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EB-5 Law & Related U.S. Law


FAQs on EB-5 law and related immigration law

[Q] Can I form a "new" commercial enterprise by creating a new corporation to purchase an old, existing biz?

[Q] Potential EB-5 investor client is going to establish a new (2010) corporation. His new corporation plans to purchase a nursing home, which has been in business since the 1970s. Based upon my reading of the relevant case law (Matter of Soffici), it is the age of the nursing home operation in question that is controlling, and not the fact that this new corporation was formed in 2010. It appears that USCIS could argue that this will not be a "new" commercial enterprise because the nursing home was in operation prior to 1990.

We believe that USCIS will rule that this is not the "new" commercial enterprise. We believe there was AAO case law on this. Also, common sense would dictate this conclusion. Therefore, unless there is a requisite "expansion" or "restructuring", no "new" commercial enterprise has been established.

[Q] Can a direct individual EB-5 case's new commercial enterprise make loans to businesses and create jobs?

[Q] EB-5 Investors (each with $1 million or more to invest)want to invest with me to form a new direct EB-5 investment company whose business will be to make direct loans to other businesses that will have job creation enough to reach 10 new jobs per investor. Can this new business loan company be structured as a direct investment for the EB-5 Investors?

No, you cannot, because direct, individual EB-5 cases require jobs to be created directly. Jobs that are created by making loans to job-creating business(es) are all indirect and/or induced jobs.

[Q] Can several affiliates owned by one person be restructured to go under one holding company to qualify for EB-5 case?

[Q] Imagine a situation where a current E-2 investor has 3 companies in which he has invested approximately $400K in each (total $1.2 million investment). He is the 100% owner of all 3 companies. One of the companies owns the job-creating business, let's say a car wash, which already created 10 full-time positions. The other 2 companies own real estate leased to the business. The investments were made several years ago.

To try to qualify for EB-5 case, can the investor form a holding company in which he would be 100% owner, and then transfer all of his shares in each of the 3 separate companies to the holding company? In this way, there would be one holding company and the 3 corporations would be wholly-owned subsidiaries of the holding company. Would this structure comply with the definition of commercial enterprise at 8 CFR 204.6 and, as a result, allow all investments in the 3 separate companies to be pooled for purposes of showing $1m investment?

This is an interesting question and happens more often that one thinks.

[Q] Can a job-creating entity be a non-profit organization?

In a direct EB-5 case, the answer is "no", because the underlying new commercial enterprise must create jobs directly, and only for-profit entities can be new commercial enterprises.

[Q] Would a loan backed by future cash flows qualify as proper EB-5 investment?

{Q} Would a loan backed by future cash flows qualify? Can an EB-5 investor argue that the loan is collateralized by his business which generates the future income? Basically, does this loan qualify as "capital"?

In our opinion, USCIS will have some issue with this arrangement, because basically this loan is given on the borrower's good credit or name. It's like Bill Gates going to any bank and getting a loan purely based on his perceived ability to make money. What is a loan collateralized by personal asset is sometimes a grey area, because one could argue that one's good name is personal asset also.

[Q] What does "make available" money to job-creating entity phrase mean?

[Q] USCIS requires that the EB-5 petitioner, a holding company that owns a restaurant 100% (the job creating entity), show that it has made the full amount of money available to the restaurant, per Izumii. Izumii does not define what "make available" actually means. Are there cases or memos that define what it means for a holding company to "make available" the full amount of money to its wholly owned job-creating entity?

There is no other case or memo, although it is true that the full amount of money must be made available to the entity most closely related to the job-creation.

[HOT] [Q] Can I use a gift received from a friend to do EB-5 case?

You must have a nice friend. :) The EB-5 regulations state that the capital must have been obtained "through lawful means." 8 CFR 204.6(j)(3). Therefore, the emphasis of proof should be on showing that the giver of this gift made money "lawfully", rather than showing that the gift tax was paid.

[Q] Can an EB-5 investor apply for EB-5 case where investment and job-creation took place let's say 4 or 5 years ago?

