The Immigration Act of 1990 created the Immigrant Investor Program as the fifth preference category for employment-based immigration—the EB-5—to stimulate the U.S. economy through job creation and capital investment by foreign investors. Approximately 10,000 EB-5 immigrant visas per year are available to immigrant investors who invest in a new commercial enterprise, a troubled business, or a regional center pilot program.
Alien entrepreneurs can obtain an EB-5 immigrant visa if they invest $1 million in a new commercial enterprise which will create at least 10 full-time jobs for U.S. workers. Investors only need to invest $500,000, however, if the investment is made in a high unemployment or rural area. The new commercial enterprise must have been established after November 29, 1990.
If the company was established prior to that date, it can also qualify for investment as a troubled company if it has been 1) restructured/reorganized so as to be tantamount to a new commercial enterprise; or 2) expanded through investment in such a way that the resulting new commercial enterprise yields a 40 percent increase in net worth or number of employees.
In 1992, Congress created another avenue for foreign investment called Regional Centers—economic units designed to promote investment, economic growth, and job creation. A Regional Center can be a private enterprise or a regional government agency that has a targeted investment program, directing and managing investments in the designated business and geographic focus of the Regional Center. Jobs created both directly and indirectly are counted for purposes of meeting the 10-job-creation requirement.
Even if foreign investors want to start their own companies in the U.S., over 90 percent of EB-5 investors choose the Regional Center for their green cards and then come to the U.S. and start a company. They then bypass government examination of where their money is being spent and how the companies are creating the required jobs. There is also no day-to-day management required and less risk with a Regional Center investment.
EB-5 applicants must demonstrate that their investment is both legal and available by filing an I-526 immigrant petition with U.S. Citizenship and Immigration Services (USCIS) along with evidence such as articles of incorporation, bank statements, asset verification, funds transfers, stock certificates, tax returns, I-9 forms, business plans, or other financial transactions as well as documentation of employees hired and a regional center approval if appropriate. If USCIS approves the petition, then applicants can become two-year conditional residents upon completion of the process.
To become a conditional permanent resident (CPR), an investor can visa process or adjust status. CPR status is valid for two years. Three months before CPR status expiration, investors and their family members must petition for removal of the conditions, which, when approved, affords them full lawful permanent resident status.
While the EB-5 program offers significant economic benefits to both investors and job-seekers, the processing time for an EB-5 permanent resident case has been lagging for the past several years. USCIS’s new EB-5 Director Nicholas Colluci, however, is making changes to the EB-5 program with the intent to improve both efficiency and quality.
As a result of transferring the adjudication of I-526 petitions to the D.C. office, USCIS processing times on EB-5 applications have improved. Unfortunately, the wait time for processing I-526 petitions is still 12.4 months.
Colluci plans to increase staffing in the D.C. office to continue to reduce processing times and advance quality control by hiring staff with backgrounds in economics, securities and immigration law to identify investment projects that are likely to succeed.
If EB-5 demand continues at the current pace and exceeds the supply, USCIS may establish a cutoff date for those investors born in China who account for more than 80 percent of the 10,000 EB-5 visas available. In the past, the predicted establishment of a cutoff date for China EB-5s never occurred because of the slow pace of I-526 approvals.
If USCIS does establish a cutoff date, it will likely occur in August or September of this year. Chinese investors should not be alarmed by the prospect of a cutoff date, however, because a new supply of visas will be available at the beginning of the new fiscal year starting in October, eliminating the shortage.