The Three Elements of the EB-5 Program:


(1) the immigrant’s investment of capital, (2) in a new commercial enterprise, (3) that creates jobs. Each of these elements is explained below in the context of both the original EB-5 Program and the Immigrant Investor Program.


The law authorizes issuance of an immigrant visa to an investor who is coming to the United States to engage in a new commercial enterprise in which the investor has invested or is in the process of investing the requisite capital and which will benefit the United States economy and create full-time employment for at least ten United States workers.

An investor must file a petition, Form I-526, with the United States Citizenship and Immigration Services (“USCIS”). Upon approval of the petition by the USCIS, the investor and the immediate family (spouse, and unmarried children under 21 years of age as of the date of filing Form I-526) may apply for permanent residence by processing at a United States consulate, or at a local USCIS office if the investor is in the United States.

The United States Congress stipulated that the initial permanent residence status shall be conditional for two years. Prior to the expiration of the two-year period, the conditional resident investor must file a petition, Form I-829, with the USCIS to request removal of the conditions on permanent residence. The petition should be granted if the investor demonstrates that the investor invested or was actively in the process of investing the requisite capital; the investor sustained the enterprise and the investment throughout the two-year period of conditional residence; and the investment created the requisite employment
.

The Investment of Capital


The EB-5 Program is based in part on the fact that the United States economy will benefit from an immigrant’s contribution of capital. It is also based on the view that the benefit to the U.S. economy is greatest when capital is placed at risk and invested into a new commercial enterprise that, as a result of the investment, creates at least ten jobs for U.S. workers. The regulations that govern the EB-5 Program define the terms “capital” and “investment” with this in mind. 1. “Capital” Defined The word “capital” in the EB-5 Program does not mean only cash. Instead, the word “capital” is defined broadly in the regulations to take into account the many different ways in which an individual can make a contribution of financial value to a business. The regulation defines “capital” as follows: Capital means cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien entrepreneur [immigrant investor], provided that the alien entrepreneur [immigrant investor] is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness.

All capital shall be valued at fair market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act. 8 C.F.R. § 204.6(e).

The definition of “capital” has been clarified in regulations and in precedent decisions that our Administrative Appeals Office (AAO) has issued:

• First, the definition of “capital” is sufficiently broad that it includes not only such things of value as cash, equipment, and other tangible property, but it can also include the immigrant investor’s promise to pay (a promissory note), as long as the promise is secured by assets the immigrant investor owns, the immigrant investor is liable for the debt, and the assets of the immigrant investor do not for this purpose include assets of the company in which the immigrant is investing.

In one of the  AAO’s precedent decision Matter of Hsiung, 22 I&N Dec. 201, 204 (Assoc. Comm’r 1998), The USCIS reflected the fact that the immigrant investor’s promissory note can constitute “capital” under the regulations if the note is secured by assets the petitioner owns. USCIS also determined that: (1) The assets must be specifically identified as securing the promissory note; (2) Any security interest must be perfected to the extent provided for by the jurisdiction in which the asset is located; and, (3) The asset must be fully amenable to seizure by a U.S. note holder.

• Second, all of the capital must be valued at fair market value in United States dollars. 8 C.F.R. § 204.6(e) (definition of “capital”). The fair market value of a promissory note depends on its present value, not the value at any different time. Matter of Izummi, 22 I&N Dec. 169, 186 (Assoc. Comm’r 1998).

Moreover, to qualify as capital for EB-5 purposes, “nearly all of the money due under a promissory note must be payable within two years, without provisions for extensions.” Id. at 194. • Third, the immigrant investor must establish that he or she is the legal owner of the capital invested. Matter of Ho, 22 I&N Dec. 206 (Assoc. Comm’r 1998).

• Fourth, any assets acquired directly or indirectly by unlawful means, such as criminal activity, will not be considered capital. The immigrant investor must demonstrate by a preponderance of the evidence that the capital was obtained through lawful means.

According to the regulation, to make this showing the immigrant investor’s petition must be accompanied, as applicable, by: (1) Foreign business registration records; or, (2) Corporate, partnership (or any other entity in any form which has filed in any country or subdivision thereof any return described in this list), and personal tax returns including income, franchise, property (whether real, personal, or intangible), or any other tax returns of any kind filed within five years, with any taxing jurisdiction in or outside the United States by or on behalf of the immigrant investor; or, (3) Evidence identifying any other source(s) of capital; or, (4) Certified copies of any judgments or evidence of all pending governmental civil or criminal actions, governmental administrative proceedings, and any private civil actions (pending or otherwise) involving monetary judgments against the immigrant investor from any court in or outside the United States within the past fifteen years. 8 C.F.R. § 204.6(j)(3)(i)-(iv). 2. “Invest” Defined The immigrant investor in the EB-5 Program is required to invest his or her capital. The petitioner must document the path of the funds in order to establish that the investment was his or her own funds. Matter of Izummi, 22 I&N Dec. at 195. The regulation defines “invest” as follows: Invest means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the alien entrepreneur [immigrant investor] and the new commercial enterprise does not constitute a contribution of capital .

