What are the EB5 Immigration Petition Eligibility Requirements?

Post Source: USCIS

To be eligible for an EB-5 immigration petition, three key elements must be met:

• An investment of capital;

• Engagement in a new commercial enterprise; and

• Job creation.

Investment of Capital 

Capital

The regulations that govern the category define the terms capital and investment with an economic benefit in mind, meaning that the U.S. economy can benefit from an immigrant's contribution of capital.

The word capital is defined broadly. The following table outlines how the EB-5 Reform and Integrity Act of 2022 refined the definition of capital.

The immigrant investor must establish that they are the legal owner of the capital invested and have obtained the capital through lawful means. As of May 14, 2022, gifts and loans to the investor are expressly permitted as capital, provided certain conditions are met.

Promissory Notes

Capital can include the immigrant investor's promise to pay (a promissory note), as long as the immigrant investor is personally and primarily liable for the promissory note debt and his or her assets adequately secure the note. Further, the assets securing the promissory note:

• Cannot include assets of the company in which the immigrant is investing;

• Must be specifically identified as securing the promissory note; and

• Must be fully amenable to seizure by a U.S. noteholder

The fair market value of a promissory note depends on its present value, not the value at any different time. In addition, nearly all of the money due under a promissory note must be payable within 2 years, without provisions for extensions.

Investing Indebtedness

When investing indebtedness, an immigrant investor must demonstrate:

• The immigrant investor is personally and primarily liable for the debt;

• The indebtedness is secured by assets the immigrant investor owns; and

• The assets of the new commercial enterprise are not used to secure any of the indebtedness.

Any indebtedness secured by the immigrant investor's assets qualifies as capital only up to the fair market value of the immigrant investor's pledged assets.

Investment

The petitioner must document the path of the funds to establish that the investment was made, or is actively in the process of being made, with the immigrant investor's own funds. For petitions filed on or after March 15, 2022, the capital must be expected to remain invested for not less than 2 years.

To qualify as an investment, the immigrant investor must actually place his or her capital at risk. A loan from the immigrant investor to the new commercial enterprise does not count as a contribution of capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the immigrant investor and the new commercial enterprise is not a capital investment.  Purchasing a share of a business from an existing shareholder without more does not qualify, since the payment goes to the former shareholder rather than to the new commercial enterprise. Investments with guaranteed returns are not qualified. Any agreement between the immigrant investor and the new commercial enterprise that provides the investor with a contractual right to repayment is an impermissible debt arrangement. 

Sole Proprietors and Funds in Bank Accounts

A standalone investor who is operating a new commercial enterprise as a sole proprietor cannot consider funds in his or her personal bank account as capital committed to the new commercial enterprise. Funds in a personal bank account are not necessarily committed to the new commercial enterprise. The funds must be in business bank accounts.^[34] However, even a deposit into a business account over which petitioner exercises sole control, without more, may not satisfy the at-risk requirement.

Escrow Accounts

An immigrant investor's money may be held in escrow until the investor has obtained conditional permanent resident status if the immediate and irrevocable release of the escrowed funds is contingent only upon:

• Approval of the investor's petition for classification under INA 203(b)(5); and

• Visa issuance and admission to the United States as a conditional permanent resident, or approval of the investor's Application to Register Permanent Residence or Adjust Status (Form I-485).

An immigrant investor's funds may be held in escrow within the United States to avoid any evidentiary issues that may arise with respect to issues such as significant currency fluctuations and foreign capital export restrictions.

Use of foreign escrow accounts is not prohibited as long as the petition establishes that it is more likely than not that the minimum qualifying capital investment will be transferred to the new commercial enterprise in the United States upon the investor obtaining conditional permanent resident status.

When adjudicating the immigrant investor's petition to remove conditions,^[37] USCIS requires evidence verifying that the escrowed funds were released and that the investment was sustained in the new commercial enterprise for the period of the immigrant investor's residence in the United States.

