Policy Considerations

The underlying policy of the EB-5 investor visa and the related Pilot Program is to benefit the U.S. economy overall including US communities that are economically disadvantaged, US workers, and the foreign national investors. The goal of the EB-5 investor visa program is to generate so called “win-win” scenarios for all parties involved or affected. A 2003 U.S. Government report indicated that about $1 billion has been invested in the U.S. economy through the EB-5 program. Today we estimate that the amount invested pursuant to this visa category is nearly double that 2003 figure. There have been many success stories involved with the granting of EB-5 Visas. Given the positive impact of this program in creating U.S. jobs and economic development, we strongly anticipate that the EB-5 Investment Visa and the related Pilot Program will be viable for many years to come.

History of EB-5

Through the Immigration Act of 1990 Investor VISA Program, Congress enacted the Immigration Act of 1990, which includes a program permitting foreign investors to obtain permanent residency in the United States. Section 121(b)5 of the Act created a new investor immigrant visa category aimed at generating a significant inward flow of foreign capital and creating jobs for U.S. workers. The new legislation makes 10,000 green cards of permanent residency available nationwide each year for qualified immigrant investors. The Act requires a capital investment of $1 million for all areas, except in rural and high unemployment areas where a lowered investment of $500,000 may be made. The investment must also create full-time employment for at least 10 U.S. citizens or other legal residents-other than members of the investor's family-for a period of two years. Entrepreneurs will receive a two-year provisional visa and, if the criteria are met, a permanent green card may be issued. The Immigration Act states that not less than 3,000 of the 10,000 visas shall be reserved for investors who establish a new commercial enterprise in a targeted employment area. The law requires that the qualifying level of high unemployment be 150 percent of the annual national average unemployment rate. There have been several related subsequent Congressional enactments since the creation of the EB-5 visa category. In 1993 Congress created the related EB-5 Pilot Program as part of the Departments of Commerce, Justice, State, Judiciary and Related Appropriations Act of 1993.

In 2002, Congress in passing the 21st Century Department of Justice Appropriations and Authorization Act of 2002, extended and simplified the EB-5 visa category by removing several administrative and legal hurdles created by the INS and subsequent court decisions. In 2003 Congress reauthorized the Regional Center Pilot Program, of which CMB Export participates, in the Basic Pilot Program Extension and Expansion Act of 2003. $500,000 investments in targeted employment areas made via a Regional Center such as CMB Export need only show indirect job creation using any “reasonable methodologies”. 

Investment Requirements

Amount the investor has to invest for the EB-5 program.

The investor is required to invest a minimum of $1 million however if the investment is in a Targeted Employment area the EB-5 applicant may invest a reduced amount of a minimum of $500,000 (The CMB Regional Center Investment Plan is designed for this lower investment threshold which is the minimum allowed by U.S law to qualify for the EB-5 Visa/Green Card) in a high unemployment area which is defined as 150% of the national average unemployment statistic.

The Job creation requirement for every investor is ten new American jobs.

Each foreign national EB-5 Investor must create at least 10 full time U.S.-based jobs. If the investment is not in an approved regional center the jobs must be directly created by the entity the investor is investing in. If the investor uses a Regional Center to make the investment the job creation requirement of ten jobs still exists however the investor can utilize both direct and indirect job creation to prove they have met the USCIS requirement. Additionally the Regional Center may use reasonable job measuring methodologies to prove the indirect jobs.

The investor’s source of funds to fund the investment must be from a lawful source.

The investor must demonstrate that the capital is in fact from a legal source. For example the funds cannot be derived from a criminal enterprise. An investor may receive a gift of funds however in that case the USCIS will require information and track the source of the funds from the person who gave the gift. Loans are also a credible source of funds however the investment in the enterprise cannot be used as collateral or be pledged in any way.

The investment must be at risk.

The EB-5 applicant’s capital investment must be truly at risk and not simply a loan. Guarantees of return of any capital are strictly prohibited, and if given negate the ‘at risk’ requirement of the EB-5 law and the investors petition will be denied. There can be no redemption agreements. The entire capital must be at risk and therefore reserve accounts are also not allowed.

The investor must qualify as an accredited investor.

The USCIS wants investors to be sophisticated enough to understand the sometimes complex issues with this type investment. Therefore the investors must meet the requirements as set forth for defining an accredited investor. An "accredited" investor, as that term is defined by Regulation D of the Securities Act, which means any investor meeting at least one of the following conditions:

1) any natural person whose individual net worth (or joint net worth with that person's spouse, if applicable) at the time of purchase exceeds $1,000,000;

or 

2) any natural person who had an individual income in excess of $200,000 or joint income with that person's spouse in excess of $300,000 in each of the two most recent years and who reasonably expects an income in excess of $300,000 in the current year;

or

3) any other "accredited investor" as that term is defined in Regulation D as adopted by the Securities and Exchange Commission;

or

4) Has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in the Units, and of making an informed investment decision, and does not require the use of a Purchaser Representative.

There are other requirements for the EB-5 investor program that deal with the filing and what must be presented to the USCIS. The list is long and is really not something that should or will be explained here. Every immigrant investor will hire an attorney who will work with the Regional Center to insure these regulations are followed in the submission of the investor’s EB-5 application.