Capital at "risk" 8 C.F.R. § 204.6(e).

The regulation also provides that, in order to qualify as an investment in the EB-5 Program, the immigrant investor must actually place his or her capital “at risk” for the purpose of generating a return, and that the mere intent to invest is not sufficient. The regulation provides as follows: To show that the petitioner has invested or is actively in the process of investing the required amount of capital, the petition must be accompanied by evidence that the petitioner has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk. Evidence of mere intent to invest, or of prospective investment arrangements entailing no present commitment, will not suffice to show that the petition is actively in the process of investing. The alien must show actual commitment of the required amount of capital.

8 C.F.R. § 204.6(j)(2).  Investment based on ​guaranteed a rate of return and escrow.

The EB-5 Program is seeking to attract individuals from other countries who are willing to put their capital at risk in the United States, with the hope of a return on their investment, to help create U.S. jobs. The law does not specify what the degree of risk must be; the entire amount of capital need only be at risk to some degree. If the immigrant investor is guaranteed the return of a portion of his or her investment, or is guaranteed a rate of return on a portion of his or her investment, then that portion of the capital is not at risk. Matter of Izummi, 22 I&N Dec. at 180-188. For the capital to be “at risk” there must be a risk of loss and a chance for gain. In our precedent decision Matter of Izummi, 22 I&N Dec. at 183-188, the AAO found that the capital was not at risk because the investment was governed by a redemption agreement that protected against the risk of loss of the capital and, therefore, constituted an impermissible debt arrangement under 8 C.F.R. § 204.6(e) as it was no different from the risk any business creditor incurs. Id. at 185. Furthermore, a promise to return any portion of the immigrant investor’s minimum required capital negates the required element of risk. Thus, if the agreement between the new commercial enterprise and immigrant investor, such as a limited partnership agreement or operating agreement, provides that the investor may demand return of or redeem some portion of capital after obtaining conditional lawful permanent resident status (i.e., following approval of the investor’s Form I-526 and subsequent visa issuance or, in the case of adjustment, approval of the investor’s Form I-485), that portion of capital is not at risk. Similarly, if the investor is individually guaranteed the right to eventual ownership or use of a particular asset in consideration of the investor’s contribution of capital into the new commercial enterprise, such as a home (or other real estate interest) or item of personal property, the expected present value of the guaranteed ownership or use of such asset does not count toward the total amount of the investor’s capital contribution in determining how much money was truly placed at risk. Cf. Izummi at 184 (concluding that an investment cannot be considered a qualifying contribution of capital at risk to the extent of a guaranteed return). Nothing, however, precludes an investor from receiving a return on his or her capital (i.e., a distribution of profits) during or after the conditional residency period, so long as prior to or during the two-year conditional residency period, and before the requisite jobs have been created, the return is not a portion of the investor’s principal investment and was not guaranteed to the investor.

An investor’s money may be held in escrow until the investor has obtained conditional lawful permanent resident status if the immediate and irrevocable release of the escrowed funds is contingent only upon approval of the investor’s Form I-526 and subsequent visa issuance and admission to the United States as a conditional permanent resident or, in the case of adjustment of status, approval of the investor’s Form I-485. An 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 however 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 lawful permanent resident status. At the Form I-829 stage, USCIS will require evidence verifying that the escrowed funds were released and that the investment was sustained in the new commercial enterprise. 


The Amount of Capital That Must be Invested.


​​The statute governing the EB-5 Program provides that the immigrant investor must invest at least $1,000,000 in capital in a new commercial enterprise that creates not fewer than ten jobs. As discussed above, this means that the present fair market value, in United States dollars, of the immigrant investor’s lawfully-derived capital must be at least $1,000,000. 8 U.S.C. § 1153(b)(5)(C)(i). An exception exists if the immigrant investor invests his or her capital in a new commercial enterprise that is principally doing business in, and creates jobs in, a “targeted employment area.” In such a case, the immigrant investor must invest a minimum of $500,000 in capital. 8 U.S.C. § 1153(b)(5)(C)(ii); 8 C.F.R. § 204.6(f)(2). See Section 3.a below for the definition of where the new commercial enterprise is “principally doing business.” An immigrant investor may diversify his or her total EB-5 investment across a portfolio of businesses or projects, so long as the minimum investment amount is placed in a single commercial enterprise. For immigrant investors who are not associated with a regional center, the capital may be deployed into a portfolio of wholly-owned businesses, so long as all capital is deployed through a single commercial enterprise and all jobs are created directly within that commercial enterprise or through the portfolio of businesses that received the EB-5 capital through that commercial enterprise. For example, in an area in which the minimum investment amount is $1,000,000, the investor can satisfy the statute if the investor invests in a commercial enterprise that deploys $600,000 of the investment toward one business that it wholly owns, and $400,000 of the investment toward another business that it wholly owns. See 8 C.F.R. § 204.6(e). (In this instance, the two wholly-owned businesses would have to create an aggregate of ten new jobs between them.) An investor cannot qualify, on the other hand, by investing $600,000 in one commercial enterprise and $400,000 in a separate commercial enterprise. In the regional center context, where indirect jobs may be counted, the commercial enterprise may create jobs indirectly through multiple investments in corporate affiliates or in unrelated entities, but the investor cannot qualify by investing directly in those multiple entities. Rather, the investor’s capital must still be invested in a single commercial enterprise, which can then deploy that capital in multiple ways as long as one or more of the portfolio of businesses or projects can create the required number of jobs.


