EB-5’s Requirements for Investor Status

One of the law’s principal requirements is that the investor must invest or be actively in the process of investing at least $1 million in the enterprise. The law gives flexibility to the USCIS to raise the $1 million figure as high as $3 million for “high employment areas” and to lower the figure as low as $500,000 for “targeted employment areas.” “High employment areas” are defined by the law as metropolitan statistical areas (mostly urban areas) with an unemployment rate significantly below the national average unemployment rate. A “targeted employment area” is defined by the law to include rural areas (areas outside of a metropolitan statistical area or outside of a city or town with 20,000 or more people) or areas experiencing high unemployment of at least 150 percent of the national average rate.

In multiple investor situations, each investor seeking permanent residence must make a minimum qualifying investment or be actively in the process of making a qualifying investment. The rules define “invest” to mean the contribution of capital. A debt financing arrangement between the alien and the new commercial enterprise in which the alien is acting solely as a creditor does not constitute a contribution of capital. As a result, an alien investor cannot establish the requisite investment of capital if the “investment” is made in the form of a loan to the company.

The rules define capital to include: (1) cash; (2) cash equivalents (such as certificates of deposit, treasury bonds, or other instruments that can be converted readily into cash); (3) equipment; (4) inventory; (5) other tangible property; and (6) indebtedness secured by assets owned by the alien, e.g., a promissory note made out by the alien and payable to the commercial enterprise (provided the alien is directly and personally liable and the assets of the enterprise are not used to secure the debt). In determining whether the statutory minimum level of capital has been invested, the capital contributed to the new enterprise must be valuated at fair market value in U.S. dollars.

The alien investor must also establish that the required amount of capital has been placed at risk for the purpose of generating a return on that capital. A mere intent to invest, or prospective investment arrangements entailing no present commitment will not suffice to establish that the petitioner is actively in the process of investing. Actual commitment of the required amount of capital is required such as: (1) the deposit of monies in the enterprise’s business accounts; (2) the purchase of assets for use in the U.S. enterprise; (3) the transfer of assets from abroad for use by the commercial enterprise; (4) the transfer of monies to the commercial enterprise in exchange for shares of stock; and (5) a loan, mortgage agreement, promissory note, security agreement, or other evidence of the investor’s borrowing which is secured by assets of the petitioner, other than those of the new commercial enterprise, and for which the investor is personally liable.

By Brian D. Lerner, Immigration Attorney