[Q] Can an I-526 be filed and approved based on the requisite investment and 10+ job-creation in or by a new commercial enterprise where both the investment and the job creation took place 4 or 5 years in the past, without having to create additional jobs after the I-526 petition is approved? Also, if the answer is "Yes", do the previously created 10+ jobs have to be maintained during the conditional resident period for the I-829 to be approved?

USCIS Answer: Yes, the jobs created a number of years ago still count, and yes they must be maintained during the conditional resident period.

[Q] Does successor-in-charge concept apply in EB-5 case?

If the new commercial enterprise entity just changes its name and EIN number but remains the same in other respects, USCIS will accept the entity as the same entity, but if any additional changes are involved, USCIS will decide on case-by-case basis.

Having said this, we have seen situations where USCIS or AAO will not accept the successor-in-charge concept, so realize that the EB-5 law as understood by USCIS varies among examiners.

[HOT] [Q] When does investor have to show TEA requirement has been met?

According to USCIS, at the time of filing (not at the time of investment) I-526 petition. Even if TEA designation changes in future, it's OK, as long as this initial requirement has been met.

Note USCIS later clarified the controlling time as either the filing date or time of investment, whichever is earlier. Where an escrow mechanism is used, the controlling point of time is when I-526 petition is filed, but if no escrow is used, it's time of capital investment. See Dec 11, 2009 Policy Memo, pages 16 to 17.

The above position seems to have changed, as USCIS stated most recently during the January 23, 2012 Q & A meeting the following:

TARGETED EMPLOYMENT AREAS

[Q] What is form I-407?

It's a form used to give up one's permanent residence status in front of a consular office at the American Embassy abroad. Under the U.S. immigration law, a permanent resident can "give up" his or her permanent residence at the American Embassy by giving a written affidavit statement.

[Q] Anything that can be done when USCIS Field Office refuses to give temporary stamps while I-829 is pending?

[Q] Many USCIS Field Offices refuse to stamp passports of people who have pending I-829s with temporary evidence of permanent resident status with I-551 stamp, on the ground that I-829 receipt notice should suffice for work and travel purposes. However, this view does not take into account the fact that CPB often wants to see temporary stamps. Will you issue a memo to all USCIS Field Offices telling them that all pending I-829 applicants should get their permanent resident stamps in their passports?

In USCIS' own words:

USCIS is in the process of updating the language regarding this issue on the Form I-829 receipt notice which will resolve this issue.

[Q] What is the procedure upon I-829 denial?

[Q] If an I-829 petition is denied because of a determination that the jobs will not be created within a reasonable time or because the investor was not aware of the need to file an amended I-526 petition, will the investor be placed into removal proceedings in order to renew the I-829 before an immigration judge? What are USCIS’ procedures to place an EB-5 investor in removal proceedings? We have heard stories of EB-5 investors waiting months before a notice to appear is issued. During that time, what is the investor’s status until the removal proceedings are initiated? If the investor or a family member is outside the United States, what document will be issued to enable the investor or family member to be reunited with the remainder of the family or to appear in the removal proceeding?

USCIS' answer:

[Q] Can one invest in a Headquarter company in TEA but create jobs through retails stores located outside TEA?

[Q] An EB-5 investor invests in a company that operates several retail outlets. The company’s headquarters office is in a designated TEA, but the retail stores directly owned and operated by the company are not in TEAs. Assume 5 jobs will be created in the headquarters location and 5 jobs will be created at retail stores that are not in TEAs. How much money must the investor invest: $500,000 or $1 million?

This is what USCIS stated on this issue.

This question cannot be answered in the abstract without a clear presentation of the facts in the record of proceeding. Whether a particular case with this fact pattern can be approved is dependent upon a review of the specific evidence of record.

[HOT] [Q] What is the requirement in designating a TEA area?

[Q] Pursuant to 8 C.F.R. § 204.6(i), please confirm that a targeted employment area (TEA) may consist of a geographic area designated by a governor's delegate, that is described by a collection of wards, census tracts, and/or other political descriptions (such as sets of city blocks), even when the precise location of a particular commercial enterprise is located in a ward or census tract that does not by itself have an unemployment rate of 150% of the national average.

Because this question is very important, USCIS' answer is quoted below in its entirety.