“Targeted Employment Area” Defined  

The statute and regulations governing the EB-5 Program defines a “targeted employment area” as, at the time of investment, a rural area or an area that has experienced unemployment of at least 150 percent of the national average rate. A “rural area” is defined as any area not within either a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more (based on the most recent decennial census of the United States). 8 U.S.C. § 1153(b)(5)(B)(ii), (iii); 8 C.F.R. § 204.6(e). In other words, a rural area must be both outside of a metropolitan statistical area and outside of a city or town having a population of 20,000 or more. Congress expressly provided for a reduced investment amount in a rural area or an area of high unemployment in order to spur immigrants to invest in new commercial enterprises that are principally doing business in, and creating jobs in, areas of greatest need. In order for the lower capital investment amount of $500,000 to apply, the new commercial enterprise into which the immigrant invests or the actual job creating entity must be principally doing business in the targeted employment area.

For the purpose of the EB-5 Program, a new commercial enterprise is “principally doing business” in the location where it regularly, systematically, and continuously provides goods or services that support job creation. If the new commercial enterprise provides such goods or services in more than one location, it will be deemed to be “principally doing business” in the location that is most significantly related to the job creation.

Factors to be considered in making this determination may include, but are not limited to,

(1) the location of any jobs directly created by the new commercial enterprise;

(2) the location of any expenditure of capital related to the creation of jobs;

(3) where the new commercial enterprise conducts its day-to-day operation; and (4) where the new commercial enterprise maintains its assets that are utilized in the creation of jobs. Matter of Izummi, 22 I&N Dec. at 174. As discussed fully below, investments through the Immigrant Investor Program can be made through regional centers and the new commercial enterprise may seek to establish indirect job creation. In these cases, the term “principally doing business” will apply to the job-creating enterprise rather than the new commercial enterprise. See 8 C.F.R. § 204.6(j)(6); Matter of Izummi, 22 I&N Dec. at 171-73 (discussing the location of commercial enterprises to which the new commercial enterprise made loans). The immigrant investor may seek to have a geographic or political subdivision designated as a targeted employment area.

To do so, the immigrant investor must demonstrate that the targeted employment area meets the statutory and regulatory criteria through the submission of: (1) evidence that the area is outside of a metropolitan statistical area and outside of a city or town having a population of 20,000 or more; (2) unemployment data for the relevant metropolitan statistical area or county; or (3) a letter from the state government designating a geographic or political subdivision located outside a rural area but within its own boundaries as a high unemployment area. 8 C.F.R. § 204.6(j)(6). 


A State’s Designation of a Targeted Employment Area.


​​The regulation provides that a state government may designate a geographic or political subdivision within its boundaries as a targeted employment area based on high unemployment. Before the state may make such a designation, an official of the state must notify USCIS of the agency, board, or other appropriate governmental body of the state that will be delegated the authority to certify that the geographic or political subdivision is a high unemployment area. The state may then send a letter from the authorized body of the state certifying that the geographic or political subdivision of the metropolitan statistical area or of the city or town with a population of 20,000 or more in which the enterprise is principally doing business has been designated a high unemployment area. 8 C.F.R. § 204.6(i). Consistent with the regulations, USCIS defers to state determinations of the appropriate boundaries of a geographic or political subdivision that constitutes the targeted employment area. However, for all TEA designations, USCIS must still ensure compliance with the statutory requirement that the proposed area designated by the state in fact has an unemployment rate of at least 150 percent of the national average rate. For this purpose, USCIS will review state determinations of the unemployment rate and, in doing so, USCIS can assess the method or methods by which the state authority obtained the unemployment statistics. Acceptable data sources for purposes of calculating unemployment include U.S. Census Bureau data (including data from the American Community Survey) and data from the Bureau of Labor Statistics (including data from the Local Area Unemployment Statistics). There is no provision that allows a state to designate a rural area.



  Engage in a New Commercial Enterprise (No passive investor will qualify).

