EB-5 Program vs. L-1 Visa

Foreign investors who are interested in applying for U.S. green cards often ask this question - Should I apply for the EB-5 employment creation visa or the L-1 multinational executive and manager visa? The answer often depends on the individual circumstances and the facts of each particular case.  This article attempts to highlight the most important considerations.

EB-5 vs. L-1: The Basics

The EB-5 Program allows foreigners to apply for U.S. permanent resident status by investing $500,000 or $1,000,000 dollars in a U.S. enterprise and creating or preserving at least 10 full-time job openings.   The advantages are that applicants do not have to meet any educational or qualification requirements.  Further, the visa numbers are still abundant in general, although demand for EB-5 China visa numbers has been under pressure as of late.

The L-1 visa allows a multinational company to temporarily transfer foreign nationals with management, executive, and specialized knowledge skills to the United States to continue employment with an office of the same employer. The basic requirement is that the foreigner must have worked at a foreign company for at least one year as an executive, manager or specialized knowledge employee.  The advantages are that, unlike the EB-5 visa, no specific amount of capital investment is required for the L-1 visa.  There are no upper limits as to how many L-1 visas are issued each year. Further, L-1 visa holders may subsequently apply for U.S. green cards through the EB-1C visa category.

Under both EB-5 and L-1 visa programs, the dependents (spouses and minor children) may also live in the U.S. with the principal applicant.

Approval Rates

Many foreigners often ask about the "success rate" of these two visa program categories. However, there really is no simple answer to this question.  For instance, the approval rates of these applications vary each year, and one should not rely on the statistics of a particular year.   For example, according to the statistics released by USCIS, the denial rates for L-1A petitions increased from 8 percent in FY 2007 to 14 percent in FY 2011 for no apparent reasons.  Further, the approval rates also vary between different countries and industries. For instance, the approval rates of L-1B cases (specialized knowledge employee) have been declining in recent years for IT professionals.

Within the EB-5 category, the USCIS reported that the approval rate of the I-526 application (Immigrant Petition by Alien Entrepreneur) has increased from 53% in 2005 to 79% in 2012.  But it is important to note that many petitions are not adjudicated in the year that it was filed.  These numbers only take into account cases that have been decided by the agency during the particular fiscal quarter or year.  For example, USCIS reported an approval rate of 81% in 2011, when it receipted 3,805 I-526 petitions, approved 1,503 cases and denied 371 cases.  One thing is clear is that the approval rates of each visa category might change due to the agency's changes in internal policy and other administrative reasons. Hence, foreign investor should not rely on the statistics of one particular year as basis for their investment decisions.

Foreign Investor's Situation

Perhaps the more important consideration in choosing between the L-1 visa and the EB-5 visa is the investor's personal circumstances.  The personal investor must evaluate if she has met the basic requirements of either or both of these visa programs.  For example, if an investor has not been working as an executive or high-level managerial position in a foreign company for at least one year, then she will not be qualified for the L-1A visa.  Likewise, if an investor does not have at least US$500K to invest, then he should not consider the EB-5 program.

Some investors actually meet the basic requirements for both visa programs. In those situations, the investor should consider his personal preferences.  If a person prefers to run his own business and does not want to invest substantial amount of money, she probably should consider the L-1 visa. Unlike the EB-5 program, to qualify for an L-1 visa, the U.S. business does not have to employ at least 10 full time employees.

On the other hand, if money is not an issue and the investor has no problem letting other people invest his money, then he should consider an EB-5 Regional Center program.  An EB-5 Regional Center is a legal entity that is established to invest foreign investors' capital in certain pre-defined projects.  There are several hundred regional centers in existence.  Foreign investors must choose carefully which program to invest their capital.   It is important to note that an investor may also choose to invest a million dollars in his own business without using a regional center.  In this situation, the investor is free to choose any type of business to invest in and make his own business decisions.

Risks

Finally, investors must also consider the risks involved when choosing a visa program.  Generally speaking, all investment opportunities involve risks.  Since the L-1 visa requires less initial capital investment and usually allows the investor to "start small". So the risks of financial loss is somewhat limited. Further, to the extent that the L-1 visa holder generally makes his own business decisions, he should be able to control how much risks to take.  On the other hand, since the EB-5 program involves a large amount of capital investment, the risks involved are naturally greater.  Further, if one invests through a Regional Center program, all business decisions will be made by others without any guarantee of a return.   Hence, it is very important to carefully evaluate an investment program before making a decision.  Do not solely rely on the recommendation of intermediaries as these middle companies usually receive kickbacks or commissions from the investment programs.