A blog about U.S. immigration matters by Paul Szeto, a former INS attorney and an experienced immigration attorney and counsel. Contact Info: 732-632-9888, http://www.1visa1.com/ (All information is not legal advice and is subject to change without prior notice.)

Wednesday, March 7, 2012

EB-5 Investor Visa: Sources of Capital

The U.S. Immigration and Nationality Act sets aside 7.1% worldwide visa numbers to qualified immigrants seeking to enter the U.S. for the purpose of engaging in a new commercial enterprise. The applicant must either have invested or is in the process of actively investing capital not less than U.S. $1,000,000 in the enterprise. This is commonly known as the EB-5 investor visa. Other categories of immigrant visa are usually oversubscribed for countries such as China and India. For instances, many family-based petitions, including those filed by U.S. citizens, are currently backlogged. The EB-2 and EB-3 employment visa categories are similarly oversubscribed. The advantage of the EB-5 visa is that, so far, there has been sufficient number of visa numbers for qualified applicants. It means that once a qualified applicant has establish that he or she meets all the legal requirements, a conditional green card will be issued by the U.S. government. For those immigrants who have sufficient capital, the EB-5 visa is an attractive alternative. It is not to say that it is easy for anybody to apply for an EB-5 visa. Rather, the investor visa requirements are quite complicated and adjudication standards very high.

The EB-5 visa program requires an investment of capital of at least one million U.S. dollars (except for certain target investment areas). Cash investment is perhaps the most direct way to meet the capital requirement. However, the regulations also allow other forms of capital investment including equipment, inventory, other tangible property and cash equivalents. Further, debts secured by assets owned by the investor entrepreneur also qualifies as capital as long as the investor is personally and primarily liable and that the assets of the new commercial enterprise are not used to secure any of the debts. Such a broad definition of capital makes it easier for investors to inject capital into their businesses. For instance, a restaurant owner may have a portion of the capital invested in equipment and cooking appliances; a pharmaceutical company may partially satisfy the capital requirement by investing in laboratory equipments and facilities; and a manufacturer or distributor of goods could meet the capital equipment through the purchase of inventory and other assets. All assets are valued at fair market value in United States dollars.

Another important requirement of capital is that it must come from lawful sources. Assets obtained through unlawful or criminal means cannot be used to meet the capital investment requirement. To prove the lawfulness of sources of capital, an investor must provide documentary evidence including: (1) Foreign business registration records, (2) Corporate, partnership (or any other business entity), and personal tax returns including income, franchise, property (whether real, personal, or intangible) filed within five years in or outside the United States by or on behalf of the immigrant investor; (3) Evidence identifying any other sources of capital; or, (4) Certified copies of any judgments or evidence of all pending governmental civil or criminal actions, and any private civil actions involving monetary judgments against the immigrant investor from any court in or outside the United States within the past fifteen years. Unfortunately, many investors are able to come up with the capital for investment but are not able to provide evidence to prove that the capital comes from lawful sources.

Finally, it is important to note that although an investor must commit to invest one million U.S. dollars in the enterprise, there is no requirement that the full amount must be invested when an EB-5 visa application is filed. An investor can use documents to show that she is in the process of investing the capital, perhaps in different stages depending on the needs of the business enterprise.

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