EB-5 basics

  • GCBI Team Posted on March 9, 2020 | September 30, 2020 | 5 min read

What is EB-5?

The EB-5 regional center program is an immigrant investor program that allows eligible petitioners and qualifying family members to receive Green Cards and become permanent residents of the United States. 

Who can benefit from EB-5?

An approved immigrant investor can become a U.S. permanent resident, along with his or her spouse and unmarried children under the age of 21.

What is the different between a direct investment and a regional center investment?

There are two types of EB-5 investmenst: Direct investments and investments made in the regional center program. Direct investments require active management by the investor and only direct jobs count towards job creation requirements. Participation in the regional center program does not require active management of the investment and jobs created may include direct, indirect, or induced jobs.

What is a Targeted Employment Area (TEA)?

A Targeted Employment Area is an area in need of economic stimulus that qualifies for a reduced investment amount in the EB-5 regional center program; TEA’s can be either high-employment TEA’s or rural TEA’s. The capital investment requirement for a project located in a targeted employment area (TEA) is $900,000, instead of $1.8 million for a non-TEA or standard investment.

What are the main EB-5 requirements?

Besides investing the required amount, a  fundamental requirement is the creation of 10 full-time U.S. jobs (there is a misconception that these jobs need to last two year). Another main requirement is that the investment capital be sustained “at risk” for the two years of conditional permanent residency.

What is a conditional Green Card?

If an EB-5 investor's I-526 petition is approved they may become conditional permanent residents of the U.S. for a period of two years. During this time, their investment capital must remain “at risk.” To remove conditions of their permanent residency, they file an I-829 petition.

The main steps in the EB-5 process

There are 4 steps in the EB-5 petitioning process that an immigrant investor should be prepared to complete to become a U.S. permanent resident, along with their spouse and unmarried children under the age of 21.

Step 1: Select a qualifying EB-5 project and make the capital investment

Historically, over 95% of EB-5 investors have chosen projects sponsored by regional centers as this represents a much easier path with more flexible job creation requirements.

When choosing an EB-5 investment project, an investor should keep in mind the two primary goals: receiving a Green Card and return of their investment capital in a timely manner.

What industry should I make my EB-5 investment in?

Traditionally, real estate EB-5 projects were preferred as the job creation requirement was almost always fulfilled by development rather than operations.

However, with the new program policy that came into effect November 21, 2019, most big-city investment projects no longer qualify at the lower investment level. So the EB-5 project landscape is literally changing.

Many new investment projects do not require a specific location, therefore making TEA-eligibility  — at half the standard investment amount — much easier.

Step 2: The I-526 petition

An EB-5 investor should work with an experienced immigration attorney to document evidence that the applicant has invested, or is in the process of investing, the required capital. They also provide evidence the investment project will satisfy the EB-5 I-526 requirements. This goes into the I-526 petition that is submitted to United States Citizenship and Immigration Services (USCIS).

Key program requirements that must be satisfied by an I-526 petition

  • Source of funds: show that the invested capital was acquired lawfully; also show a lawful path of funds 
  • The business plan must be compliant with USCIS policy and guidance (including "Matter of Ho" and "Matter of Izummi")
  • Capital is invested into a New Commercial Enterprise and will be spent on job creation
  • Business plan credibly demonstrates the project will create 10 full-time American jobs
  • The investment capital is sustained “at-risk’” with a chance for gain and a risk of loss — with no guarantees of return of capital
  • For Targeted Employment Area (TEA) investments, the location meets rural or high-unemployment requirements at the time of the investment

Does an investor get their money back in the the event of an I-526 denial?

The program policy does not speak to this issue. Some investors may have a I-526 denial refund guarantee in their offering document terms. Though not all “guarantees” are the same. 

I-526 processing times

September 2020:  USCIS is publishing an average historical I-526 processing time of 13.7 months (FY 2020).

Step 3: Conditional Green Card

After approval of an I-526 petition, an investors and their eligible family members may acquire  two-year conditional residency in one of two ways:

  • Investors living in the U.S., will file Form I-485 to adjust status
  • Investors living outside the U.S. file Form DS-260 for consular processing 

The I-485 application & wait times

An investor with an approved I-526 who is living in the U.S. can immediately file an I-485 to adjust their status from non-immigrant to conditional permanent resident. This form is six pages and is most often filed by an immigration lawyer.

As of September 2020, USCIS is publishing an average historical I-485 processing time of 14.3 months (FY 2020). 

Consular processing and wait times

An investor living abroad with an approved I-526 petition then files a Form DS-260 for conditional permanent residency. This will be processed at the  U.S. Consulate or Embassy in their country. Once again, it should be filed by an experienced immigration attorney who will provide guidance on the interview process. The application comprises both an application and interview.

Each consulate or embassy will have its own wait times, but consular processing is almost always faster than apply to adjust status. 

Approval and receiving a conditional Green Card

Approval of either an I-485 or DS-260 petition means a conditional Green Card. This status lasts two years.

It is important to note that during the 2-year conditional residency period, an investor and family members must fulfill “physical presence requirements,” and cannot remain outside of the United States for more than one year.

Three months before conditional permanent resident status expires, the investor must file an I-829 petition for removal of conditions of permanent residency.

Step 4: I-829 Petition

The EB-5 investor finally files an I-829 petition to remove conditions on their permanent residency status. This proves to USCIS that he or she has satisfied all of the EB-5 I-829 requirements.

Key elements of the I-829 petition

  • Proof that a new commercial enterprise was created and received the petitioner’s investment capital 
  • Documentation that at least 10 full-time jobs were created, as per the business plan
  • Investment was sustained “at risk” throughout conditional residency period
  • Confirmation no “material changes” were made subsequent to the I-526 approval

When to file an I-829 petition

90 days before the end of an investor’s conditional permanent residency, their lawyer will typically the investor’s I-829. Sometimes USCIS may request an interview.

I-829 processing times

As of September 2020, USCIS is publishing an average historical I-485 processing time of 37.3 months (FY 2020). 

Approval of an I-829 petition

The EB 5 investor, spouse, and their unmarried children under the age of 21 are given 10-year Green Cards that can be renewed indefinitely. 

Five years after receiving their initial conditional residency, they may apply to become U.S. citizens.

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