Significant foreign investments in the U.S. can result in immigration status for the investor, the investor’s family and, in some cases, the investor’s employees. But the rules are constantly changing, and in every case, they are becoming more stringent.
Larger investments (known as EB-5) may result in a green card for the investor and their family, while smaller investments of less than $200,000 (known as E-2 or treaty investors) can result in a temporary non-immigrant visa that can be renewed indefinitely as long as the business remains viable. Critical changes to the EB-5 program will go into effect on November 21,2019 that will restrict or prevent many investment opportunities and the Trump Administration is already enforcing policies that restrict the Treaty Investor applications.
Although these are very complicated matters requiring the help of an experienced immigration attorney, we can summarize these visas as follows:
An Employment Based Preference category is set aside for larger investors. This preference, known as the Employment Based Fifth Preference, or EB-5, requires an investment in a “new commercial enterprise” that creates 10 or more jobs for US workers. As of November 21, 2019, the size of the minimum investment will almost double and the acceptable geographic areas for investments will likely become more restrictive.
Here is a summary of the new regulations:
- Higher Minimum Investment Amounts. Under the new rule, the minimum investment amount will increase from $500,000 to $900,000 in Targeted Employment Areas (TEAs) and the non-TEA amount will jump from $1 million to $1.8 million. In the future, the investment amount will be adjusted every 5 years based on inflation.
- Changes to Targeted Employment Areas. The federal government, rather than the states, will determine whether the commercial enterprise is in a TEA. Many EB-5 projects that currently qualify as a TEA and allow for investment through the lower amount may no longer qualify, resulting in a minimum investment increase from $500K to $1.8M
Other things to note:
- Unlike the E-2, Treaty Investor visa, the EB-5 investor can be from any country.
- The investment can be either a direct investment in your own business or indirect investment in a Regional Center approved by the Department of Homeland Security (DHS.) The Regional Center, almost always involves larger, multimillion dollar projects that will create jobs for the investor who will have no direct involvement in the management of the business enterprise.
- There is no requirement that the 10 jobs be created before the initial application is approved BUT, the business plan must provide a detailed analysis explaining how those jobs will be created within 2 years.
- There are over 700 Regional Centers approved by DHS and only a small fraction are currently successful in fully funding a qualifying enterprise and obtaining USCIS approvals for immigrant investors. Choosing a Regional Center wisely is critical.
- As with the E2 Treaty Investor program, the investment must be from the investor’s personal funds but those funds can come from a gift, inheritance, secured loan, or your own earned income.
- Initial approval of an EB-5 application will result in a conditional green card for two years. In the 90 days before the green card expires, the investor must remove the conditions by demonstrating to USCIS that you have fully paid your investment and that investment has created 10 US jobs.
E2 TREATY INVESTORS.
The Treaty Investor category allows foreign companies and smaller individual investors to transfer the investor or a key employee for the investing company to the US to direct the business operations. Although the law and the regulations remain unchanged from the past, the manner in which both USCIS and the consulates enforce the regulations has undergone sweeping changes. These changes have resulted in the following:
- A virtual mountain of evidence is now required with every application
- Although the law and regulations provide that the E-2 can be approved if the investor is in the process of investing, the adjudicators now require evidence that the business is actually operational and producing a steady flow of goods and services
- Although the regulations provide that the investor is not required to provide actual prove that he or she will be returning to their home country when the visa or status expires, most consulates are requiring a substantial amount of proof,
- Although the regulations provide that the E2 investor must create one or more jobs for a U.S. worker within 5 years, most adjudicators are requiring proof of current employees, including an organization chart and detailed descriptions of each employee in the organization.
Other, more general things to note:
- To qualify, the investor must be a citizen or national of a country which has an investment treaty with the U.S. That treaty country list is a long one but does not include any of the BRIC countries (Brazil, Russia, India, or China).
- The amount of the investment must be “substantial.” Although the regulations do not provide for a specific minimum amount, we rarely accept investments of less than $100,000 and even that may not be enough. Ultimately it depends on the nature of the business and the amount of funds that will be required to make the business viable. (An investment in a convenience store will be less than an investment in a manufacturing plant.)
- The investment cannot be “marginal.” This means it “cannot be solely to earn a living for the investor and his family.”
- The investment funds must be the investor’s personal funds and can be obtained by any legal means including income, a gift, inheritance, the sale of property or a personally secured loan. If the investor is a business, the funds must be the funds of the business and the business must have the nationality of a treaty investor company.
- The investment does not have to be cash. An investment of manufactured goods, for example, is acceptable.
- The investor must own a controlling interest in the US business which generally means owning 51% of the corporate stock or partnership interest.
- The investment must be at risk. This means the investment amount must be spent and not merely sitting in a bank account.