Lawful Source of Funds

For Petitions Filed on or after May 14, 2022, the following evidence is required to demonstrate the lawful source of funds:

• Business and tax records, or similar records, including:

  • Foreign business registration records; and

  • Corporate or partnership tax returns (or tax returns of any other entity in any form filed in any country or subdivision of such country);

• Personal tax returns, including income, franchise, property (whether real, personal, or intangible), or any other tax returns of any kind, filed during the past 7 years (or another period to be determined by the Secretary to ensure that the investment is obtained from a lawful source of funds) with any taxing jurisdiction within or outside the United States by or on behalf of the investor;

• Any other evidence identifying any other source of capital or administrative fees; and

• Evidence related to monetary judgments against the investor, including:

  • Certified copies of any judgments and evidence of all pending governmental civil or criminal actions, governmental administrative proceedings, and any private civil actions (pending or otherwise) involving possible monetary judgments against the investor from any court within or outside the United States; and

  • The identity of all persons who transfer into the United States, on behalf of the investor, any funds that are used to meet the capital requirement.^[59]

As of May 14, 2022, by statute, gifts and borrowed funds are expressly permissible for petitions filed on or after that date, provided:

• They were gifted or loaned to the investor in good faith; and

• They were not gifted or loaned to circumvent any limitations imposed on permissible sources of capital, including, but not limited to, proceeds from illegal activity.

Investors relying on gifted or borrowed funds must demonstrate the lawful source of those funds by submitting the evidence described above for the donor or, if not a bank, the lender.

Evidence of Investment in a New Commercial Enterprise

The following evidence is required to establish investment in a new commercial enterprise:

• Bank statements showing amounts deposited in U.S. business accounts for the enterprise;

• Evidence of assets which have been purchased for use in the U.S. enterprise, including invoices, sales receipts, and purchase contracts containing sufficient information to identify such assets, their purchase costs, date of purchase, and purchasing entity;

• Evidence of property transferred from abroad for use in the U.S. enterprise, including U.S. Customs and Border Protection commercial entry documents, bills of lading, and transit insurance policies containing ownership information and sufficient information to identify the property and to indicate the fair market value of such property;

• Evidence of monies transferred or committed to be transferred to the new commercial enterprise in exchange for shares of stock (voting or nonvoting, common or preferred). Such stock may not include terms requiring the new commercial enterprise to redeem it at the holder's request; or

• Evidence of any loan or mortgage agreement, promissory note, security agreement, or other evidence of borrowing secured by the immigrant investor's assets, other than those of the new commercial enterprise, and for which the immigrant investor is personally and primarily liable.

Engagement in Management of a New Commercial Enterprise

The immigrant investor must be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial responsibility or through policy formulation. Such requirement is met if evidence showing the following: 

• A statement of the position title that the immigrant investor has or will have in the new enterprise and a complete description of the position's duties;

• Evidence that the immigrant investor is a corporate officer or a member of the corporate board of directors; or

• If the new enterprise is a partnership, either limited or general, evidence that the immigrant investor is engaged in either direct management or policymaking activities. The immigrant investor is sufficiently engaged in the management of the new commercial enterprise if the investor is a limited partner and the limited partnership agreement provides the investor with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act.

Job Creation

The investment into a new commercial enterprise must create full-time positions for not fewer than 10 qualifying employees. A qualifying employee is a U.S. citizen, a lawfully admitted permanent resident, or other immigrant lawfully authorized for employment in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or a noncitizen remaining in the United States under suspension of deportation. This definition does not include the immigrant investor, the immigrant investor's spouse, sons, daughters, or any nonimmigrant.

Evidence of Job Creation 

An immigrant investor must submit the following evidence:

• Documentation consisting of photocopies of relevant tax records, Employment Eligibility Verification (Form I-9), or other similar documents for 10 qualifying employees, if such employees have already been hired; or

• A copy of a comprehensive business plan showing that, due to the nature and projected size of the new commercial enterprise, the need for not fewer than 10 qualifying employees will result within the next 2 years and the approximate dates employees will be hired.

The 2-year period is deemed to begin 6 months after adjudication of Form I-526. The business plan filed with the immigrant petition should reasonably demonstrate that the requisite number of jobs will be created by the end of this 2-year period.

As of May 14, 2022, regional centers file a Form I-965F with USCIS before a regional center investor may file an individual petition I-526E.