The law requires the investor to engage in a new commercial enterprise. A passive investor cannot qualify for permanent residence in this visa category. The investor must be involved either in the day-to-day managerial control of the commercial enterprise, or in the management of the enterprise through policy formulation. The USCIS regulations state that if the investor is a corporate officer or board member, or, in the case of a limited partnership, is a limited partner with the rights and responsibilities typically provided under the provisions of the Uniform Limited Partnership Act, then the investor satisfies the requirement of engaging in the management of the new commercial enterprise. The USCIS has stated that the investor must actually engage in management rather than just carry the title, however an investor may hire a manager to assist in managing day to day business.

“Commercial Enterprise” Defined

First, the regulation governing the EB-5 Program defines the term “commercial enterprise” broadly, consistent with the realities of the business world and the many different forms and types of structures that job-creating activities can have. The regulation defines a “commercial enterprise” as follows: [A]ny for-profit activity formed for the ongoing conduct of lawful business. 8 C.F.R. § 204.6(e). The regulation provides a list of examples of commercial enterprises. It specifically states that the list is only of examples, and is not a complete list of the many forms a commercial enterprise can have. The examples listed are: [A] sole proprietorship, partnership (whether limited or general), holding company, joint venture, corporation, business trust, or other entity which may be publicly or privately owned. This definition includes a commercial enterprise consisting of a holding company and its wholly-owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. 8 C.F.R. § 204.6(e). Finally, the regulation provides that the commercial enterprise must be one that is designed to make a profit, unlike, for example, some charitable organizations, and it does not include “a noncommercial activity such as owning and operating a personal residence.” 8 C.F.R. § 204.6(e).


“New” Defined


In its effort to spur job creation through a wide variety of businesses and projects, the EB-5 Program has presented a broad definition of what constitutes a “new” commercial enterprise into which the immigrant investor can invest the required amount of capital and help create jobs. The EB-5 Program defines “new” as “established after November 29, 1990.” 8 C.F.R. § 204.6(e). The immigrant investor can invest the required amount of capital in a commercial enterprise that was established after November 29, 1990 to qualify for the EB-5 Program, provided the other eligibility criteria are met. In addition, in the EB-5 Program a “new” commercial enterprise also means a commercial enterprise that was established before November 29, 1990 if the enterprise will be restructured or expanded through the immigrant investor’s investment of capital:

a. The Purchase of an Existing Business That is Restructured or Reorganized The immigrant investor can invest in an existing business, regardless of when that business was first created, provided that the existing business is simultaneously or subsequently restructured or reorganized such that a new commercial enterprise results. 8 C.F.R. § 204.6(h)(2). The facts of Matter of Soffici—where an investor purchased a Howard Johnson hoteland continued to run it as a Howard Johnson hotel—were not sufficient to establish a qualifying restructuring or reorganization. 22 I&N Dec. 158, 166 (Assoc. Comm’r 1998) (“A few cosmetic changes to the decor and a new marketing strategy for success do not constitute the kind of restructuring contemplated by the regulations, nor does a simple change in ownership.”).

On the other hand, examples that could qualify as restructurings or reorganizations include a plan that converts a restaurant into a nightclub, or a plan that adds substantial crop production to an existing livestock farm.


The Expansion of An Existing Business

The immigrant investor can invest in an existing business, regardless of when that business was first created, provided that a substantial change in the net worth or number of employees results from the investment of capital. 8 C.F.R. § 204.6(h)(3). “Substantial change” is defined as follows: [A] 40 percent increase either in the net worth, or in the number of employees, so that the new net worth, or number of employees amounts to at least 140 percent of the pre-expansion net worth or number of employees. 8 C.F.R. § 204.6(h)(3). Investment in a new commercial enterprise in this manner does not exempt the immigrant investor from meeting the requirements relating to the amount of capital that must be invested and the number of jobs that must be created. 8 C.F.R. § 204.6(h)(3).


Pooled Investments in Non-Regional Center Cases

The EB-5 Program provides that a new commercial enterprise can be used as the basis for the petition of more than one immigrant investor. Each immigrant investor must invest the required amount of capital and each immigrant investor’s investment must result in the required number of jobs. Furthermore, the new commercial enterprise can have owners who are not seeking to enter the EB-5 Program, provided that the source(s) of all capital invested is (or are) identified and all invested capital has been derived by lawful means. 8 C.F.R. § 204.6(g). 

Evidence of the Establishment of a New Commercial Enterprise

To show that the new commercial enterprise has been established, the immigrant investor must present the following evidence, in addition to any other evidence we deem appropriate: (1) as applicable, articles of incorporation, certificate of merger or consolidation, partnership agreement, certificate of limited partnership, joint venture agreement, business trust agreement, or other similar organizational document for the new commercial enterprise; or, (2) A certificate evidencing authority to do business in a state or municipality or, if the form of the business does not require any such certificate or the state or municipality does not issue such a certificate, a statement to that effect; or, (3) Evidence that, as of a date certain after November 29, 1990, the required amount of capital for the area in which an enterprise is located has been transferred to an existing business, and that the investment has resulted in a substantial increase in the net worth or number of employees of the business to which the capital was transferred. This evidence must be in the form of stock purchase agreements, investment agreements, certified financial reports, payroll records, or any similar instruments, agreements, or documents evidencing the investment in the commercial enterprise and the resulting substantial change in the net worth or number of employees.


