EB-5 Terms To Know
It’s a bit challenging trying to learn about the EB-5 Visa Program when every professional constantly uses EB-5 jargon that you probably don’t understand.
Why is it important to be familiar with the EB-5 terminology?
It’s not just $500,000 of your money on the line; it’s your client’s future. EB-5 visas would mean they could move to the U.S. for better business opportunities, better education options for their children, and a safer political climate. A lot is riding on their EB-5 petition approval. That’s why you’ll want to start off strong and know what every major EB-5 term means, so that you can consult them before signing any agreements.
Here are quick explanations of the most common EB-5 terms that you will come across:
EB-5 Program: In 1990, Congress created the EB-5 Program to stimulate the U.S. economy through capital investment from foreign nationals.
Regional Center Program: In 1992, Congress created the Regional Center Program, also known as the Immigrant Investor Program, to further promote economic growth. Each year, visas are set aside for investors of regional center sponsored projects.
United States Citizenship and Immigration Services (USCIS): USCIS is the government agency that oversees lawful immigration to the U.S.
Regional Center (RC): Regional centers are public or private economic units. They must be approved by USCIS based on project proposals that would boost economic growth. They can use EB-5 funds on projects in particular geographical areas and in certain industries.
Designated Regional Center: Regional Centers must file Form I-924, Application for Regional Center Designation Under the Immigrant Investor Program, before they can obtain EB-5 investment. Upon approval (designation), a regional center may participate in the Immigrant Investor Program. Designation does not mean USCIS endorses the regional center, guarantees its compliance with U.S. security laws or implies that it minimizes risk to the investor.
New Commercial Enterprise (NCE): EB-5 investors must invest in a new commercial enterprise. An NCE is any new lawful for-profit business that creates at least 10 full-time jobs. In certain cases, a failing business may qualify if it is significantly restructured or expanded and saves 10 jobs.
Job Creating Enterprise (JCE): After an investor invests in the new commercial enterprise, it is deployed as a loan to the job creating enterprise. The JCE uses the capital for the purposes of job creation.
Targeted Employment Area (TEA): A targeted employment area is a designated location that is either rural or has an unemployment rate that is 150% the U.S. national average. In order to get the TEA benefit of a lower minimum investment amount of $500,000, a letter of designation must be provided at the time an EB-5 investors files their I-526 Petition. Both EB-5 Programs can utilize TEA.
Exemplar Project: These are USCIS approved projects. USCIS has already reviewed offering documents, business plan, and job creation methodology and has determined that they are compliant. Investors view exemplar projects favorable because it reduces the risk involved in investing and streamlines their petition process as USCIS has already approved most of the project.
I-526 Petition: Immigrant Petition by Alien Entrepreneur is the form foreign investors use when they wish to immigrate to the U.S. through the EB-5 Program. This form requires the investor to prove that they made their capital investment into a NCE and that their funds came from lawful sources. If investing in a TEA, this form requires proof of TEA designation. Upon approval, an investor, their spouse and unmarried children under the age of 21 years all become eligible to receive visas when they become available.
I-485 Petition: Application to Register Permanent Residence or Adjust Status is a form used by EB-5 investors if they are already residing in the U.S. and have received I-526 Petition approval, then they can use this form to adjust their status to become conditional permanent residents. If an investor is not already residing in the U.S. they would file Form DS-230 in their home country at their local U.S. consulate.
I-829 Petition: Petition by Entrepreneur to Remove Conditions on Permanent Resident Status is used by EB-5 investors who have fulfilled the EB-5 Program requirements and need to remove the conditions on their green cards. The two main EB-5 requirements that must be fulfilled prior to filing an I-829 Petition include proving that the investor sustained their at-risk investment for the full two-year conditional period and that they were credited with the creation of 10 full time jobs for qualified U.S. workers.
Direct Job Creation: Direct jobs are actual jobs in a business. Investors in either EB-5 Program may count direct job creation. One example of a direct job is a concierge employee in a hotel project.
Indirect Job Creation: Indirect jobs are created in businesses that supply services or goods to the NCE. Only designated Regional Center investments may count indirect job creation. One example of an indirect job is a contracted cleaner in a hotel project.
Induced Job Creation: Induced jobs are jobs created in the community in which the NCE was constructed and were the result of the NCE’s workers spending money locally. Only designated Regional Center investments may count induced job creation. One example of an induced job is a new job position opening up in a supermarket down the street due to an influx of employees from a hotel project doing shopping.
We hope this helps you better grasp the sometimes-complex world of EB-5 — if you have additional questions or would like to start the process for you or your clients, please reach out! We’re standing by to walk you through the process.