The EB-5 program provides a route to the green card for investors. Its focus is on job creation, and each EB-5 investor must prove that his/her investment resulted in at least 10 full time jobs for U.S. workers. The program as it stands currently requires either:
- a $1 million investment in a “New Commercial Enterprise,”
- a $500,000 investment in a New Commercial Enterprise located in a Targeted Employment Area (“TEA”), meaning a rural or high unemployment area, or
- a $500,000 investment in an EB-5 Regional Center (Regional Centers are always located in TEAs, hence the lowered investment amount).
Options 1 and 2 are referred to as “direct investment” EB-5 cases and require that the investor manage and direct the New Commercial Enterprise and directly hire the qualifying U.S. workers.
By contrast, the Regional Center referred to in Option 3 pools capital from multiple EB-5 investors, then invests it in a “Job Creating Enterprise” either through an equity investment or a loan. Investors investing in a Regional Center do not have to take on an active management role and do not have to directly hire the 10 U.S. workers. In addition, the Regional Center option allows “indirect” and “induced” jobs to count toward the 10 job requirement. Indirect jobs are those created in businesses related to the EB-5 project (e.g. jobs created by purchases from suppliers); induced jobs are those created in the community where the Regional Center is located (e.g. expenditures by workers for the Job Creating Enterprise that create jobs for others).
Because of these advantages, Regional Center-based EB-5 cases account for over 95% of all EB-5 petitions filed.
Once approved, an EB-5 petition provides for a conditional 2 year green card. A separate petition must be filed to remove the conditions and establish that the investment continues to meet the EB-5 requirements.
Regardless of whether an investor chooses a direct or Regional Center-based investment, the investor must prove that the investment funds were lawfully sourced and must provide documentation tracing the funds to the New Commercial Enterprise. The funds must be “at risk,” meaning there is no guaranteed return on the investment or right of redemption, and the funds must remain committed to the New Commercial Enterprise from the time of the investment through to the approval of the removal of conditions petition.