GENERAL FAQ

EB-5 DESCRIPTION

The Employment Based visa program was created with the Immigration Act of 1990, creating five employment based visa preferences. EB-5 is the 5th preference and provides a method of obtaining a green card for foreign nationals who invest money in the United States and create U.S jobs. Investors who have placed a minimum of US $1 million (or at least $500,000 in a Targeted Employment Area – a high unemployment or rural area) into a new or existing business (referred to as a “job creating enterprise”) become eligible for a visa after certain criteria by the United State Citizenship and Immigration Service have been satisfied.  Those criteria include that the investment is at risk, that is there is no guarantee of a return of the investment, nor a return on the investment, and that the investor prove the creation of creating or preserving at least 10 jobs for U.S. workers.

Initially, under the first EB-5 program, the foreign investor was required to create an entirely new business (or New Commercial Enterprise); however, under the Pilot Program investments can be made directly in a job-generating commercial enterprise (new, or existing – “Troubled Business”), or through a “Regional Center” – a 3rd party-managed investment entity – which assumes the responsibility of creating the requisite jobs. Regional Centers may charge an administration fee for managing the investor’s investment.

Immigration Capital takes pride in its ability to move forward quickly once an agreement to raise capital has been reached. In general timeline to expect is 45 days for documentation. Once documentation is finished it generally takes another 45 days to educate our agents, translate any documents needed for Chinese investors, and create the marketing materials in Chinese. Once that process is finished Capital raising begins.

Virtually every state in the United States has adopted some form of the Uniform Partnership Act which governs the formation of limited partnerships. We structure a limited partnership based on those laws in the state in which the project is based. The limited partnership is managed by a general partner. In each of the limited partnerships we form, we are the general partner.

The general partner is responsible for managing the day to day activities and the investments of the limited partnership. The general partner is also responsible for ensuring that the limited partnership acts in accordance with the requirements of the USCIS for a regional center.

The limited partners in the limited partnership are the international investors and both the limited partners and the general partner share in the profits generated from the limited partnership as outlined in the limited partnership agreement that establishes the limited partnership.

The employment based visa was created with Immigration Act of 1990, it’s been around for nearly 3 decades and it’s divided into five subcategories called preferences.

  • EB-1: Priority Workers, people with extra-ordinary ability (Sports, Arts, Engineering and Mathematics or “STEM”)
  • EB-2: Members of the professions holding advanced degrees or their equivalent
  • EB-3: Intended for “skilled workers”, “professionals”, and “other workers”
  • EB-4: Used primarily for Religious workers
  • EB-5: Immigrant Investor Visa

The EB-5 category is where we specialize, the EB-5 Visa program was designed to stimulate the US economy by helping create US Jobs through foreign investment in new development projects.

EB-5 for a number of reasons is structured commonly as mezzanine debt.  The major advantage of EB-5 capital is that it is a non-recourse source of funds. As each deal is different, cost of capital is negotiated before fund raising begins. A developer can anticipate that the interest rate will generally be in the range of 50%-60% of traditional mezzanine financing.

A limited partnership is a separate legal business entity formed under the laws of the state in which the limited partnership is formed. It has two types of members: one or more general partners who manage the day today operations of the business and have personal liability for any obligations of the partnership and limited partners that have minimal involvement in the management of the partnership and have limited liability only to the extent of their investment in the limited partnership.

The partnership agreement of the limited partnership identifies in detail the rights and powers of the general partner and the limited partners, their percentages of ownership and distributions of profits.

To obtain permanent green cards for the immigrant investor and their family, the investor must meet the following requirements when they invest in the EB-5 program:

First, the investor has to meet the basic requirement for capital investment: $500,000 or $1 million. To invest in the lower range, the investment must be made into a project located in a Targeted Employment Area (TEA).  A TEA is a region impacted by unemployment levels that are at least 150% of the national average.

Through the term of this investment, the investor must show that they have created at least 10 new US jobs over the course of two years.

Finally throughout the term of the investment the investors capital must be what is financially deemed “at risk.” To clarify this does not mean investment into risky investments, it means that the investment has the possibility of gain or loss and no direct guarantee to the investor for the repayment of the investment.

On our loan programs, we structure our investments such that there is a guarantee of the repayment of the loan to the lending entity that the investor invests in.  This arms length separation allows for a guarantee that does not violate USCIS regulations.

