Monday, November 5, 2012

Permanent Residency for Wealthy Investors: The EB-5 Visa

Aside from family immigration, an immigrant can obtain permanent residency on a purely business basis. The EB-5 Immigrant Investor Program is an example of business-based immigration, and allows foreign investors and their dependents to obtain permanent residency. Congress created the EB-5 visa in 1990, with the aim of stimulating economic growth in the U.S as well as offering the opportunity to investors to become lawful permanent residents.

The EB-5 visa was created as a method of obtaining permanent residency for foreign investors who invest in the U.S. If approved, the EB-5 visa initially allows the investors and their dependents conditional permanent residence for two years. Then, before the two years are up, the investor must submit evidence documenting that all the requirements for the EB-5 visa have been met. The requirements of the EB-5 visa are:

1. All EB-5 investors must invest in a new (established after 1990) commercial enterprise;

2. The enterprise must create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years of the investor’s admission to the U.S. as a Conditional Permanent Resident;

3. The minimum qualifying investment in the U.S. is $1 million. However, in areas of high unemployment or rural areas, the minimum qualifying investment is $500,000; and

 4. The investor must be actively involved in the management of the new commercial enterprise (day-to-day or through policy).

In our experience with EB-5 visas, one of the greatest challenges is the capital investment requirement, what it is, and how it is obtained. Capital means cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the foreign investor. All assets of the foreign investor must be acquired by the investor by lawful means, and cannot be borrowed. Proving that the investment money comes from a legal source requires laboriously tracing the money to its original source and documenting each transfer of the funds. The application process for the EB-5 visa is in three major steps:

1. First, the foreign investor applies for the EB-5 visa while either residing abroad or residing in the U.S. by submitting USCIS Form I-526;

 2. Second, after Form I-526 is approved, the foreign investor applies for conditional resident status either by submitting a Form I-485 or by filing paperwork with the U.S. State Department. After obtaining conditional resident status, immigrant investors have a 2-year probationary period to establish their business and meet the EB-5 requirements.

3. Third, the foreign investor applies for permanent resident status by submitting USCIS Form I-829. When eligible, immigrant investors may apply for U.S. citizenship. However, this is not a requirement of the program.

 Of the above 3 steps, the initial application Form I-526 is the most complex. It must be accompanied with extensive documentation supporting:

1. The business proposal. The Immigration Service will require detailed documents that clearly outline and describe the type of business to be invested in, its location, how it is to be financed, the investor’s banking relationships, the business customer base, number of employees, and source of inventory or raw materials. The investor will need a comprehensive business plan and other documents outlining the business proposal with Form I-526. If the business already exists, the investor will also need to obtain articles of incorporation, and a set of audited financial statements. It is best to work with an experienced immigration attorney at this crucial step in order to successfully progress to the next step in the EB-5 process.

2. The investment of money. As discussed above, this is one of the most difficult parts of the EB-5 application process. The foreign investor must produce documents that show the source of the investment funds and that the investor is personally at risk for the money. The investor must also show that the money is from legitimate sources, and may be required to provide copies of past income tax returns, submit personal bank statements, sales documents, as well as documents showing the transfer of money, and letters of reference from financial institutions. Common problems include: investor’s difficulty or unwillingness to show the source of funds, investors who structure the financing arrangements so that the financial risk is to the business and not to the investor himself, and failure of some investors to show investment or proposed investment in the required amount of funds.

3. The number of full-time jobs created. Documenting that the proposed business venture will generate at least 10 full-time jobs may require that the investor provide documentary evidence of employment by submitting payroll records, state employment records, and copies of Internal Revenue Service Form I-9 (Employment Eligibility Verification) for each employee.

4. The foreign investor’s management role in the business. Documentation of the investor’s active involvement in managing the business would include, for example, copies of board minutes appointing the investor to a management position, copies of stock certificates, copies of tax records, and copies of articles of incorporation.

It is essential to obtain the advice and counsel of an experienced immigration attorney in the EB-5 preparation and process. Our office offers consultations and representation, assisting EB-5 and other immigrants at every step of permanent residency and citizenship process.

About the author: Kathleen Lord-Black is a U.S. immigration lawyer whose offices are located in downtown Vancouver, British Columbia.  She has served as Immigration Consultant for the San Francisco Public Defenders Office, 2005 Chair of the Immigration Section of the Barristers Club of the Bar Association of San Francisco, past SEIU Union Rep, and former Congressional liaison for U.S. Representative Farr. Ms. Lord-Black is an active member of the American Immigration Lawyers Association, and the American Civil Liberties Union. Ms. Lord-Black can be reached via email at; and by telephone at (360) 329-2436 (U.S.) and  (604) 352-2006 (Canada);