Rachel Browning’s Legal Blog

This week I thought I would start a kind of “series” of blogs on some of the lesser-known visas – both immigrant (permanent) and nonimmigrant (temporary) – that are available to foreign nationals coming to the U.S. and to U.S. companies and organizations seeking to employ them.

While most individuals applying for permanent residency do so through the first three employment based petitions, (eligibility for which is determined by education and professional experience), the fifth employment-based preference (EB-5) immigrant visa category allows for a foreign national to obtain permanent residence (the “green card”) by investing in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs.  Unlike the non-immigrant E-2 Treaty Investor category, the Immigrant Investor must invest a specific amount, currently at least $1 million, or $500,000 if the investment is made in a “targeted employment area,” meaning a rural area of the United States in need of investment. 

While the Immigration and Nationality Act (INA) statute does not specifically designate what types of applicants may qualify, the USCIS has taken the position that only non-corporate entities, i.e., individuals may apply in the EB-5 category.  However, two or more individuals may join to make an EB-5 investment, as long as:  (1) each petitioning investor has invested (or is actively in the process of investing) the required amount; and (2) the creation of at least 10 qualifying full-time jobs may be attributable to each investor.  In addition, the source(s) of all capital invested must be identified; and derived by lawful means. 

Two basic requirements must be met in order for a business to qualify as a “new commercial enterprise.”   First, the enterprise must be formed after November 29, 1990. 

See, e.g., Matter of [name not provided], EAC-91-184-50136, 12 Immigr. Rep. B2-51 (AAU Aug. 12, 1993) (denying petition as investment made before Nov. 29, 1990; investor’s documentation of “expanded business” deemed insufficient). See also Yates memorandum, supra note 9, at ¶2.

An enterprise formed before 1990 can qualify as long as the investor is doing something to restructure, expand or develop the existing business. The second requirement is that the business be a “commercial” enterprise, which could include any for-profit entity:  sole proprietorships, partnerships (limited or general), holding companies, joint ventures, corporations, business trusts, or other entities publicly or privately owned.   Regardless of the form used to create a new enterprise, the focus of the law is on the creation of at least 10 new employment opportunities.  Investments creating a new enterprise but failing to create 10 new jobs will fail to qualify for EB-5 classification. 

To qualify as an investor, the individual applicant must take more than just a passive role in the new enterprise.  This requires the EB-5 immigrant to be involved in the management of the new commercial enterprise, either in the day-to-day management of the business or through policy formulation.  The regulations state that if the EB-5 petitioner is a corporate officer or board member, or a limited partner under the provisions of the Uniform Limited Partnership Act (ULPA), he or she will satisfy the requirement of engaging in the management of the new commercial enterprise. 

Although the INA explicitly states that an EB-5 petitioner may be “in the process” of investing the required capital, the USCIS traditionally requires that the capital already be invested and “at risk” prior to filing the EB-5 petition.  An “investment” requires a contribution of “capital.”  Indebtedness secured by assets owned by the EB-5 petitioner may be considered capital, provided the investor is personally liable for the debts.  The assets of the enterprise upon which the petition is based cannot be used to secure any of the indebtedness. 

Finally, the INA requires that the investment “benefit the U.S. economy” in order for the EB-5 petitioner to qualify for the visa.  Because the INA does not elaborate on what constitutes a “benefit,” the specific requirements of this element have been left to the subjective interpretation of USCIS officers.  The EB-5 petitioner should be prepared to demonstrate all the ways in which the enterprise will benefit the economy, besides the fact that the enterprise has created 10 new jobs.

Foreign national entrepreneurs interested in pursuing the EB-5 option should contact an attorney to assist in the lengthy and complicated application procedures.  The Immigration Attorneys of Smith & Garg in Westchase, Houston, The Woodlands, Texas and Long Beach California can provide the assistance you require to make your qualifying investment and obtain your permanent resident visa.