To acquire permanent residency status (A Green Card) through the EB-5 plan, as per the United States Citizenship and Immigration Services (USCIS) an investor must meet certain requirements.
Primarily, a future investor should have to meet the capital investment amount necessities, including a way of funds and authorized source. The United States Citizenship and Immigration Services (USCIS). Also, this should be satisfied that the business that will receive the investment satisfies the program of EB-5 visa.
Ultimately, there should be a minimum of 10 new jobs created, as defined by USCIS. Formerly, the EB-5 visa applicant, his or her partner, and any children under the age of 21 will be able to acquire the permanent status of residency, if all of the necessities have been found satisfied by USCIS.
1-EB-5 amount of investment
The EB-5 Rule of Immigrant Investor Program Modernization Rule i.e. implemented by USCIS, become the news of the year of EB-5 and it rolled out on November 21, 2019. It applies to all I-526 applicants who applied on November 21, 2019, or after this date.
The EB-5 must-have requirements of $1.8 million for a non-Targeted Employment Area investment (for a standard) and Targeted Employment Area investment of $900,000. At the start of the 1990s, the amounts have increased to account for inflation since the establishment of the EB-5 program. By the USCIS the amount will be reviewed every 5 years to know if an increase is justified. The first review will take place on October 2, 2024.
New and more restrictive Targeted Employment Areas rules
TEA can be either rural areas or high-employment. To certify as a high-employment TEA, an area should have an average of unemployment at a minimum of 150% of the United States national unemployment rate.
To certify as a rural Targeted Employment Area, an area should be outside a metropolitan statistical area (MSA) and it shouldn't be within a city with a population of more than 20,000. These data were used in the 2020 census.
For creating the jobs in that area, the job-creating entity (JCE) is essential to do both its main business in the TEA.
The willpower of TEA status has now moved to the federal level, earlier the individual states held this power. The Department of Homeland Security (DHS) thought that under the earlier rules state designation of TEA status was differently implemented by different U.S. states. Hence, this change was executed to ensure regularity and to deliver on one of the original directions of the EB-5 program that rural areas receive support of finance.
Targeted Employment Area data & methodology
Department of Homeland Security has not provided any particular required set of data or information to its applicants and economists to use. While several may feel that there is a lack of clarity and the benefit of this, its determined direction is that this should allow seekers more flexibility in showing TEA designation.
DHS accepts the TEA data from various sources: the Bureau of Labor Statistics (BLS) and the U.S. Census Bureau's American Community Survey (ACS). Every source offers certain benefits: BLS provides the most recent data, and the older data of ACS goes down to smaller geographic units, including census tracts.
As states of the United States, under the old rules and regulations, used a census-share methodology, an integration of both data sources, many economists are confident that the Department of Homeland Security will continue to accept census-share data.
Limiting census tracts
In addition, the requirement of a new plan limit census tracts to be adjoining to the project area. According to the past regulations, there will be no longer allowed an unlimited collection of census tracts.
Targeted Employment Area filing is now made with the I-526 petition
The TEA acceptance process is no longer different from the I-526 filing; it will be prepared along with each I-526 appeal. Applicants must provide evidence that their investment in an EB-5 investment project meets TEA requirements.
Best Practices for TEA filing
Applicants look for to invest $900,000 into a TEA project must ensure they have expert due industrious verifying that it will be approved when the project meets new program requirements.
TEA qualification should include the following:
- To define the geographic area of a TEA, use direct references to the new rules and regulations
- Sources should be clear so that the data being mentioned online
- Showing all the steps of the calculation process clearly and accurately
Negligence in presenting acceptable data for Targeted Employment area qualification can result in the investor's I-526 supplicant being ignored. It supports noting that the money is not the only problem in the case of being denied; a denial could also result in losing crucial time for that applicant of an EB-5 Green Card.