The Requirement that the Immigrant Investor be Engaged in the Management of the New Commercial Enterprise


The EB-5 Program requires the immigrant investor to be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial responsibility or through policy formulation. It is not enough that the immigrant investor maintain a purely passive role in regard to his or her investment. 8 C.F.R. § 204.6(j)(5). To show that the immigrant investor is or will be engaged in the exercise of day-to-day managerial control or in the exercise of policy formulation, the immigrant investor must submit:

(1) 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; or,

(2) Evidence that the immigrant investor is a corporate officer or a member of the corporate board of directors; or,

(3) If the new enterprise is a partnership, either limited or general, evidence that the immigrant investor is engaged in either direct management or policy making activities.

If the petitioner is a limited partner and the limited partnership agreement provides the immigrant investor with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act, the immigrant investor will be considered sufficiently engaged in the management of the new commercial enterprise.


The Location of the New Commercial Enterprise in a Regional Center


As previously mentioned, there is a regional center model within the EB-5 Program that allows for not only “direct job” creation, but “indirect job creation” as demonstrated by reasonable methodologies. Originally introduced as a “pilot program,” and now titled the “Immigrant Investor Program,” the program provides investors with expanded opportunities to demonstrate job creation in accordance with a series of job creation rules discussed below. “Regional center” is defined as follows: Regional center means any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment. 8 C.F.R. § 204.6(e). A regional center that wants to participate in the Immigrant Investor Program must submit a proposal using Form I-924, that:

(1) Clearly describes how the regional center focuses on a geographical region of the United States, and how it will promote economic growth through increased export sales, improved regional productivity, job creation, and increased domestic capital investment;

(2) Provides in verifiable detail how jobs will be created directly or indirectly;

(3) Provides a detailed statement regarding the amount and source of capital which has been committed to the regional center, as well as a description of the promotional efforts taken and planned by the sponsors of the regional center;

(4) Contains a detailed prediction regarding the manner in which the regional center will have a positive impact on the regional or national economy in general as reflected by such factors as increased household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and without the regional center; and,

(5) Is supported by economically or statistically sound valid forecasting tools, including, but not limited to, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and/or multiplier tables. 8 C.F.R. § 204.6(m)(3)(i)-(v).

USCIS will review the proposed geographic boundaries of a new regional center and will deem them acceptable if the applicant can establish by a preponderance of the evidence that the proposed economic activity will promote economic growth in the proposed area.

The question is a fact-specific one and the law does not require any particular form of evidentiary showing, such as a county-by-county analysis. In USCIS’s experience, the reasonableness of proposed regional center geographic boundaries may be demonstrated through evidence that the proposed area is contributing significantly to the supply chain, as well as the labor pool, of the proposed projects. The Immigrant Investor Program was implemented with the goal of spurring greater economic growth in the geographic area in which a regional center is developed.

The regional center model within the Immigrant Investor Program can offer an immigrant investor already-defined investment opportunities, thereby reducing the immigrant investor’s responsibility to identify acceptable investment vehicles. As discussed fully below, if the new commercial enterprise is located within and falls within the economic scope of the defined regional center, different job creation requirements apply. A regional center can contain one or more new commercial enterprises. The level of verifiable detail required for a Form I-924 to be approved and provided deference may vary depending on the nature of the Form I-924 filing. If the Form I-924 projects are “hypothetical” projects,  general proposals and general predictions ( Matter of Ho) may be sufficient to determine that the proposed regional center will more likely than not promote economic growth, improved regional productivity, job creation, and increased domestic capital investment. Determinations based on hypothetical projects, however, will not receive deference and the actual projects on which the Form I-526 petitions will be based will receive de novo review during the subsequent filing (e.g., an amended Form I-924 application including the actual project details or the first Form I-526 petition filed by an investor under the regional center project).

Organizational and transactional documents submitted with a Form I-924 hypothetical project will not be reviewed to determine compliance with program requirements since these documents will receive de novo review in subsequent filings. If an applicant desires review of organizational and transactional documents for program compliance, a Form I-924 application with a Form I-526 exemplar should be submitted.

Form I-924 applications that are based on actual projects may require more details than a hypothetical project in order to conclude that the proposal contains verifiable details and is supported by economically or statistically sound forecasting tools. Determinations based on actual projects ( In cases where the Form I-924 is filed based on actual projects that do not contain sufficient verifiable detail, the projects may still be approved as hypothetical projects if they contain the requisite general proposals and predictions), however, will be accorded deference to subsequent filings under the project involving the same material facts and issues. While an amended Form I-924 application is not required to perfect a hypothetical project once the actual project details are available, some applicants may choose to file an amended Form I-924 application with a Form I-526 exemplar in order to obtain a favorable determination which will be accorded deference in subsequent related filings, absent material change, fraud, willful misrepresentation, or a legally deficient determination (discussed in more detail below).


