EB-5

•   Open to everyone

•   The visa is the Green Card (lawful permanent residency)

•   Investment covers investor, spouse and children under 21 (at time of filing)

•   Minimum investment of $900K (in high unemployment/rural areas) or $1.8 million elsewhere

•   Must create 10 jobs (per investor)

•   Slow processing time (2 years, more for some countries like China and Vietnam)

E-1

•   A treaty-based investment visa that is only available to citizens of countries with the correct type treaty with the US

•   Grenada to E2 strategy allows a citizen of any country to obtain an E-2 (see the Case Study[put in hyperlink])

•   Investments can be $150K-$500K+

•   Very fast processing (a few weeks or months)

•   The visa (ability to enter the US) is typically 1-5 years, shorter in the case of a few countries

•   Renewable for an unlimited number of times (fewer renewals for a few countries)

•   Dependent visas for Spouse (can get EAD) and children under 21 years old

•   No direct path to a green card, but the investment can be credited against minimum for EB-5

E-2

•   A treaty-based investment visa that is only available to citizens of countries with the correct type treaty with the US

•   Grenada to E2 strategy allows a citizen of any country to obtain an E-2 (see the Case Study[put in hyperlink])

•   Investments can be $150K-$500K+

•   Very fast processing (a few weeks or months)

•   The visa (ability to enter the US) is typically 1-5 years, shorter in the case of a few countries

•   Renewable for an unlimited number of times (fewer renewals for a few countries)

•   Dependent visas for Spouse (can get EAD) and children under 21 years old

•   No direct path to a green card, but the investment can be credited against minimum for EB-5

L-1A

•   Open to everyone

•   Must be or have been an employee from the ‘sponsor’ business in the home country for 12 of the previous 36 months

•   Very fast processing (a few weeks or months)

•   The initial visa is one year, after which it may be renewed

•   Dependent visas for Spouse (can get EAD) and children under 21 years old

•   Can be converted to a green card

 

EB-5 Immigrant Investor Program

Download a PDF

The U.S. Congress created the employment-based fifth preference (“EB-5”) immigrant visa category in 1990 for immigrants who invest in and manage U.S. commercial enterprises that benefit the U.S. economy through what is labeled the “EB-5 Program.”  It is open to citizens of all countries.  For a business to quality, it must create or save at least 10 full-time jobs for U.S. workers for each EB-5 investor.  Job creation can be proven in one of two ways.  The business in which the capital is invested (called a “New Commercial Enterprise” or “NCE”) can create ten actual jobs for US workers who work an average of 35 hours per week.  Alternatively, the NCE can affiliate with a with a government approved ‘Regional Center’, which then allows the NCE to prove job creation with the use of econometric formulae.

The minimum amount required to invest is $1.8 million, although that amount is reduced to $900,000 if the investment is made into a new commercial enterprise principally doing business in a high unemployment area or rural area (called a “Targeted Employment Area” or “TEA”).

The investor starts the immigration process with the investor’s US immigration attorney filing an I-526 Petition with USCIS, which is the request for the investor (and his or her family) to receive a conditional lawful permanent residency status (a green card) based on making a compliant investment in a US company.    Upon approval of the I-526 Petition by the USCIS, the petition transfers to the National Visa Center (“NVC”). The NVC will then send a notification to the Investor’s foreign Embassy that has jurisdiction to process immigrant visas, and will send visa application documents for the investor to complete. The Investor’s immigration attorney will work with the Investor to complete these forms, which are filed directly with the Visa Section at the U.S. Embassy.  The investor will then schedule a visit with their Visa Section at the embassy.

The current processing time for the I-526 is at least 24 months.  For investors in countries currently subject to ‘retrogression’ (a delay in the availability of a visa due to insufficient supply for a particular country and visa type) there may be a substantial delay before the investor can schedule an appointment with their local consulate to receive the visa (or file to change status if in the United States). Currently, the only countries subject to retrogression are China and Vietnam.  In the case of China, the delay due to retrogression is likely to be at least ten years and for Vietnam, it is likely at least five.  India, had recently been subject to retrogression, but is no longer.

The I-526 petition is a substantial undertaking.  The regulations require that the capital for the investment come from funds that are owned by the investor.  Generally, that means that if loans are taken to provide the needed investment capital, those loans should be secured by collateral owned by the investor with a value that is at least equal to the amount of the loan.  This requirement was recently challenged in Zhang v. USCIS, in which the federal district court invalidated the USCIS prohibition against unsecured loans; however, the case is currently on appeal. (For additional information, see “EB-5 Funds Obtained From Unsecured Loans Now Legal Under Zhang” ).