2- Source of Funds
To tackle money laundering and address security concerns, USCIS examines in-depth where an applicant's money came from and as well as the way of applicant's that money. For EB-5 investors, proving the legal source and way of their investment capital is complex. They must as per USCIS, come up with documentation that meets the agency's precise standards.
Where can investment money come from for EB-5?
An EB-5 applicant should have several probable sources of the money they invest. Salaried income may be one of them. Stocks, Bank account deposits, and Securities are other prospective legal sources. For any type of source, all investment funds should clearly show their primary sources.
Choosing the source of funds & documentation in a strategic way
Choosing which fund should be used or not to use can be an important decision for investors and their immigration lawyers. Documentation should be valid and complete. If the documents of the applicants are not in English, then to be sure that their documentation provides a translation.
EB-5 investment fund source- Loan
Most frequently, for EB-5 investment a loan comes from a financial institution. The security for the loan must be recognized. Opposite to a past regulation, USCIS now the loan allows as a source of funds if the investor is responsible for the loan. Also, the value of security must be equal to the amount of the loan. An applicant can look for USCIS to request confirmation if the value of the security is just close to the loan amount.
Best practices advise that the amount of the loan is no more than 70% of the value of the property of security
Tax returns & other financial documentation
An applicant should have individual and corporate/partnership tax returns filed in any sovereignty for the last 5 years. When an applicant's previous year's tax returns specify higher income, he should also submit tax returns with the highest income for the 3 years. As prefer, EB-5 planning of tax should be managed before filing, and with an expert.
Can gifts, inheritance, or divorce proceeds be a source of funds?
Sometimes an applicant investing in an EB-5 project has got their capital investment utilizing an inheritance. In such types of cases, the applicant should have provided all the documents and information related to that inheritance, including the estate settlements of the departed.
Gifts are one of the other possible valid sources of funds. All documents related to that gift should be shared, plus the registration of the gift money for the tax, and the source of the income of the gift giver.
Money derived from divorce and other legal proceedings may be used in alimony, and proceeds of civil lawsuits, along with official court judgments.
3- EB-5 job creation requirements
For the immigrant investor program, USCIS needs that each of EB-5 results in the formation of conservation of at least 10 full-time jobs of U.S. workers. These jobs must be formatted within two years after the investor has secured his or her conditional permanent residency.
In the case of direct investment into the project of EB-5, the investor should be able to manifest that his or her investment led to the creation of direct jobs for employees who work straightly within the business entity that received the investment.
Although, those investors who invested between centers of regional have more job formation flexibility and can mention 10 full-time direct, indirect, and influenced jobs that were created with their investment. Indirect jobs- created in businesses that provide goods and services to the EB-5 project.
EB-5 entities of business
The EB-5 visa applicant must be funded in a New Commercial Enterprise (NCE) that is for U.S. business profit. A New Commercial Enterprise may take several business structures, they include general or limited partnerships, corporations, sole proprietorships, business trusts, or other publicly or privately owned structures of business.
Investments can be directly into the business that the investor actively manages, or through an approved EB-5 regional center then the investment can be indirect, which directs the project and it doesn't require the investor to actively direct the business.
All the New Commercial Enterprises were established after November 29, 1990. However, older commercial enterprises may certify under some determined conditions, for instance, if the capital investment leads enhancing by 40% in the employee's number or the net worth of the company. If an older business is reshaped in such a way that an NCE is created, then that entity may then certify.
Summary of EB-5 Visa Requirements
- EB-5 investment amount: capital investment in a non-targeted employment area is $1.8 million, investment project area: capital investment in TEA-designated area is $900,000.
- The investor should have to show a legal source and path of investment funds.
- The investment should have been made in a for-profit United States business entity.
- In the first two years, the investment must create 10 full-time U.S. jobs after that conditional residency is granted.
- A direct investment requires active management by the investor and can only count direct jobs.
- A regional center only requires passive management by the investor and can count direct or indirect jobs.