EB-5 is an extremely versatile source of funds and has been used in everything from movie production to the mining of rare metals.  However with the current market in China and as investors become more educated on  various EB-5 opportunities, the vast majority of EB-5 capital is used to finance new commercial real estate construction.

There are two components to this question: the first being how is your partnership interest protected in the investment you make, and the second being how is the total investment by all investors protected.

The uniform partnership act has been adopted by virtually every state in the United States and limited partnerships are one of the most common ways for investors to invest in business ventures in the United States. The laws are very standardized, established and provide the highest degree of protection for the investors within the partnership.

Separately the structure we use for the limited partnership investments is one of the safest way to invest and that is by structuring the investment as a loan to the project. In this way if the project runs into difficulty the developer or sponsor of the project will lose their equity first before any of the investors investments are impacted. We minimize risk by structuring our loans such that there is sufficient developer or sponsor equity to cover the most likely losses in the event of a default. We further minimize this risk by selecting only the highest quality projects, the best developer teams and investing in high-growth markets.

Since 2005 the program his generated over 181,000 jobs, or on average 29,300 new jobs per year. In 2013 alone EB-5 capital generated 41,000 new jobs.  The popularity of the Immigrant Investor program has generated around $2 Billion annually for development in the United States. On an annual basis the USCIS allocates 10,000 visa to be used for the EB-5 investment program. This number accounts for approximately  1% to 2% of the total visas issued for the United States. Currently there are more than 13,000 investors in the pipeline for the EB-5 program, representing more than $6.7 billion in capital.

An EB-5 construction loan is similar, but different from a standard construction loan.  An EB-5 loan is used to fund construction but the difference from a typical construction loan, the term is normally 5 years or longer, and interest only for the term of the loan.

One of the general partner’s obligations is to account for the total annual income of the partnership and distribute the profits as required by the limited partnership agreement. A full accounting will be provided to each partner on an annual basis identifying the total income to the partnership and the distribution. As required by the US government a form “K-1” will be provided to each investor so that their respective accountant may a prepare their individual US tax return. Investors will realize their return upon the maturity of their investment.

Retrogression is a term applied to describe the additional wait time required to obtain a visa for Chinese investors who currently have a USCIS approved EB-5 application (form I-526). Each country is allocated a certain percentage of the 10,000 visas issued.  Any unused applications available to other countries may be utilized in any given year by any other country.  In the current environment, China uses the bulk (typically 85%) of the visas allocated, and they are able to use that high percentage because other countries are not using their allotted quotas.  As applications exceed the visas available, approved applicants must wait for the following year to obtain a visa. As of 2016 there is an approximately two year wait.

The investors invest into a limited partnership as limited partners.  Their management is limited to policy-making decisions of the limited partnership but not in the operation, management or control. They will not be actively in involved in decision making in the development process.

No. The USCIS allows for investor to be “in the process of investing.” However, we very highly recommend having your full $500,000 invested as we have seen applications denied when the full amount had not been invested.

The EB-5 Immigrant Investor Program is not unique to United States. More than 25 countries, including Australia and United Kingdom, use similar programs to attract foreign investments. While the American program is more stringent than many others, requiring risk for the investors in terms of both their financial investments and their immigration status, it is one of the more popular programs. Canada had a similar program in place requiring an $800,000 interest-free deposit, but closed their program in June 2014 with nearly 45,000 investors in queue.

In the rare circumstance that your I–526 is denied, we will refund your $500,000. However, once an investor has had their I-526 approved the investor will not receive a return of their principal until the end of the term of the loan.

The EB-5 Immigrant Investor Program is overseen by two regulatory bodies, the United States Citizenship And Immigration Service (USCIS) and the Securities and Exchange Commission (SEC). The USCIS overseas Visa documentation and approval as well as ensuring regional center compliance. As EB-5 investment through a regional center is structured, it is considered a security or private placement and securities or private placements are overseen by the SEC.

