Fundamentals of the EB-5 Program Investment

An investment in a new commercial enterprise (NCE)—a for-profit firm engaging in the authorized commercial activity created after November 29, 1990—must be made to qualify for the EB-5 program.

The minimum EB-5 investment varies according to the area. In general, the program requires an investment of $1,050,000, whereas investments in targeted employment areas (TEAs) require only $800,000.

 

Furthermore, each EB-5 investor’s investment in the NCE must result in the creation of at least 10 qualifying work jobs.

EB-5 Job Creation: Direct, Indirect, and Induced Jobs Only direct job creation by the NCE is counted toward the 10 needed jobs for EB-5 investors that invest directly in an NCE.

Direct jobs are employment produced by the initiative and filled by competent Americans. To be eligible for the EB-5 program, these occupations must be full-time—35 hours or more each week. Even if the total number of hours worked is equal to that of full-time employment, part-time roles cannot be included in job creation. Job sharing agreements, on the other hand, are permissible. Qualified employees share the hours of full-time employment in such instances.

Regional centers were added to the EB-5 program in 1992 as an economic unit capable of counting direct, indirect, and induced jobs toward the program’s employment creation objectives. The capacity to quantify jobs in this manner is a particular advantage of investing in a regional center-sponsored project.

In contrast to direct jobs, indirect jobs are produced as a result of the project’s economic effect rather than the project itself. Indirect employment is generated as the invested capital is spent on products and services to support the enterprise.

Induced employment is comparable to indirect jobs in that they represent the project’s economic impact. In contrast to indirect jobs, which are generated to support the project via the provision of products and services, induced jobs are produced as a result of new employment. Additional job jobs are generated when the project’s new employees’ earnings are spent in the local community.

Again, only investments in projects supported by USCIS-approved regional centers can be included as indirect and induced employment creation. Such positions must be documented in an economic report using appropriate economic or statistical forecasting approaches.

Employees Who Are Qualified

A work opportunity must be filled by a qualified employee to count toward the EB-5 program’s employment creation criteria.

Employees who are qualified are individuals who have the legal right to work in the United States, whether through citizenship or permanent residence status. Individuals who are currently residing in the United States as conditional residents, refugees, asylees, or on deportation suspension are included in this definition. Foreign citizens existing in the United States as nonimmigrants, including those on H-1B visas, are not qualified employees for EB-5 job creation.

Furthermore, the EB-5 investor and his or her dependent family members are not qualified employees and cannot contribute to employment creation.

Employment Requirement for Bankrupt Companies

Investment in struggling enterprises is also permitted under the EB-5 program. To be designated a problematic business for EB-5 purposes, an entity must have been in operation for at least two years and must have suffered a net loss of at least 20% of its net value in the 12 to 24 months before receipt of the EB-5 investment.

Job creation is not required in such instances. Instead, the EB-5 program requires investors to show that jobs were at least maintained at pre-investment levels.

Job Creation Deadlines

Before an investor may file Form I-526, Immigrant Petition by Alien Entrepreneur, he or she must make an irreversible investment in the enterprise. Furthermore, if the necessary employment has not yet been created, their development within the next two years must be proved through a realistic business plan.

When an investor’s I-526 petition is approved, he or she is awarded conditional permanent residence for two years. The investor will file Form I-829, Petition by Entrepreneur to Remove Conditions, at the end of this conditional period. At this point, actual job creation must be proved.