The Creation of Jobs In developing the EB-5 Program

​​

Congress intended to promote the immigration of people who invest capital into our nation’s economy and help create jobs for U.S. workers. Therefore, the creation of jobs for U.S. workers is a critical element of the EB-5 Program. It is not enough that the immigrant invests funds into the U.S. economy; the investment must result in the creation of jobs for qualifying employees. As discussed fully below, the EB-5 Program provides that each investment of the required amount of capital in a new commercial enterprise must result in the creation of at least ten jobs. It is important to recognize that while the immigrant’s investment must result in the creation of jobs for qualifying employees, it is the new commercial enterprise that creates the jobs. 4 This distinction is best illustrated in the non-regional center context by an example: Ten immigrant investors seek to establish a hotel as their new commercial enterprise. The establishment of the new hotel requires capital to pay financing costs to unrelated third parties, purchasing the land, developing the plans, obtaining the licenses, building the structure, taking care of the grounds, staffing the hotel, and the many other types of expenses involved in the development and operation of a new hotel. The immigrant’s investments can go to pay part or all of any of these expenses. Each immigrant’s investment of the required amount of capital helps the new commercial enterprise – the new hotel – create ten jobs. The ten immigrants’ investments must result in the new hotel’s creation of 100 jobs for qualifying employees (ten jobs resulting per each individual immigrant’s capital investment). See 8 C.F.R. §204.6(j) (it is the new commercial enterprise that will create the ten jobs). Since it is the commercial enterprise that creates the jobs, the developer or the principal of the new commercial enterprise, either directly or through a separate job-creating entity, may utilize interim, temporary or bridge financing – in the form of either debt or equity – prior to receipt of EB-5 capital. If the project commences based on the interim or bridge financing prior to the receipt of the EB-5 capital and subsequently replaces it with EB-5 capital, the new commercial enterprise may still receive credit for the job creation under the regulations. Generally, the replacement of bridge financing with EB-5 investor capital should have been contemplated prior ​to acquiring the original non-EB-5 financing. However, even if the EB-5 financing was not contemplated prior to acquiring the temporary financing, as long as the financing to be replaced was contemplated as short-term temporary financing which would be subsequently replaced, the infusion of EB-5 financing could still result in the creation of, and credit for, new jobs.

For example, the non EB-5 financing originally contemplated to replace the temporary financing may no longer be available to the commercial enterprise as a result of changes in availability of traditional financing.

Developers should not be precluded from using EB-5 capital as an alternative source to replace temporary financing simply because it was not contemplated prior to obtaining the bridge or temporary financing. It is also important to note that the full amount of the immigrant’s investment must be made available to the business(es) most closely responsible for creating the jobs upon which EB-5 eligibility is based. Matter of Izummi, 22 I&N Dec. at 179. Thus, in the regional center context, if the new commercial enterprise is not the job-creating entity, then the full amount of the capital must be first invested in the new commercial enterprise and then made available to the job creating entity. 
Full-Time Positions For Qualifying Employees

The EB-5 Program requires that the immigrant investor invest the required amount of capital in a new commercial enterprise in the United States that “will create full-time positions for not fewer than 10 qualifying employees.” 8 C.F.R. § 204.6(j). An “employee” is defined as follows: Employee means an individual who provides services or labor for the new commercial enterprise and who receives wages or other remuneration directly from the new commercial enterprise. 8 C.F.R. § 204.6(e). The employee must be a “qualifying employee” for the purpose of the EB-5 Program’s job creation requirement. A “qualifying employee” is defined as follows: Qualifying employee means a United States citizen, a lawfully admitted permanent resident, or other immigrant lawfully authorized to be employed in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or an alien remaining in the United States under suspension of deportation. This definition does not include the alien entrepreneur [immigrant investor], the alien entrepreneur’s spouse [immigrant investor’s], sons, or daughters, or any non immigrant alien. 8 C.F.R. § 204.6(e).

Job Creation
​The EB-5 Program’s job creation requirement provides that it is “full-time employment” that must be created for the ten or more qualifying employees. INA § 203(b)(5)(A)(ii), 8 U.S.C. § 1153(b)(5)(A)(ii). “Full-time employment” is defined as follows: Full-time employment means employment of a qualified employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. A full-time employment position can be filled by two or more qualifying employees in a job sharing arrangement as long as the 35-working-hours-per-week requirement is met. However, a full-time employment position cannot be filled by combinations of part-time positions, even if those positions when combined meet the hourly requirement. 8 C.F.R. § 204.6(e). Direct jobs that are intermittent, temporary, seasonal, or transient in nature do not qualify as full-time jobs for EB-5 purposes. Consistent with prior USCIS interpretation, however, jobs that are expected to last for at least two years generally are not intermittent, temporary, seasonal, or transient in nature. Due to the nature of accepted job creation modeling practices, which do not distinguish whether jobs are full- or part-time, USCIS relies upon the reasonable economic models to determine that it is more likely than not that the indirect jobs are created and will not request additional evidence to validate the job creation estimates in the economic models to prove by a greater level of certainty that the indirect jobs created, or to be created, are full-time or permanent. USCIS may, however, request additional evidence to verify that the direct jobs will be or are full-time and permanent, which may include a review of W-2s or similar evidence at the Form I-829 stage.

Job Creation Requirement

As previously discussed, the centerpiece of the EB-5 Program is the creation of jobs. The immigrant investor seeking to enter the United States through the EB-5 Program must invest the required amount of capital in a new commercial enterprise that will create full-time positions for at least ten qualified employees. There are three measures of job creation in the EB-5 Program, depending on the new commercial enterprise and where it is located:


Troubled Business



The EB-5 Program recognizes that in the case of a troubled business, our economy benefits when the immigrant investor helps preserve the troubled business’s existing jobs. Therefore, when the immigrant investor is investing in a new commercial enterprise that is a troubled business or, in the regional center context, is placing capital into a job-creating entity that is a troubled business, the immigrant investor must only show that the number of existing employees in the troubled business is being or will be maintained at no less than the pre-investment level for a period of at least two years. 8 C.F.R. § 204.6(j)(4)(ii).


​This regulatory provision, while allowing job preservation in lieu of job creation, does not decrease the statutory numeric requirement; in the case of a troubled business, ten jobs must be preserved, created, or some combination of the two (e.g., an investment in a troubled business that creates four qualifying jobs and preserves all six pre-investment jobs would satisfy the statutory and regulatory requirements). A troubled business is defined as follows: [A] business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve- or twenty-four month period prior to the priority date on the alien entrepreneur’s [immigrant investor’s] Form I-526, and the loss for such period is at least equal to twenty percent of the troubled business’s net worth prior to such loss. For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

New Commercial Enterprise Not Associated With a Regional Center


For a new commercial enterprise that is not associated with a regional center, the EB-5 Program provides that the full-time positions must be created directly by the new commercial enterprise to be counted. This means that the new commercial enterprise (or its wholly-owned subsidiaries) must itself be the employer of the qualified employees who fill the new full-time positions. 8 C.F.R. § 204.6(e) (definition of employee).


New Commercial Enterprise Located Within and Associated With a Regional Center


For a new commercial enterprise that is located within a regional center, the EB-5 Program provides that the full-time positions can be created either directly or indirectly by the new commercial enterprise. 8 C.F.R. § 204.6((j)(4)(iii). Investors investing in a regional center are subject to all the same program requirements except that they may rely on indirect job creation as demonstrated through reasonable methodologies. 8 C.F.R. §§ 204.6(m)(1), (7). Indirect jobs are those that are held outside of the new commercial enterprise but are created as a result of the new commercial enterprise. For indirect jobs, the new full-time employees would not be employed directly by the new commercial enterprise. For example, indirect jobs can include, but are not limited to, those held by employees of the producers of materials, equipment, or services used by the new commercial enterprise. Indirect jobs can qualify and be counted as jobs attributable to a regional center, based on reasonable economic methodologies, even if they are located outside of the geographical boundaries of a regional center.

For purposes of demonstrating indirect job creation, petitioners must employ reasonable economic methodologies to establish by a preponderance of the evidence that the required infusion of capital or creation of direct jobs will result in a certain number of indirect jobs. 



Evidence of Job Creation and related business plan 

In order to show that a new commercial enterprise will create not fewer than ten full-time positions for qualifying employees, an immigrant investor must submit the following evidence:

(A) Documentation consisting of photocopies of relevant tax records, Form I-9, or other similar documents for ten (10) qualifying employees, if such employees have already been hired following the establishment of the new commercial enterprise; or,

(B) 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 ten (10) qualifying employees will result, including approximate dates, within the next two years, and when such employees will be hired.

8 C.F.R. § 204.6(j)(4)(i).

For purposes of the Form I-526 adjudication and the job creation requirements, the two-year period described in 8 C.F.R. § 204.6(j)(4)(i)(B) is deemed to commence six months after the adjudication of the Form I-526. The business plan filed with the Form I-526 should reasonably demonstrate that the requisite number of jobs will be created by the end of this two-year period. 


The AAO precedent decision has articulated the standards by which USCIS will review a business plan:

The plan should contain a market analysis, including the names of competing businesses and their relative strengths and weaknesses, a comparison of the competition’s products and pricing structures, and a description of the target market/prospective customers of the new commercial enterprise.

The plan should list the required permits and licenses obtained. If applicable, it should describe the manufacturing or production process, the materials required, and the supply sources.

The plan should detail any contracts executed for the supply of materials and/or the distribution of products. It should discuss the marketing strategy of the business, including pricing, advertising, and servicing.

