EB5 green card requirements

Posted by GCBI Team on January 20, 2020

Introduction

The key requirement of the Green Card by investment program, referred to as EB-5 by U.S. Citizenship and Immigration Service (USCIS) includes an investment of lawfully sourced funds into a New Commercial Enterprise that creates at least ten (10) full-time jobs.

The amount of capital to be invested varies depending on the location of the project that creates the jobs.  This article provides important details on these key requirements.

EB5 green card requirements

1.  Investment amount 

As of November 21, 2019, investment amounts, as per the new rule published by the U.S. Department of Homeland Security, are as follows: The investment amount is $1.8 million but can be discounted to $900,000 if invested in a Targeted Employment Area (TEA).

The Targeted Employment Area Designation

Targeted Employment Area (TEA) is a program designation, designed to promote employment in high-unemployment and rural areas. 

USCIS — and not individual states — will now make the determination of whether a rural or high unemployment zone qualifies as a TEA. To qualify as a high-unemployment TEA, the area must have an unemployment rate of at least 150 percent of the national average. To qualify as a rural TEA, the area must not be within a Metropolitan Statistical Area (MSA) or on the outside boundary of a city or town with 20,000 or more in population. And the rules now limit an EB5 project to be located within one census tract, meaning the project must be in a census tract directly adjacent to the designated tract of the TEA to qualify for the discounted investment amount.

As a result of these new TEA rules, far fewer projects that had TEA designation prior to November 21, 2019, will still be able to qualify as TEAs. Most experts believe less than half of projects will continue to qualify; if that is the case, the minority of EB-5 investment projects will be at the $900,000 investment level and most will be at the standard $1.8 million level.

As it is now the investor’s responsibility to provide proof of TEA qualification (prior to November 21, 2019, it was designated by individual states), it is paramount to work with an experienced third-party expert to determine TEA qualification with accepted methodologies and data, and provide the correct documentation.

2. Provide proof of lawful source of funds

For those looking for the US Green Card by investment, they must provide a lawful source of their investment capital, as per United States Citizenship and Immigration Services (USCIS) policy. To address money laundering and national security concerns, USCIS has stringent requirements for investor source of funds.

Eligible sources of investment capital

The capital investment can come from a variety of sources such as employment income; stocks, securities, bank deposits, inheritance, gifted money, sale of a property and secured debt. Every clearly defined source of investment income must be included in the I-526 petition

An investor and his or her immigration lawyer must carefully decide what funds to use for the investment capital. Full, valid documentation is required. If a petitioner’s documents are in a language other than English, a translation must be provided.

Loans as a source of funds for EB-5 capital

Usually, a loan for EB-5 capital comes from a financial institution. In such cases, collateral for the loan must be documented. USCIS will now only accept a loan as a source of funds if the investor is primarily liable for such a loan, and if the collateral has a value that is at least equal to the amount of the loan. In situations where the value of the collateral is close to the loan amount, an investor may receive a request for evidence (RFE) from USCIS. To avoid this potentially challenging situation, ensure the loan amount is no more than 70% of the value of the collateral.

Taxation documentation

An investor must provide individual and corporate/partnership tax returns for the five previous years. In cases where an applicant’s earlier years’ tax returns show a higher income, the investor should also provide the tax returns for the three years of highest income.

Gifts, inheritance, & divorce proceeds as investment capital

When an EB5 Green Card applicant has acquired their investment capital by inheritance, they must provide all documents related to that inheritance, including estate settlements of the deceased person.

Gifts can also be an eligible source of funds for investors. Again, all related documents must be shared with USCIS, including the registration of the gift funds for taxation, as well as the source of income of the gift giver.

Proceeds from divorce and other legal proceedings may be potentially lawful sources of funds. This would include alimony, and funds from civil lawsuits; include documentation of official court judgments.

Missing documentation

When an EB-5 applicant cannot provide certain documentation, they must file a declaration fully explaining the reason for the absence of such documents. USCIS sometimes accepts declarations of missing documents, but this situation should be avoided if possible.

3. Job creation

Another critical USCIS requirement for each EB-5 investor is the creation of at least ten full-time jobs created for U.S. workers. An investor must ensure all of these jobs are created during the 2-year period of the investor’s conditional permanent residency.

When an EB5 Green Card investor has made a direct investment into an EB-5 project, he or she must provide evidence the investment created jobs for employees who work directly for the business that received the investment capital. 

EB-5 petitioners who invest through a regional center have more flexibility with job creation:  they can create 10 full-time direct, indirect or induced jobs with their investment. Indirect jobs occur with businesses that supply goods or services to an EB-5 project.; induced jobs are made within the community the project is in as a result of income being spent by EB-5 project employees.

After USCIS has adjudicated the petition and all EB-5 program requirements have been met, the principal applicant, his or her spouse, and any children under the age of 21 will be able to live as permanent residents in the U.S.

  
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