Further, the investment funds must be proven to be from legal sources, such as trade/business, investment income, gifts or inheritance.  USCIS has essentially required the equivalent of a forensic audit to document the flow of all funds back to the source.  A proper EB-5 source of funds often involves thousands of pages of materials.  Typical legal fees for representing an investor and preparing the source of funds is $15,000 or more.

The second part of the I-526 petition are the materials related to the NCE.  The standards that govern an acceptable business plan were articulated in a case entitled In Matter of Ho.  Generally the plan must establish that the NCE will create the required jobs (or in the case of the regional center, engage in the types of business activity that are the assumptions upon which the econometric formulae calculate job creation), and is generally credible. The NCE may engage in any sort of legal trade or business.  It is best to avoid controversial areas such as cannabis, even when legal in a given state, due to issues with Federal laws.  Competent business plans are often dozens of pages, with detailed financial projections and hundreds and sometimes even thousands of pages of supporting materials.   The budget to prepare all other needed materials for a project can be $50,000 to $75,000 for smaller projects to a quarter million or more for larger ones.  To properly prepare a project, expertise is needed in corporate law, immigration law, management consulting, financial modelling, and business plan writing.  Typically, projects that have created an EB-5 investment program, will charge an administrative fee of $50,000 to cover these and other related costs.

After approval of the I-526 petition and receipt of the investor’s green card, the investor is technically a ‘conditional’ lawful permanent resident.  The condition is that the company receiving underlying investment, the NCE, will create the needed jobs.  Following the start of the lawful permanent residency status, the investor then must file a petition to remove the condition on Form I-829.  At this stage the NCE provides the investor’s immigration attorney with all the needed information to prove that the funds were spent according to the business plan and that the job creation has occurred.

The current processing time for the I-829 is two years. The investors status will be extended for as long as the I-829 is being processed by USCIS.  Once approved, the investor is an unconditional lawful permanent resident.  After a total of five years from the date of the beginning of the conditional lawful permanent residency status, the investor will be entitled to become a US citizen if desired.  This is not a requirement; the lawful permanent resident can be maintained indefinitely.

All EB-5 projects are subject to certain structural limitations.   Most notably, the investment capital must be ‘at risk’.  This means that the investment is subject to total loss so all investments in all NCEs must be equity investments.  If the investment in the NCE is guaranteed or collateralized in some way, the structure would violate the regulations.  Note, many regional center projects utilize a more complex legal structure for the investment, due to their ability to prove labor creation through econometric formulas.  Technically, the formulas are determining the indirect and induced labor created through the economic activity.  This is the activity of firms other than the NCE.  In these projects, the sponsors separate the NCE, which accepts the investor capital, from the job creating entity (JCE), which undertakes the project.  The NCE, in which EB-5 capital always must be an equity investment, can then invest in the JCE as either an equity investment or a loan. The loan can and often is collateralized by the assets of the JCE.  Often, sponsors and practitioners gloss over the structural distinction between the NCE and the JCE.  It is always the case, if properly structured that the investment into the NCE will be an equity investment for which there can be no guarantee or rights to collateral owed directly to the investor.  Any rights of these sorts will be owed only from the JCE to the NCE and not to the individuals.

The investment must also be irrevocable, meaning that the investor does not have the right to demand repayment at a particular time or upon a set of predefined events. As noted above, the timetable from beginning to end of even a non-retrogressed investor is at least six years (and potentially far longer for Chinese and Vietnamese investors).  This is often longer than the loan term or project timeline.  Unfortunately, because of the requirement that the investor’s capital remain at risk for the duration of their immigration process (or at least through the filing of the I-829 base on recent guidance, and the investment cannot be redeemed at the investor’s demand some other condition being met, some projects must redeploy the capital that is returned from the NCE to the JCE.  USCIS has created significant confusion around what Regional Center sponsored NCEs are and are not permitted to do in respect of redeploying capital so they do not run afoul of the rules.  Even the most recent policy memorandum did not materially clarify the issues.  Things can get very confusing and risky to an investor.  For example, it is possible to have someone who invests in an NCE that makes a secure loan to a JCE, after which the NCE then redeploys the capital that was repaid from the JCE into some new project that may or may not be a secured loan.  Non-regional center projects avoid these issues.  The money is invested with the JCE as the NCE and the JCE are one and the same. Accordingly, there is possibility for redeployment, as the investment is always with the NCE and will remain so during the entire term of the investor’s EB-5 immigration process.

