Foreigners are still very interested in buying US businesses or creating them from scratch and as a further benefit the foreigners may get a green card in the process. The EB-5 Investor Immigration category to immigrate to the U.S. has become a the way for many foreigners to get that elusive permanent residence status often called a green card. In 1990 Congress invented a path to permanent residence called EB-5, Employment Based Immigrant category for those individuals that invest a million dollars in a new US commercial enterprise that will create 10 full time jobs (35 hours a week or more) within a conditional two year period. With this economy, every state, including Florida, is hoping for more EB-5 visas in their state.
How hard does that seem to do? Well maybe harder than it seems in these tough economic times. That is why Congress also enacted a few exceptions to the criteria mentioned above, one of them is called the Regional Center. A Regional Center is defined by Immigration as any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment. This type of Center once approved by Immigration, would require each investor to put in $1 million dollars and indirectly maintain the jobs there and if the location of the Center is in a “targeted employment area” that is an area that the state has determined is rural and has high unemployment figures then the investment could be as little as $500,000. The Regional Centers are growing in popularity as more and more foreigners that are well to do want to reside in the US on a permanent basis and if they have the financial means will put money into a Regional Center oversee their investment at some level. Congress was trying to create jobs for Americans and increase capital growth in our Country by creating the Regional Center, exactly what needs to be done in these hard economic times. This is why the EB-5 visa has become so popular. Foreigners are looking at US businesses to purchase like never before, prices are lower than ever for foreign buyers and our system encourages foreigners to buy businesses by offering them a way to stay here on a permanent basis.
Why then statistically has the EB-5 category which has an annual quota not been used up right away. I think partly because many potential investors just don’t know enough about it. It is important to understand EB-5 laws in order to properly direct a buyer to this approach. I had an opportunity once to educate the Commerce Department of Governor Janet Brewer’s Office in Arizona where my law firm’s headquarters are located, on the ins and outs of EB-5 visas as well as other nonimmigrant business visa categories. My impression from this meeting was that there is a real excitement to approve more Regional Centers. Regional Centers for business activities can be in a variety of fields such as restaurants, construction, education, healthcare, medical office, theme parks, etc. As you can see, there is a broad range of businesses that can be approved for EB-5 visas.
When thinking about businesses to help buyers purchase, keep in mind EB-5 visas because if you have a potential investor that has $500,000 and wants to purchase a business in a “targeted employment area” he may qualify for an EB-5. Or you may have an investor whose goal is to invest $1 million dollars over a two year period in a new commercial enterprise, in that case it may be a long term goal, EB-5, either way,
Once the investor is committed to buying a new commercial enterprise, the issue arises will they properly comply with the conditional status that is initially given for a two year period. Many EB-5’s fall apart because they can’t invest the money they have committed to over that two year period, the money isn’t “at risk” or they can’t hire the 10 full time workers that they promised to. Immigration Regulations require the money for EB-5 to be “at risk” that is irrevocably committed to the US business and if it isn’t then it is not a true investment for EB-5 purposes. Investments do not always pan out as they were expected, so the government put in place rules to make sure the money stays in the U.S. on a long term basis in order to qualify for an EB-5. The long term expectations of the buyer needs to be learned to see if they qualify for an EB-5.
If your prospective buyers do not have $500,000 or even $1,000,000 another way for them to come here, is the E-2 investor visa. Presently, individuals from Canada are heavily investing in our State and this nonimmigrant E-2 visa is becoming more and more popular for smaller investments. There are no minimum investments amounts like the EB-5 but the regulations set forth by Immigration just state a, “substantial investment”, in my practice substantial has been at times as little as $50,000 in any type of business, except be wary immigration does not consider purchase of several US homes a business but rather purchase of a franchise real estate company that sells homes that could be a business. Once E-2 classification is granted, the applicant can have it as long as they qualify and the regulations set forth by Immigration are in place for this type of visa category, but some individuals will continue to invest in their E-2 business till they have put $1 million of their own personal funds into the US business and turn their E-2 status into EB-5. The reason to switch to an EB-5 is this allows for a path to a green card which the E-2 does not have.
Sometimes buyers will seize opportunities from businesses that are troubled and Immigration has issued EB-5 visas for “troubled businesses” when the business has been in existence for at least two years and has incurred a net loss during the 12 to 24 months period prior to the priority date on the immigrant investors application. The loss for this period must be at least 20 percent of the troubled business net worth prior to the loss. For those Buyers that purchase “troubled businesses” the investor does not have to create 10 new employees but maintain what is there, which can be much easier to do in this day and age.
There are many ways for foreign investors to come here, stay here and buy small to large businesses. An appraisal of a US business that you are interested in purchasing is a critical part of this process as well. With a little knowledge and understanding of these possible investor classifications a foreign investor could have an exciting path to a long term stay in the US.
Jessica Weiss is an Immigration Attorney with the law firm of Weiss & Moy, P.C. and she can be also contacted at her email of firstname.lastname@example.org