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Exchange Visitor Visas (J-1)
Global (non-U.S.) Immigration
"Million Dollar" Green Cards
The Amount and Location of the Investment
The amount of capital that must be invested in order to qualify for an investor green card depends upon the location of the investment. In most areas, a prospective immigrant investor must invest $1.0 million to qualify for an investor green card. However, the U.S. Citizenship and Immigration Services ("USCIS") can raise this amount to as high as $3.0 million for "high employment areas", or lower it to $500,000.00 for "targeted employment areas".
Types of Qualifying Investments
A qualifying investment must be made in a “new commercial enterprise” or in a “troubled business”. A “commercial enterprise” is defined to include any activity formed for the ongoing conduct of business, including a sole proprietorship, partnership, holding company, joint venture, corporation, business trust, or other entity which is publicly or privately owned.
A “new commercial enterprise” is established:
An "existing business" is a business that was established before November 1990. As such, most EB-5 investments are made into "new" commercial enterprises.
A “troubled business” is defined as a business that has been in existence for at least two years, and which has incurred a net loss of at least 20% of the company’s net worth.
Types of Capital that Can Be Invested
The Investment Must Be "At Risk"
The investment of capital is “at risk” for the purpose of generating a return on that investment if there is an actual or active process of investing. An actual commitment of the investment is required. Simply transferring money from overseas into a U.S. bank account is not sufficient. Additional actions must be taken, such as:
On a practical level, it is our opinion that the new company should be operational when the initial filing is made to the USCIS. Only in this way can the investor(s) conclusively demonstrate that the investment is truly "at risk". This is especially important when there is a single investor. As the sole shareholder or owner of a company, the investor has the sole right to decide whether the commercial enterprise's funds should be used to create new jobs (as required) or returned to the investor.
The Job Creation Requirement
An investor must show that his or her investment will benefit the U.S. economy by either creating 10 new jobs, or by protecting the existing jobs in a troubled business. These jobs must be created (or protected) within the 2-year conditional residency period.
The investment company must employ U.S. citizens, permanent residents or other immigrants who are lawfully authorized to be employed in the United States. Non-immigrants and immediate family members do not qualify. This employment must also be full-time employment, although "job-sharing", where two people share one full-time job, is permitted.
Multiple investors may establish a "new commercial enterprise" using a "pooled investment" approach. In this instance, each individual investor must have invested or be actively in the process of investing $500,000.00 to $1.0 million in capital, and each individual investment must result in the creation of at least ten full-time jobs for U.S. workers.
If multiple investors are investing in an "existing business", whether each individual investor’s investment must result in at least a 40% increase in the net worth of the company depends upon the timing of the investments:
If multiple investors invest in a “troubled business”, then the job requirement is changed from the creation of ten new full-time jobs to maintaining the same number of jobs that existed prior to the investment.
Use of Loans or Other Types of Indebtedness
Many investment plans relied upon in the 1990’s to obtain EB-5 green cards were ultimately deemed improper; and the green cards issued under these plans were revoked. These investment plans all involved pooled arrangements and the use of loans or other forms of indebtedness. It was determined that these plans did not require the requisite amount of capital be invested, or did not truly place this capital “at risk”. This is because an investor’s theoretical exposure to potential liability is not the same as an actual commitment of a specific amount of funds.
Guaranteeing Loans Using Company Assets
A foreign investor’s personal guarantee on loans secured by the commercial enterprise being invested into does not constitute a personal debt. For loan proceeds to be considered “capital”, and for the indebtedness to be considered an investment, the investor must be personally and primarily liable for the indebtedness.
Guaranteed Returns on Investment
An investor may not receive guaranteed payments from a commercial enterprise, especially if the investor has not made the required amount of investment. Such guaranteed returns on capital, regardless of whether the business is making a profit, is considered to be identical to a bond or other debt arrangement in which the company promises to pay interest payment on capital loans made to it by the foreign investor.
Promissory notes may be used to invest in a commercial enterprise. However, the required payments must be due on the note and actually completed during the 2-year conditional residency period. Failure to do so would make the investor ineligible to have their conditional residency status removed. This is because the investor would not have invested the required amount of capital, which is a prerequisite to having his or her conditional residency status removed.
Agreements that give a foreign investor the right to have the commercial enterprise purchase their interest in the company at a minimum price is no longer permitted. This is because the foreign investor’s capital cannot be considered to be “at risk” if they are guaranteed a return on their investment irregardless of the success or failure of the business.
A commercial enterprise may agree to re-purchase the investor’s shares at the end of each investor's 2-year conditional green card period. However, the company must re-purchase the stock at the stock's fair market value. Such agreements still place an investor's capital is "at risk" since the investor may lose all or part of their investment if the fair market value of the investment has fallen at the time of the repurchase. It must be noted, however, that such agreements are still looked at very closely by the government. This is because such arrangements suggest a pre-conceived intent to abandon the commercial enterprise as soon as a "permanent" green card is obtained.
The use of escrow funds to hold the required capital investment is allowed so long as these funds are guaranteed to be released, in full, during the investor's 2-year conditional residency period. These funds cannot be released only on the condition that the investor obtains his or her green card. Such agreements do not truly place the required capital "at risk". This is because the funds are not fully committed to the commercial enterprise, and can be diverted from the job creation purposes of the EB-5 program if the investor does not obtain his or her green card.
Removal of Conditional Status
When a foreign investor obtains permanent residency through the EB-5 immigrant investor process, the investor's permanent residency is conditioned upon the foreign investor maintaining an ongoing, employment-creating enterprise for at least two years. Once this two year period is completed, the immigrant investor must petition the USCIS to remove his or her conditional status or be placed in removal (i.e., deportation) proceedings. An investor's permanent residency can also be terminated by the USCIS at any time during the 2-year conditional residency period if it is determined that:
An application to remove an investor's conditional permanent residency must be filed within 90 days of the second anniversary of the grant of conditional resident status. If the investor fails to file the petition, the investor will be placed in removal proceedings.
An investor who fails to file a timely petition to remove his or her conditional residency also begins to accrue "unlawful presence" for purposes of the 3/10-year bar as of the date the investor's conditional status expired. Under this bar, an alien who is unlawfully present in the United States for a period of more than 180 days who voluntarily departs the United States before the commencement of removal proceedings is inadmissible for a period from 3-10 years from the date of departure (depending upon the length of unlawful presence). However, any accrued unlawful presence is eliminated if the USCIS accepts a late filing for the removal of conditional status, or if an immigration judge restores the investor's lawful status.
A foreign national may obtain an EB-5 "million dollar” green card if the prospective immigrant invests $500,000.00 to $1.0 million in either a new commercial enterprise or troubled business within the United States; and if this business either creates 10 new jobs in a new business or protects the number of existing jobs in a troubled business.
IMPORTANT: An EB-5 green card is a "conditional" green card. This means is that the investor initially receives only a 2-year green card. This "conditional" green card is made "permanent" if it is shown that the investor has met all of the EB-5 requirements within the 2-year conditional green card period (i.e., that the investor has invested all of the money required; and that the company has either created 10 new jobs or protected the existing jobs in a troubled business).
© 2017 Thompson Immigration Law Associates