Funds Requirement

I. Minimum Amount Requirement

Generally speaking, the minimum investment required to qualify for EB-5 status is $1,000,000. However, the limit is reduced to $500,000 in cases of investment in “targeted employment areas.” Such qualifying areas must have an unemployment rate 150% of the national average. A rural area refers to municipal areas with a population less than 20,000. Every state keeps a list of “targeted employment areas” for reference. Click on the following link for a current list of “targeted employment areas.

Please note that if there is a redemption clause in a commercial enterprise’s agreement that guarantees the return of a petitioner’s investment, such assets will not be deemed as “at risk”; a petitioner must infuse the full amount of at risk capital into an enterprise.

II. Legitimate Source of Funds

Assets acquired directly or indirectly by unlawful means such as criminal activities are not acceptable capital. In practice, USCIS is very strict about reviewing the legitimacy of funds.

III. Acceptable Types of Property as Investment

Cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the investor are all acceptable investments for EB-5 purposes. A loan to the company or any other debt between the company and investor does not constitute an investment because such a monetary transfer does not bear any investment risk (some exceptions apply, see below). All capital shall be valued at fair market in U.S. dollars. The investor need not commit his/her entire capital immediately, but the investment must substantially complete prior to the end of the 2-year conditional residency period.

Evidence required for an Investment from your lawful income:

1. Five years of personal income tax returns
2. Personal bank account statements for the past couple of years
3. Salary reports
4. Salary verification letter from previous employers
5. Five years of business income tax returns if income was generated from the operation of your business
6. Business registration documents and ownership if funding is from the operation of your business
7. Articles of incorporation, share certificates and other like documentation if funding is from the operation of your business
8. Business bank account reports for the past couple of years if funds are from the operation of your business

Evidence required for investment funds from a gift:

9. Documentation proving funds from the donor to the investor
10. Statement explaining the surrounding circumstances of the gift and why the gift was made
11. Gift tax return, if any
12. Documentation such as personal/business income tax return and ownership of business proving the donor’s financial background to demonstrate how he/she derived the funds that were gifted

Evidence required for investment funds from an inheritance:

13. Statement of the relationship between the investor and the deceased
14. A death certificate
15. Documentation of the investor’s receipt of inherited funds
16. Certification of payment of inheritance tax, if any
17. If there is a lack of documentation tracing funds from the deceased’s estate to the investor, a statement of thorough explanation of the relationship, the amount inherited, and other circumstances concerning the inheritance is required

Evidence required for investment funds from transactions:

• Sale of business
1. Deeds
2. Closing statements
3. Bank account statements
4. Documentation tracing funds from the closing of the transaction to the investor’s individual account
5. Copy of the business registration before the sale and immediately after the sale
6. Letter from the accounting firm that represented the investor in the sale, indicating the sale, sale price, and the identity of the buyer
7. Business financial information such as evaluation from a certified accountant proving the value of the business
• Sale of real estate
1. Purchase agreement
2. Final settlement statement 
3. Receipt of funds from the buyer to the investor
4. Payment of real estate tax obligations
5. Title transfer evidence
6. Past five years personal income tax return proving funds in the purchase of the real estate that sold
• Sale of stock
1. Company’s incorporation documents or other company registration documents
2. The share purchase agreement
3. Evidence of the transfer of  proceeds of the stock sale from the brokerage company to the investor’s account
4. Payment of tax obligations of the proceeds of stock sale
5. Stock transaction record
• Investment funds from a loan. (Only a loan secured by your assets as opposed to property of the commercial enterprise that you invested in is eligible.)
1. Terms of the loan agreement
2. Documentation proving that the loan transferred from the lender to you
3. Lender’s business registration record, business income tax returns if the lender is a business or personal income tax return if the lender is an individual. 

Enterprise Requirement

There are several factors investors should pay attention to when investing in a new enterprise:
An enterprise is considered “new” if it was established after Nov. 29, 1990. Enterprises established before this date can also be considered new enterprises if they have gone through re-organization or substantial change, which means a 40% increase in either the net worth or the number of employees.

Any for-profit entity of lawful business is considered a commercial enterprise. This does not include non-profit organizations.

EB-5 has no requirement for the type of invested enterprise. Corporations, limited liability companies and limited partnerships are all acceptable. However, the choice of business type is very important for tax and management reasons. For more information about business types, please read below.

Except in a regional center company case, investors are required to participate in the operational management of the invested enterprise; in practice, this can be satisfied by taking a managing position, participating in the decision-making process or being a limited partner in a LLP. In some cases, the participation requirement can be waived.

USCIS excludes corporate and other non-individuals as an investor from the EB-5 category. However, it is perfectly acceptable for multiple investors seeking EB-5 status to join together as long as each investor infuses the requisite amount of capital into an enterprise and each investment creates at least 10 full-time positions.

Business Types

Businesses can take many different forms under U.S. law. There are many different factors that influence a business’ decision to take on a particular form. The organizational structure of a business can affect its success.

Three types of business entities commonly associated with EB-5 petitions:

1. Corporations

Corporations are the most familiar business structure. A corporation exists as a separate legal entity. This means that when an individual incorporates his/her business in a particular state, the corporation is responsible for its actions, including taxes and debt. Typically under this structure, corporate officers and shareholders cannot be held personally liable for the actions of the corporation. Additionally, ownership of corporate stock may be freely transferred by sale or by gift, subject to certain corporate restrictions. An incorporated business may buy, sell, and hold property under the corporation name and enjoy unlimited life, meaning the business remains unaffected by the death of a director, officer, or shareholder. However, some types of corporations are subject to “double taxation.” This means that profit is first taxed at the corporate level and then again at the personal level.  

2. Limited Liability Companies

A limited liability company (LLC) exists as a separate legal entity. This structure combines some of the limited liability advantages of a corporation with the tax-related benefits of avoiding double taxation associated with a partnership. One of the major advantages of an LLC is that the business can choose how it would like to be taxed—as a corporation or partnership. Additionally, there is no limit to the number of shareholders that can exist in a LLC structure. A LLC can be managed either through “member management,” in which all members of the LLC have a say, or through “manager management,” in which members appoint a manager to operate and direct the business. Many states have implemented “franchise taxes” for LLCs which serve as fees to the company for the limited liability and flexibility they enjoy.

3. Limited Partnership

A limited partnership occurs when two or more individuals join together to form a business by contributing capital, property, labor or skills in exchange for part of the profit or losses of a business. In a limited partnership, there is usually only one general partner and one or more limited partners with limited duties and liabilities. In this structure, the general partner(s) have full management responsibilities and control daily business functions. The limited partner is typically a passive investor. Limited partnerships enjoy the tax benefit of avoiding double taxation on their profit. However, partners are personally liable and not all partners share liability equally. Examples of limited partnerships include large law firms.

(Updated 10/5/2012 by AG)

For more information on the EB-5 Visa, please refer to the following links:

• EB-5 Visa
• EB-5 Requirements
• EB-5 Investment Options
• Benefits and Risks of Each EB-5 Investment Option
• EB-5 Process Overview
• Evidence to Submit with Form I-526
• Changing your EB-5 Business Plan
• Evidence to Submit with I-829
• Job Creation Requirement
• A Comparison between EB-5 and EB-1C
• Forming an EB-5 Regional Center
• How to Set Up an EB-5 Investor Visa Regional Center
• Is the EB-5 Visa Applicable to You?
• Services that we provide
• Frequently Asked Questions about EB-5