Publications

January, 2012

EB-5 VISA FOR INVESTORS WHO FORM A NEW ENTERPRISE

To enhance job creation in the U.S., an immigrant may organize a new commercial enterprise in which the investment must be at risk. By this active investment, the investor may receive provisional residence and two years later, permanent residence. The capital of this enterprise may be cash, equipment, inventory or other tangible property valued at fair market value in U.S. currency. When the necessary criteria are met after two years, the applicant with his immediate family will receive permanent residence.

Evidence that the investment has been actually dedicated or is actively in the process of being do dedicated must be shown. A sum of $1,000,000 must be put into the new commercial endeavor that will create not fewer than 10 new jobs. However, if the new business is primarily being conducted in a “targeted employment area” where there is a high rate of unemployment, then only $500,000 need be committed.

The investment(s) may be diversified to include a portfolio of businesses as long as the necessary investment is placed into a single controlling commercial enterprise and the jobs created are all within this commercial enterprise formed by the immigrant investor.

A “targeted employment area” may be a rural area or an area that has an unemployment rate of at least 150% of the national average. Rural means not within a metropolitan statistical area and the new business must be doing business and creating jobs in for at least 10 new employees in the rural area. The rural area is defined outside of a city or town having a population of 20,000 or more. In short, the business must be conducted in a location where regularly, systematically and continuously goods and service that support job creation will be served.

Investments may also be made through the Immigrant Investor Pilot Program where the investor may take advantage of indirect job creation. The definition then of “principally doing business” can be served by a job-creating enterprise rather than a new commercial enterprise.

The investor may ask for the designation of a “targeted employment area” by proof that this targeted employment area meets the regulatory criteria. A State may also designate a “targeted unemployment area” based on a designation of an area of high unemployment within that State. To accomplish this, an official of the State must notify the USCIS of the Agency of the State that will have the authority to certify that the geographic or political subdivision in the State or of the City or Town with a population of 20,000 or more has been designated by the State as a high unemployment area. The State will still have to show that the proposed area has an unemployment rate of 150% of the national average. The USCIS will maintain oversight over the State’s statistics. A State has no jurisdiction over what constitutes a rural area apart from that designated by the USCIS.

An immigrant investor can invest in an existing business regardless of when the business was created provided that the old business is restructured or reorganized so that it becomes a new commercial enterprise. Merely investing in an old business does not satisfy the need to create a new entity. Proof that a substantial change in the net worth or number of employees will result from this infusion of added capital needs to be demonstrated. A 40% increase either in the net worth of the already existing company or 40% in the number of employees is required so that the new net worth or new number of employee amounts to at least 140% of the preexisting number in the reconstructed company.

More than one immigrant may invest in a new commercial enterprise but each immigrant investor must invest his/her required amount of capital and each immigrant applicant’s investment must result in 10 new jobs created by each additional immigrant investor.

To prove that this new investment has been made in the new enterprise, Articles of Incorporation, a Certification of a Merger or Consolidation, a Partnership Agreement, etc. must be shown by documents demonstrating authority to do business in a particular State or municipality, and evidence presented of the commitment of the necessary capital. The immigrant also needs to prove that he/she is exercising day-to-day managerial control and/or taking appropriate policy responsibility in the business. These investments require active participation, not passive.

To prove the new investment in the new enterprise, Articles of Incorporation, Certification of Merger or Consolidation, Partnership Agreement, etc. must be shown on a Certificate demonstrating authority to do business in a State or municipality be shown and evidence presented of the commitment of the necessary capital. The immigrant also needs to prove that he/she is exercising day-to-day managerial control and/or policy responsibility. The investment requires active participation not passive.

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New York Immigration Lawyers > Immigration Publications > January 2012