EB-5 Program Overview
What is EB-5?
- Congress created the employment-based fifth preference (EB-5) immigrant visa category in 1990 for immigrants who invest in and manage U.S. companies that benefit the U.S. economy and create or save at least 10 full-time jobs for U.S. workers. The basic amount required to invest is $1 million, although that amount is reduced to $500,000 if the investment is made in a high unemployment area or rural region. When investors first make their investment, they get a “conditional” green card good for two years. At the end of that time they must prove that they have maintained their investment and have created or saved at least 10 jobs before their conditional status will be removed and they become regular green card holders.
- A TEA is a Targeted Employment Area. By default, the EB-5 program requires an Immigrant Investor to invest a minimum of $1MM into a job creating enterprise. However, it the project is within a TEA, the minimum investment requirement is lowered to $500K. This is important because, for the most part, potential Immigrant Investors are only willing to entertain projects with a $500K minimum investment requirement.
- A TEA is defined as an area being either rural, or an area with high unemployment (defined as having an unemployment rate of 150% or greater of the national average).
- The EB-5 Visa program is intended to allow foreign investment in job creating enterprises.
- For every Immigrant Investor, the project or enterprise must create or preserve 10 jobs. For example, if a hotel will employ 40 FTEs, then the project would be capable of accepting investment from 4 Immigrant Investors.
- EB-5 Immigrant Investors can be a portion of a project’s capital stack. For example, in the same hotel above which creates 40 jobs, the project could be funded with $2MM of debt and $2MM of equity from EB-5 investors (Assuming a total of $4MM is needed). EB-5 investors can also be a portion of an equity injection into the project.
- There are ongoing reporting requirements to the USCIS in order to demonstrate that the necessary job creation for the project was achieved and the monies were placed into the job creating enterprise.
- A Regional Center is an entity created to administer EB-5 investments. A Regional Center will identify job creating enterprises and determine if they can qualify for the EB-5 program. Additionally, the Regional Center will oversee reporting to the United States Citizenship and Immigration Services (USCIS) and to the EB-5 Investors.
- Many investors will only entertain projects that are sponsored by a Regional Center.
- Another benefit of working within a Regional Center is that the project is credited with both the direct job creation as well as the indirect job creation allowing for additional EB-5 Investors.