The typical EB-5 capital raise involves 3 basic parties: the overseas immigration agent, the USCIS licensed regional center and the legal entity that loans to the real estate development project. There will be an overseas immigration agent that Immigration Capital will engage for marketing to prospective investors.  There will be a Regional Center, the USCIS licensed entity licensed to place EB-5 Capital into a new construction project. The third entity will be the legal entity (typically a limited partnership) that receives the immigrant investor’s investment (this entity we refer to as the New Commercial Enterprise or NCE) and the NCE loans construction funds to the development project. There is forth term that is used in EB-5 to describe the entity that exists despite EB-5 and that is the Job Creating Enterprise or JCE.  The JCE is the legal entity that owns the real estate development project.

Investors should focus their emphasis on obtaining a green card and a return of their capital. Therefore investors should be looking for low risk investments that provide confidence the investment will generate jobs, fulfilling the USCIS job creation requirement.  An real estate development managed by an experienced and proven team will also provide confidence that the investor will obtain a return of their investment.

A maxim in investing is: “risk adjusted rates of return.” That is high risk, high return; low risk, low return.  We look for very low risk investments to deliver the requisite number of jobs over the statutory time period. Given the security of the investments we make, the very low risk profile and the collateral and equity we require in any project we lend on, we have a very high level of confidence for the investor to see a return of their capital, a small return on their capital, but most importantly, that the investor will successfully obtain their permanent Green Card through the creation of an excess of US jobs above the USCIS requirement.

Immigration capital is a uniquely structured entity that specializes in raising/sourcing EB-5 capital. We understand investors needs and the intricacies of the investor market, and in turn, real estate developers needs and the requirements of construction capital. We have long standing relationships with the best and brightest in the EB-5 industry, including immigration attorneys, securities attorneys, business plan writers, economists, video production, marketing and collateral production companies and immigration agents to simplify/ease the process of raising EB-5 Capital. We quarterback the entire funding process from project underwriting, through documentation and funding, from start to finish.

Immigration Capital’s highest priority is to the investor. This mentality trickles down through out our entire business model, ensure the highest quality of underwriting and documentation standards.

We connect Developers with agents world wide, who will market the developer’s projects to accredited investors outside of the United States.

We manage and facilitate the complex process of EB-5 Documentation.

We ensure that the project structure and documentation meets the complex and sometimes conflicting requirements of the SEC and USCIS.

We underwrite projects with integrity and with an experienced eye ensuring the highest quality projects are chosen not only for investors but also ensuring that developers projects are readily accepted by the investor marketplace.

To clarify this does not mean investment into risky investments, it means that the investment has the possibility of gain or loss and no direct guarantee to the investor for the repayment of the investment.  We structure our loan model investments such that there is a guarantee of the repayment of the loan to the lending entity that the investor invests in.  This arms length separation allows for a guarantee that does not violate USCIS regulations. To be clear, no guarantee can be provided from any entity directly to the investor for a return to the investor of their investment at the end of the investment period. If a promise is made to the immigrant investor of the return of their investment at the end of the investment period, the guarantee will violate the required “at-risk” provisions of the EB-5 program and will cause the immigration application to be denied.

To clarify this does not mean investment into risky investments, it means that the investment has the possibility of gain or loss and no direct guarantee to the investor for the repayment of the investment.  We structure our loan model investments such that there is a guarantee of the repayment of the loan to the lending entity that the investor invests in.  This arms length separation allows for a guarantee that does not violate USCIS regulations. To be clear, no guarantee can be provided from any entity directly to the investor for a return to the investor of their investment at the end of the investment period. If a promise is made to the immigrant investor of the return of their investment at the end of the investment period, the guarantee will violate the required “at-risk” provisions of the EB-5 program and will cause the immigration application to be denied.

We structure our opportunities for investors with a priority of 1) job creation, 2) minimal risk and security for your investment, and 3) a return on your investment while meeting the USCIS requirements that your investment be “at risk.” There are other risks that cannot be structured away such as a change in economic conditions, what are referred to as ‘acts of God,’ war, financial distress of state and local governments, but these are risks of any venture anywhere on planet earth.  Potential investors are welcome to visit us, and any of our projects to independently verify information contained in our private placement memorandums.

Many of our projects are structured as a loan secured by the assets of the developer or project (the Job Creating Enterprise or JCE). The ways in which this structure minimizes risk is: first we are leveraging the developer or sponsors equity, and the senior construction debt in the project such that there is a greater amount of total capital invested, all creating jobs for the smaller portion of debt that we are providing. This creates a higher number of jobs per investor than otherwise would exist. Second in the event of any project losses the developer or sponsor would lose their profits first, and their equity second before there would be any impact on investors.

