For foreign investors looking for freedom and flexibility to live and work in the United States in a way accommodating to their lifestyles, the EB-5 investor category can provide an excellent opportunity to accomplish this goal through the obtaining of Green Cards.
The basic requirements to qualify for permanent residency through EB-5 are:
The investment may consist of the contribution of various forms of capital, including cash, equipment, inventory, property or other tangible equivalents. An investment amount of $1,000,000 is generally required. However, $500,000 is acceptable if the business is in a “targeted” employment area where the rate of unemployment is 150% of the national average rate, or in a rural area as designated by the U.S. Office of Management and Budget.
An investment in a Regional Center is ideal for the retiree or inactive investor due in large part to the “indirect employment” feature of this program. The Regional Center program advantageously removes the 10 full-time employee requirement of the Regular program and substitutes the less restrictive “indirect employment creation” standard, according to which the investor need only pay the required amount, and the regional center will take responsibility for demonstrating that the investment will create 10 jobs, many or most of which need not be directly created by the investment itself, but rather may be indirectly created as demonstrated through econometric models.
The EB-5 program requires at a minimum that the investor be involved in the management of the investment, a requirement which is satisfied if he is a limited partner, one who has a policy making role but is not involved in the day-to-day affairs or decision making of the company. Thus, for those who are not interested in running an active business or being fully employed, Regional Center programs can offer a more acceptable inactive form of investment as compared to most direct investments.
Incidentally, whether he is investing in a regional program or making a direct investment an EB-5 investor is not required to live at the place of investment.
Under mandate by Congress, Regional Center EB-5 petitions (Form I-526) are given priority by USCIS. This results in a quicker path to approval and since the investment group should have already prepared documentation of the investment before they are sold to public, the investor does not need to assemble the extensive documentation to show the legitimacy of the investment.
The program frequently involves purchasing low-yielding industrial properties with invested funds and converting them into mortgage free higher-value commercial properties. Various programs may feature a hotel, office space, retail shops, farms, or storage space. Investors participate as limited partners of a limited partnership, and can earn a monthly return from tenant rentals after property renovation, as well as a share of future appreciation, if any, from the project when sold. Investment periods may vary, but cannot end before receipt of the Green Card by the investor.
Increasingly popular however are so-called ‘loan programs’ whereby the investors purchase shares in an enterprise which loans the investors’ money to other businesses, and then returns the investors’ money when repaid by the business, together with a small amount of interest, often as little as 1%. While the rate of return in such investment is quite small, many investors prefer them because they seem to provide the highest chance of the investor actually getting his principal back after becoming a permanent resident.
The procedure for filing an EB-5 Investor Green Card petition is relatively straightforward when a Regional Center program is used. The investor must present evidence that traces the funds through bank transfers and other documentation, from the investor directly to the enterprise. The money can be acquired through income as documented by tax returns or other records, or in the form of a secured loan or gift. A parent could make a gift to a son or daughter who could then invest the funds. Alternatively, the money can be acquired through a mortgage on one’s home, or a loan secured by any assets, other than the investment itself.
After the investor completes a thorough business and financial due diligence analysis of the viability of the Regional Center business opportunity, the investment is made and a petition is filed by the foreign investor with the USCIS. It typically takes 5-6 months for the USCIS to find the applicant and investment eligible for EB-5 status when a Regional Center program is involved.
If the investor is already in the United States, he or she then applies for a Green Card by filing Form I-485 to Adjust Status to Permanent Residence. No interview is customarily required, and approval for most cases has been taking approximately 9 to 12 months. If the investor resides abroad, an application for Permanent Residence is made at the U.S. Embassy or Consulate in the investor’s home country, where an interview for an immigrant visa is required. Approval in these overseas cases takes an average of about 12 months.
In either of the two scenarios, the entire process takes about 16-18 months in a Regional Center case. This is the situation for most applicants based on current USCIS and State Department processing times. However, times may vary from time to time and depending on the circumstances of each case.
Once USCIS approves the investor’s Green Card, it is conditional for a period of two years. Conditional Green Card status confers the same rights as permanent Green Cards.
Between 21 and 24 months after the conditional Green Card has been approved, the investor must reconfirm that the investment has been made or is still in place and that the employment requirement has been fulfilled or maintained. A Form I-829 application to remove the conditional status is then filed with the USCIS allowing the two-year card to be extended.
Once the condition has been removed, a full Green Card is valid as long as the investor resides in the United States (but subject to a routine renewal process every 10 years just as any Green Card is). From the time of application for the conditional Green Card until approval of the removal of condition usually takes about 4 years. Thereafter, in an approved Regional Center case, depending on the terms of their agreement, the investment may be sold, and the investor will still maintain the permanent Green Card. Or, in a ‘loan-based’ investment, the loan is normally repaid to the investment company, which then returns the investors principal to them and liquidates itself.
In summary, freedom to live anywhere in the United States, a passive form of investment with no required direct management responsibilities, priority standing within the Immigration process, and an accelerated path to Green Card status are important factors which make the EB-5 Green Card Regional Center category an ideal investment vehicle for the inactive investor or retiree who wishes to live and work in the United States.
As with other U.S. Immigrant Visas, applicants need to take into account U.S. and foreign tax and other business and personal planning considerations.