The issues outlined above are complex and the USCIS position with respect to them is still evolving.  As an investor contemplates an investment in a third-party project or in their own project it is paramount to have advisors with experience in both the corporate, finance and immigration aspects of the program to properly advise and or structure the transactions.

back to top

E-1 Treaty Trader Visa

Download a PDF

The E-1 visa is an investor treaty-based visa. It is a non-immigrant visa that allows the applicant to live in the US to manage or direct the US-based business affairs for the applicant’s current company. The applicant’s spouse can receive an EAD and the children (if foreign born) can attend school (domestically born children are US citizens and do not require visas).

No investment is required in the US nor is it necessary to set up a US company to act as a subsidiary of the foreign sponsor business. It is generally required as a matter of state law for the foreign business to register in the state in which it locates its offices or operations.

The visa itself is typically granted for one to five years (with some exceptions) and are typically renewable for an unlimited number of times so long as the underlying business meets the qualifications. For a full listing of visa terms and number of renewals for each country with whom the US has a treaty, click here .

Note, to qualify for a E2 visa, an investor does not have to be currently residing in a treaty country. However, the investor does have to be citizen from a treaty country. It is not enough to just maintain a legal permanent residency in a treaty country.

One of the key criteria for an E-1 business is that the investor is actively involved in developing or directing the US business activities. The degree to which an investor must actively manage the business is an often-misunderstood topic. Legally, there are ways to satisfy the ‘active involvement’ requirement without being the day-to-day manager. To do this, the E-1 business and management arrangements must be carefully constructed. It is also possible for an E-1 to sponsor one or more key employees for E-1 visas. The employees must come from the same country, be a supervisory employee, and essential to running the company.

The E-1 visa cannot be converted into a green card.

A key to the application is to prepare a very thoroughly documented business plan that clearly shows the substantial nature of the trade or business being conducted with the US, the labor creation and the other elements required. It is important to note that different consulates often have different rules of how they interpret the regulations, which will therefore change what is included in the application to some degree. Visas will not be approved based on purely prospective business plans and forecasts, the sponsoring business must already be engaged in active trade with the US.

The trade or business in the US can be any legal business or trade. It is best to avoid potentially issue laden industries such as cannabis, even if legal in a state, as they may run afoul of federal laws.

back to top

 

E-2 Treaty Investor Visa

Download a PDF

The E-2 visa is an investor treaty-based visa. It is a non-immigrant visa that allows the applicant to live in the US to manage or direct his or her investment. The applicant’s spouse can receive an EAD and the children (if foreign born) can attend school (domestically born children are US citizens and do not require visas).

The regulations do not specify an exact amount of investment. The business must be material and is required to produce enough income to support a living wage for the applicant. Typically, the minimum amount of a business the applicant will manage directly, to be safe, is $150,000. Often, when investing in a business created by a third-party, investment amounts required can be $300,000 or more (due to the nature of the business, not the regulations). There is no limit on the size of the investment.

The visa itself is typically granted for one to five years (with some exceptions) and are typically renewable for an unlimited number of times so long as the underlying business meets the qualifications. For a full listing of visa terms and number of renewals for each country with whom the US has the needed treaty,Click here

Note, to qualify for a E2 visa, an investor does not have to be currently residing in a treaty country. However, the investor does have to be citizen from a treaty country. It is not enough to just maintain a legal permanent residency in a treaty country.

One of the key criteria for an E-2 business is that the investor is actively involved in developing or directing the investment enterprise through at least 50 percent ownership or managerial control. Typically, the investor must own at least 51% of the business (two investors from the same country can own 50% each). The degree to which an investor must actively manage the business is an often-misunderstood topic. Legally, there are ways to satisfy the ‘active involvement’ requirement without being the day-to-day manager. To do this, the E-2 business and management arrangements must be carefully constructed. It is also possible for an E-2 investor to sponsor one or more key employees for E-2 visas for no additional investment capital. The employees must come from the same country, be a supervisory employee, and essential to running the company.

The E-2 visa cannot be converted into a green card; however, it is entirely possible to use the initial E-2 investment as the basis for a petition for a green card based on the EB-5 category. The EB-5 process is open to citizens of all countries. The negatives are the cost and processing speed. To qualify for EB-5, the total business investment is $900,000 in a high unemployment area and $1.8 million otherwise. For a more fulsome description of the EB-5 visa see here

US regulations require that the capital for the E-2 investment come from funds that are owned by the investor and are legally sourced. Generally, that means that if loans are taken to provide the needed investment capital, those loans should be secured by collateral owned by the investor with a value that is at least equal to the amount of the loan. Further, the source of funds must be proven to be from legal sources, such as trade/business, investment income, gifts or inheritance.