There are two types of investments: direct and through a Regional Center. In a direct investment, the investor invests directly into a business, either an existing business or a start-up. But to meet the USCIS employment generation requirement, the business must generate 10 new “direct,” employed by the business, wage paying jobs as evidenced by the business providing IRS W-2 forms for each employee for the period of investment. By investing in a Regional Center, econometric models are used to more truly calculate the full job creation benefit of the investor’s investment in the creation of direct, indirect and induced U.S. jobs. This is obviously an easier threshold to meet (and more appropriate threshold) and therefore the reason that the vast majority of EB-5 investor immigrants invest through a Regional Center.

There are two types of investments: direct and through a Regional Center. In a direct investment, the investor invests directly into a business, either an existing business or a start-up. But to meet the USCIS employment generation requirement, the business must generate 10 new “direct,” employed by the business, wage paying jobs as evidenced by the business providing IRS W-2 forms for each employee for the period of investment. By investing in a Regional Center, econometric models are used to more truly calculate the full job creation benefit of the investor’s investment in the creation of direct, indirect and induced U.S. jobs. This is obviously an easier threshold to meet (and more appropriate threshold) and therefore the reason that the vast majority of EB-5 investor immigrants invest through a Regional Center.

When the EB-5 program was created it anticipated an investment of $1,000,000 per investor. An additional allowance was made to provide for an investment of $500,000 by investing in a rural area or a Target Employment Area (TEA).  A TEA is defined as having an unemployment rate equal to or above 150% of the national average unemployment rate. This investment amount is independent of whether the investment is made direct, or through a Regional Center.

When the EB-5 program was created it anticipated an investment of $1,000,000 per investor. An additional allowance was made to provide for an investment of $500,000 by investing in a rural area or a Target Employment Area (TEA).  A TEA is defined as having an unemployment rate equal to or above 150% of the national average unemployment rate. This investment amount is independent of whether the investment is made direct, or through a Regional Center.

The USCIS regulations require that all EB-5 investments be “at risk.” Therefore, your investment can not be directly guaranteed to be repaid to you.  Elsewhere in this FAQ we describe how we assure you that we meet the USCIS requirements while maintaining the lowest possible risk profile and obtain guarantees of the repayment of the loan to the limited partnership into which the investor has invested.  This form of guarantee does not violate the USCIS regulations.

For more than the first 20 years of the EB-5 program, the typical timeframe for an immigrant investor to obtain a permanent green card was approximately 5 years.  Due to retrogression that term is now approximately 7 years.  Because USCIS has not made a specific determination regarding the immigrant investor’s investment in the event of early repayment before the investor has obtained a permanent green card (or specifically the favorable adjudication of their I-829 application), the EB-5 industry’s immigration attorneys consensus is that the investors capital should be invested in a Job Creating Enterprise or JCE until the adjudication of their I-829 application.  Our preference is once the construction period is over and the project has reached stabilization, and the developer moves forward to refinance the senior construction loan with a lower interest rate permanent loan, for the EB-5 construction loan interest rate to match the permanent loan interest rate and remain in place.  In the event where that is not possible (product that is sold to an end user as opposed to leased) we look for other development projects with the same developer that provide the same or lower risk profile.  This highlights why it becomes even more important that we know the team behind the project and their dedication to stable and successful projects.

Costs associated with your immigration attorney, the EB-5 investment syndication fee and filing fees. Your immigration attorney will charge you a fee that varies for filing your EB-5 application. We require an administrative fee that is part of the total subscription price.

The EB-5 program has 10,000 visas available for immigrant investors and their family members.

The USCIS has no standards or requirements for business experience or education. The primary requirement is that the investor is accredited and can prove through the submission of proper documentation that the source of funds is legal.

There is no requirement for English literacy but it is highly recommended that the investor obtain a translator to ensure the investor fully understands the offering materials. Further investors must sign the English version of all agreements, government forms and applications.

The investor must demonstrate through the submission of proper documentation that the investment funds were obtained in a lawful manner such as income from a legal business, salary, sale of a property, inheritance, investments, gift, loan, or other lawful means.

