Center Program, a USCIS five-year immigrant investor pilot program created in 1993 in an effort to encourage more investors to apply for EB-5 permanent residency.

The purpose of the Immigrant Investor Pilot Program is to attract more foreign investors to fund businesses and projects in specific “regional centers” that would otherwise find it difficult to attract domestic investment based on current geographical market trends. By bringing such investment into areas of economic hardship and high unemployment, Congress hopes to stimulate job expansion, improve regional productivity, invest in infrastructure, and promote the growth of innovative new businesses. Congress has made the Immigrant Investor Pilot program particularly attractive to foreign investors by lowering the investment minimum to $500,000 (for a business in a designated regional center or TEA) as opposed to $1,000,000, and by allowing a less restrictive job creation requirement based upon the creation of “indirect” and “direct” jobs and not requiring the day to day management of the business. The Immigrant Investor Pilot Program has been extended several times, and was recently extended through September 30, 2015.

With substantial improvements made in the consistency of the EB-5 visa, investors have begun to display more confidence and interest in the program. Each successive year, the EB-5 visa has grown in popularity. For instance, in 2008, USCIS issued a total of 1,360 EB-5 visas. In 2009, this number amounted to over 4,000 EB-5 visas; half of these came directly from China. Part of this increase was due to the unprecedented economic growth of China and the creation of many independently wealthy individuals.

Approval for the EB-5 visa is high. In 2009, USCIS received 1,028 submissions of Form I-526. Of these, 966 were approved and 163 were denied. Likewise, in 2010, USCIS received 1,100 Form I-526. Of these, 955 were approved and 113 were denied. Please see the EB-5 Immigrant Investor Program Memo issued by the U.S. Department of Homeland Security on June 16, 2010, for more details.

The EB-5 visa essentially offers a good immigration solution for those who have the financial resources to qualify. It does not require an employment offer from a U.S. employer as other employment-based immigration categories do, nor does it require a labor certificate. With the current economic downturn, USCIS has relaxed its requirements for the EB-5 program as a means to bring in more foreign investment. Most importantly, because the annual quota consistently exceeds the number of applicants, those who qualify for EB-5 status do not typically have to wait long for a visa as there is currently no visa quota backlog for the EB-5 investor category.

For more information on the EB-5 Visa, please refer to the following links: