The EB-5 investor visa, also commonly referred to as an EB-5 green card, is a great immigration tool for Canadian investors and their families wishing to move to the United States permanently while making a business investment.
Unlike other investor and employment visas that will only allow a person to stay in the U.S. as long as their visa is valid, the EB-5 visa allows the investor, his or her spouse and children under the age of 21 to become permanent residents of the U.S. with all the rights and benefits that this status confers such as the right to live and work, or not work, in the U.S. The EB-5 investor will also have the possibility to apply for U.S. citizenship after five years of being a permanent resident with the added benefits of being able to vote in U.S. elections, qualify for tax and estate planning benefits available only to U.S. citizens and more importantly, the right to leave and re-enter the U.S. at will without ever being denied entry.
The EB-5 visa was created by Congress in 1990 as a program for job creation and to drive foreign investment to the U.S. in order to stimulate the economy. Since job creation is at the center of the EB-5 program, each investor family has to create ten jobs for Americans through its investment. The requirement to create ten jobs can be met through direct or indirect jobs or a mix of the two depending on the type of EB-5 project that the investor invests in.
The two ways to qualify for an EB-5 investor visa are for the investor to either start a new business in the U.S. himself or to invest in a Regional Center project. A Regional Center is an entity in the U.S. charged with organizing and managing EB-5 projects in which foreign investors can invest. Through the projects that they sponsor, Regional Centers aim at encouraging economic growth through increased export sales, improved regional productivity, job creation and increased domestic capital investment. A Regional Center can cover very large geographical areas as well as areas as small as a city block.
The default investment amount required to qualify for an EB-5 visa is $1 million USD. However, when investing in a Regional Center project located in what is called a Targeted Employment Area (“TEA”), the required investment amount is reduced to $500,000 USD. A TEA is located either in a rural area with a population of 20,000 or less or in an area where the unemployment rate is no less than 150% of the national average. The reduced investment amount for projects located in a TEA is an incentive for investors to invest in those high unemployment areas to boost the economy and help lower the unemployment rate by creating new jobs. As with Regional Center projects, the job creation requirement of a TEA is also the combined total of ten direct and/or indirect jobs; projects which are not part of Regional Centers are required to show ten direct jobs created through their investment. The job creation requirement is probably the most challenging element of the EB-5 visa and being able to show indirect job creation rather than direct jobs can be of great help in meeting this requirement.
Investing in a Regional Center project can be an ideal solution for a Canadian investor looking to retire in the U.S. since no involvement from the investor in the project is required. The investor’s role in the project is passive and the Regional Center sponsors will handle most of the management of the project. The relationship between the investor and the sponsors are outlined in the following three documents:
- Private Placement Memorandum
- Subscription Agreements
- Operating Agreements
The assistance of a U.S. immigration attorney is strongly recommended in reviewing those documents in order to make sure the investor’s investment will meet the EB-5 visa requirements.
Another advantage of investing in a Regional Center project is that because the investor has no involvement in the project, he or she can reside anywhere in the U.S. regardless of the state where the project is located. For example, the project can be located in Vermont while the investor lives in Florida.
Although the EB-5 visa seems like an ideal solution for an investor looking to move to the U.S., it is important to work with a team of professionals including a US immigration attorney, economist, accountant, etc. to ensure that the project qualifies for the EB-5 visa program, represents a good investment and to minimize the financial risk of such investment. As with any business investment, there is a component of risk associated with investing in a Regional Center project and it is therefore important to carefully select the project in which to invest by properly assessing it. One of the risks involved in the process is that once the investment has been approved by the U.S. Citizenship and Immigration Services (“USCIS”), the investor and his or her family will be granted a two-year conditional green card. The green card is conditional in that the investor will need to show that the job creation requirement has been met before the condition can be lifted. Again, the job creation requirement will vary depending on whether the investment is done in a project located in a Regional Center or not. Once the investor shows that the requirement is met, the condition is lifted and the investor and his or her family will have full and complete status of permanent residents of the US.
Before starting the EB-5 visa process, the project must have been approved by immigration authorities. When investing through a Regional Center, the project has usually been pre-approved and the Regional Center provides the immigration attorney and his or her clients with the required documentation establishing the project’s qualification. Once it has been established that the project qualifies, the first step in applying for an EB-5 visa is for the immigration attorney to file form I-526, Petition for Alien Entrepreneur for the investor along with several supporting documents and the Regional Center business plan. At the time of filing form I-526, the investor must show that the investment amount ($500,000 USD or $1 million USD, depending on the project), is irrevocably committed and held in escrow. In addition to submitting proof that the funds are irrevocably committed, the investor will need to prove the source of funds and the path of funds in order to demonstrate the funds do in fact belong to him or her and that the funds were obtained lawfully. The investor will also need to show that he or she has a net worth of $800,000 or higher.
Once form I-526 has been approved, the investor and his family can file for adjustment of status through form I-485, Application to Register Permanent Residence or Adjust Status if they are already in the US or can file for an immigrant visa (green card) through form DS-230 or DS-260 if they are applying from outside of the US, in which case the file will be handled by the US consulate or embassy of the investor’s country.
In the event that the I-526 is denied, the investment funds held in escrow are released back to the investor.
Upon approval of the I-485, DS-230 or DS-260, the investor and his or her family can enter the US as conditional permanent residents.
Within 90 days prior to the second anniversary of the granting of the conditional green card, the investor and his family will need to apply to remove the conditions, as explained above, by filing form I-829, Petition by Entrepreneur to Remove Conditions.
In conclusion, the EB-5 visa can be the best way for some Canadians to move to the US while making a good investment. It is always important to work with US immigration attorneys such as Altro LLP to guide you through the immigration process and advise you on the best strategy for you and your family’s situation.