Immigration Capital does not file immigration petitions. However we have a strong support team that will assist your immigration attorney in filing the necessary documents. We require all investors secure their own independent immigration attorney to file the application for an EB-5 investor visa. We will provide all of the necessary documents that reflect the EB-5 investment to support the I-526 and I-829 petitions to your attorney.

USCIS requires complete biographical information for each applicant and proof of the source of investment funds. Most typically proof for the investment funds includes five years of tax returns, five years of bank records, proof of ownership of any businesses, financial statements for the businesses and business licenses. If the investment capital came from a specific event or transaction such as inheritance, a gift, or the sale of a property the investor must prove the transaction by providing official documents such as a contract, or closing statement. Your immigration attorney will guide you through the entire process.

The team of attorneys and consultants Immigration Capital use for our projects are among the top advisers in the EB-5 industry and will assist you and guide you through the application process.  The most common problem encountered in EB-5 applications is inadequate documentation of the source of funds.  We have a the most skilled staff in EB-5 to assist in documenting investors source of funds to prevent problems from arising.  USCIS and Homeland security’s greatest concern is money laundering. Therefore complete disclosure of source of funds should be an investor’s priority.

Yes. We believe it is very important for you to have independent legal counsel representing your interests. The application process for the EB-5 visa is complicated and technical. It is in the investors best interest as well as Immigration Capital interest if each party has their own independent counsel.

As a US resident you are subject to US tax law, which taxes US residents based on worldwide income. Foreign investors should consider this and consider ways in which to reduce or eliminate some of the tax consequences once you become a United States tax payer. Some strategies may include making gifts, accelerating income and gains, deferring deductions and losses, and creating or reorganizing business entities.  Immigration Capital has a team of attorneys and consultants that are among the top advisers in the EB-5 industry and will assist you and guide you through this process.

In evaluating the I-829 petition the USCIS is primarily looking at two issues:

  1. Have 10 new American jobs been created per investor?
  2. Is the investor still active in the investment with the required amount of capital and was that maintained throughout the period of conditional residency? So long as the investor is able to show the full amount of their capital contribution was “at risk” and the required 10 new jobs were created, this meets the adjudication standards of the I–829 petition. The economic analysis and loan structure system employed by Immigration Capital is a strongly supported format that easily shows evidence of job creation and investment for the duration of the conditional residency period.

Once the I–526 petition is filed, the current (2016) estimated time frame for an investor to complete the US consulate interview and received a conditional green card is approximately 14 months. However, USCIS is determined to reduce processing times and is taking steps to hire additional adjudicators.

Yes. The country of origin or where the family has current ties is the standard interview site. However a student attending school in the US would not be required to return home. Their status can be adjusted at the district office of the USCIS in the United States.

The consulate application and interview is to ensure that the family members complete medical, police, security and immigration history checks before the conditional permanent resident visas are issued. At the interview the consulate officer may address these issues as well as information on the I–526 as well as the nature of the immigrant investment.

Conditional green cards expire two years and the date of the issue. Investors may submit their I-829 petition as early as three months prior to that expiration date. Is important that the investor keep Immigration Capital appraised of their contact information so that we can advise the investor when to follow up with their attorney to complete the I-829 process. We will provide the investors attorney with the required supporting evidence regarding the limited partnership, capital investment and employment generation information. Once the I-829 petition is filed with the USCIS, the investor’s conditional permanent residency is extended for one more year for the I-829 adjudication.

The investor, spouse and any unmarried children – even if adopted – under the age of 21 at the time of the I-526 petition filing.  The investor may work and live overseas, if required. However it is recommended that the investor and family reenter the US no less than once every six months. The risk of being outside the United States for any longer period is that the USCIS can claim that the investor has abandoned the United States as a permanent resident, jeopardizing their green card status. However, in some cases an investor may request a “reentry permit” that allows the investor to remain outside the US for as long as two years without having to reenter to maintain permanent resident status. During this period children may remain in school in the US even if the investor is not.

When an investor’s I-529 petition is approved the immigrant investor receives a “conditional” green card which is valid for a two year period. Upon approval of the I-829 petition (see elsewhere on this FAQ) the USCIS will grant an “unconditional” or permanent green card which has no expiration date.

Yes. Immigration Capital will be happy to arrange such visits on a case-by-case basis so long as enough notice is provided to schedule a visit.