A key to the application is to prepare a very thoroughly documented business plan that clearly shows the economic impact of the business, the labor creation and the other elements required. It is important to note that different consulates often have different rules of how they interpret the regulations, which will therefore change what is included in the application to some degree. It is also important to have taken meaningful steps towards the execution of the business plan. While some consulates will allow an investor to place funds in escrow (pending approval of the E-2 visa petition) for the purchase of an existing business, most want to see that the investment has been consummated and concrete steps undertaken. In the context of a new business, these steps can include forming the entity, completing business registrations and renting an office.

Structurally, investment capital must be ‘at risk’ meaning that there must be a risk of loss associated with the business. Accordingly, the investment cannot be a loan or guaranteed, but must be an equity investment. Additionally, the investment must be irrevocably committed, which means that the investor cannot demand her or her capital back.

The company in which the investment is made can engage in any legal business or trade. It is best to avoid potentially issue laden industries such as cannabis. Also, the business cannot be seen as being something purely passive. For example, investing in real estate would not work, as there may be nothing for the company to do with the investment once the property is acquired. In contrast, investing in a real estate services business would be perfectly permissible, even one that owned real estate as part of its activities.

Approval rates for E-2 visas are very high. As reported by the Government Accountability Office in their July 2019 study of the E-2 program , denial rates over the last five years were 16.7%; however, over 95% of the denials were premised on either investor ineligibility (e.g. not being a citizen of a treaty country) or inadequate documentation. Accordingly, if an applicant is in fact from a country with the correct treaty and that person engages qualified advisors to prepare the documentation, the denial rate can be expected to be less than 1%. Moreover, qualified advisors should help the applicant prepare for the in-person consular interview. Consular officers in all immigration matters have nearly unlimited discretion whether or not to grant a visa. It is essential that the applicant is fully prepared and as with any serious undertaking, has the right team to support his or her efforts.

The E-2 process can be implemented fairly quickly. If an applicant is applying from outside the US, the applicant would file a DS-160 (including all supporting documentation) electronically with the applicable consulate. The consulate will review the materials and allow the applicant to schedule an interview. Prior to the pandemic, this process usually took several weeks’ to a few months’ time. The visa itself is usually stamped in the applicant’s passport (and those of his or her dependents) at the conclusion of the interview. Currently, most consulates are closed and those that are reopening may not be processing DS-160 applications as they are focusing first on emergency and urgent visa matters.

If the applicant is legally in the United States, he or she may file to change status directly with USCIS by filing form I-129. Premium processing is available in which the application is then processed in 15 days. No interview is required. This allows the petitioner (and dependents) to remain in the US for two years and the status can be renewed (unless limited by the specific country treaty, see the full listing . Note, upon leaving the US, prior to reentry, the applicant would have to apply for a visa at a foreign consulate (typically that of the home country, but there are exceptions). It is important to start the visa application process with sufficient lead time so as not to affect the overall travel schedule.

back to top

L-1A Visa

Download a PDF

The L1-A visa is a non-immigrant employee visa that enables a U.S. employer to transfer an executive or manager from one of its affiliated foreign offices to one of its offices in the United States. This classification also enables a foreign company that does not yet have an affiliated U.S. office to send an executive or manager to the United States with the purpose of establishing one.

Generally, the foreign business in the applicant’s home country will set up a subsidiary in the US or will acquire a majority stake (or otherwise control) in an existing business in the US. The US business does not have to be in the same trade or business as the home country business. For an person to qualify, he or she must have worked for the home country business for at least 12 of the previous 36 months. The L-1 visa covers the employee’s spouse as well as unmarried children under the age of 21.

When opening a new office, the initial visa will be granted for one year. The visa is renewable in two-year increments for a total of seven years.

A key requirement of the L1-A visa is that the applicant serve in an executive or managerial capacity. The US business must essentially have three levels of workers: the executive (the L-1 recipient), his or her direct report managers, the workers. Essentially, the L-1A holder must be a manager of managers. Accordingly, it is difficult to have a US business that has less than five employees.

A key to the application is to prepare a very thoroughly documented business plan that clearly shows the labor creation and the other elements required.There is no minimum investment amount required to create or purchase the US subsidiary; however, in order to have enough employees it may be difficult to invest less than $300K-$400K. The trade or business in the US can be any legal business or trade. It is best to avoid potentially issue laden industries such as cannabis, even if legal in a state, as they may run afoul of federal laws.

The process requires that the applicant file the visa application (DS-160) after which the employer files the Petition for a non-immigrant worker (I-129). This must be filed at least 45 days prior to the beginning of the US employment and no more than six months prior. After beginning work, the employee can start the process to receive a green card by filing for an EB-1C classification. A key advantage of this, over other routes, is that it does not require PERM labor certification (an eight month process on average). This process should require under one year.

back to top