The plan should set forth the business’s organizational structure and its personnel’s experience. It should explain the business’s staffing requirements and contain a timetable for hiring, as well as job descriptions for all positions. It should contain sales, cost, and income projections and detail the bases therefore. Most importantly, the business plan must be credible.

Matter of Ho, 22 I&N Dec. at 213. USCIS will review the business plan in its totality to determine if it is more likely than not that the business plan is comprehensive and credible.

A business plan is not required to contain all of the detailed elements described above, but the more details the business plan contains, as described in Matter of Ho, the more likely it is that the plan will be considered comprehensive and credible.

In the case of a troubled business, a comprehensive business plan must accompany the other required evidentiary documents. 8 C.F.R. § 204.6(j)(4)(ii). In the case of a new commercial enterprise within a regional center, the direct or indirect job creation may be demonstrated by the types of documents identified above or by reasonable methodologies. 8 C.F.R. § 204.6(j)(4)(iii). When there are multiple investors in a new commercial enterprise, the total number of full-time positions created for qualifying employees will be allocated only to those immigrant investors who have used the establishment of the new commercial enterprise as the basis for their entry in the EB-5 Program. An allocation does not need to be made among persons not seeking classification in the EB-5 Program, nor does an allocation need to be made among non-natural persons (such as among investing corporations). 8 C.F.R. § 204.6(g)(2). In general, multiple EB-5 investors petitioning through a regional center or on a standalone basis may not claim credit for the same specific new job. Thus, as a general matter, a petitioner or applicant may not seek credit for the same specifically identified job position that has already been allocated in a previously approved case. 


​The most important factors related to the investment of the Capital.
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The law requires an investor-petitioner to have invested or be in the process of investing the required capital. This requirement has several elements that require separate consideration.

A.        Amount of Capital

First, the amount of required capital is a minimum $1 million. The minimum amount is reduced to $500,000 in cases of investment in “targeted employment areas,” which are rural areas and areas which experience unemployment of at least 150 percent of the national average. A “rural area” is an area not within either a metropolitan statistical area or the outer boundary of any city or town having a population of 20,000 or more. The assessment of whether the investment is in a targeted employment area is based on statistical information relating to the time of investment, and is based on the location where the enterprise is principally doing business.

B.         Equity Capital 

Next, to “invest” is to contribute equity capital to the enterprise. The individual investor cannot receive any bond, note, or other debt arrangement from the enterprise in exchange for the contribution of capital. This includes any stock redeemable at the holder’s request. Provision for guaranteed returns and redemptions might be classified by the USCIS as impermissible debt arrangements. Also, the petitioner’s personal guarantee of a loan that is the primary obligation of the enterprise does not constitute an equity investment of capital by the petitioner.

C.        Kinds of Capital

“Capital” may include cash and cash equivalents, equipment, inventory, and other tangible property. Although capital does not include loans made by the petitioner to the enterprise, the investor’s contribution to the enterprise of the cash proceeds of indebtedness secured by assets owned by the investor may be considered capital, provided the investor is personally and primarily liable for repayment of the debt, and the assets of the enterprise upon which the petition is based are not used to secure any of the indebtedness.

Separately, the use of a promissory note payable by the investor to the enterprise – as a present commitment to contribute cash to the enterprise in the future – may be considered capital in limited circumstances where the promissory note is secured by the assets of the petitioner, the obligation is a perfected security interest, and the promissory note is valued in fair market United States dollars at the time it is contributed to the enterprise. Valuation of the promissory note requires consideration of the value of the assets securing the note, the amenability of the assets to seizure, and the expenses of enforcing a foreign judgment if necessary. An investor also may use a schedule of payments or a promissory note as evidence of being “in the process of investing” the required capital, however, the USCIS requires that payments of the minimum-required capital must be substantially completed before the end of the two-year conditional residence period.

D.        Escrow 

The investor may use an escrow, conditioning release of funds to the enterprise on approval of conditional residence status or approval of Form I-526. However, the USCIS has advised that the escrow must release funds directly into the enterprise’s accounts for job-creation purposes.

E.         “At Risk”

The USCIS requires proof that the capital invested is “at risk.” The USCIS focuses on actual and intended uses of capital to confirm that it will be used for job creation and profit-generating activity. The USCIS requires more than a deposit of funds into a business account, instead requiring evidence of the actual undertaking of business activity. The USCIS has held that use of capital for partnership expenses and reserve accounts unrelated to job creation eliminates consideration of that capital in counting the amount invested by the petitioner.

F.         Tracing and Lawful Source

The law requires proof that capital is invested by the petitioner. Thus, an investor-petitioner should present evidence that traces capital from the enterprise back to the petitioner as a source.

The USCIS also has required that a petitioner present evidence that the source of the capital is a lawful one. Regulations specify evidence requirements such as five years of income tax returns. The USCIS also has required evidence of the investor’s level of income or other evidence to prove the investor has sufficient lawful sources for the capital invested. Where the investor’s funds have been received by gift or loan, substantial evidence concerning the bona fides of the donor or lender may be required.