People often confuse the EB-1C immigrant visa with EB-5, the visa for immigrant entrepreneurs, and refer to both categories as “investment visas.” This is not all that surprising, considering that EB-1C and EB-5 visas share common characteristics: they both deal with foreign capital and investment, may involve the formation of a new business entity, and potentially result in job creation benefiting U.S. workers.
Despite these very general similarities, however, EB-1C and EB-5 visas are considerably different, and making the mistake of applying for one when you should have petitioned for the other could cause significant damage to or delay in to your immigration plans.
In general terms, the EB-1C category allows international companies to transfer high-level managers or executives working abroad to their U.S. entities in order for them to assume permanent managerial or executive positions. In contrast, the EB-5 category is meant for alien individuals who have invested or are in the process of investing capital in a new commercial enterprise in the U.S. While the purpose of an EB-1C is to allow companies to cross-fertilize and transfer business practices and commerce, the goal of the EB-5 visa is to stimulate investment and job creation in the U.S. Importantly, there is no capital investment requirement for EB-1C executives, as they work for their petitioning employers, but EB-5 immigrant investors are required to invest their own money.
EB-1C visas are best-suited for those who are in high-level managerial or executive positions in overseas companies that already have U.S. business exposure and are familiar with U.S. business operations. For individuals with limited business experience or for those who do not have a position at a multinational company but who do have considerable financial resources, the EB-5 category is probably the better option. Further, EB-5 may be a good option for those who do not want to work under a corporate structure or who do not have the corporate authority to transfer employment locations.
Below we review distinctions between the two categories in specific areas.
A qualifying multinational relationship must exist between the U.S. employer and foreign business entity. This relationship involves a company investment from one entity to another; examples of such qualifying relationships include parent companies and subsidiaries or affiliates. The U.S. entity is the petitioner seeking to transfer to the U.S. from a foreign affiliate a high-level alien employee, who is the beneficiary in this category. Additional requirements related to the business in an EB-1C include the requisite that the U.S. entity has been conducting business for at least one year.
The EB-5 category is designed for individual aliens seeking to invest capital in a new business, a troubled business, or a Regional Center in the U.S. The individual is not required to be associated with any overseas corporation. In an EB-5 case, the individual investor is both petitioner and beneficiary.
Source of Funding and Investment Amount
In EB-1C cases, U.S. Citizenship and Immigration Services (USCIS) typically looks into the initial investment between the overseas company and the related U.S. company, but there is no strict statutory requirement for the amount of capital that must be invested; EB-1C visas generally serve to facilitate or promote commerce between the U.S. and foreign countries. If the U.S. entity is a relatively new investment of the overseas parent company, USCIS often requires evidence of a monetary transfer from the overseas company to the U.S. entity. There is no set minimum for this investment, but the amount must be reasonable and sufficient to cover the costs of the new office. In our experience, initial investments in U.S. subsidiaries are typically around $100,000.
There are strict statutory investment requirements for the EB-5. The petitioning alien’s investment must be at least $500,000 in a new commercial enterprise in the U.S., and in some cases, a $1 million investment is required. In addition, the petitioning individual must prove through documentary evidence that the money used for the investment was his or her own money sourced and transferred legitimately. 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. Assets acquired directly or indirectly by unlawful means, such as criminal activities, are unacceptable. In practice, USCIS meticulously reviews the legitimacy of funds, even though statute doesn’t dictate that USCIS should demand evidence proving that funds transferred from a foreign company are legitimate.
In EB-1C cases, USCIS scrutinizes the corporate structure and business operations of the petitioning U.S. entity. Success in EB-1C petitions hinges on the U.S. employer’s corporate structure. It must have a qualifying relationship with the foreign company and allow the transferee to assume a high-level position, not just take on functions involving daily operations or first-line worker supervision. USCIS looks for the transferee’s position to serve “an essential function” in the organization. In general, a qualifying business needs to have at least five full-time employees. Finally , USCIS reviews the U.S. entity’s business operations to gauge a qualifying level of commensurate revenue.
For EB-5 cases, USCIS emphasizes the transfer of money; the legitimacy of the source of assets; and whether the investment has created at least 10 full-time employment opportunities for U.S. workers. If the investment is made in a USCIS approved “Regional Center,” indirect employment opportunities created by the investment may fulfill the job creation requirement.
Immigrant Alien’s Position and Role
For the EB-1C category, the position offered to the transferee must have managerial or executive duties: it must involve policy-making, major decision-making, and/or management of other managerial subordinates. Such duties are generally related to corporate structure.
The EB-5 category does not require an employment offer or a sponsoring employer. However, in a new business enterprise or troubled business, the immigrant investor must be involved in the daily management of the company. Acceptable positions for an investor include corporate officer or board member. If an investor is applying under the Regional Center Program, he or she does not need to be involved in day-to-day management of the business, and isn’t required to reside in or close to the area of investment.
A transferee in the EB-1C category must have worked in a managerial or executive-level position for the related overseas company continually for at least one year of the three years prior to the petition’s filing. There are no minimum educational or work experience requirements, but the transferee must be reasonably qualified to hold the high-level position.
The EB-5 has no educational or work experience requirements. In fact, neither investment experience nor any specific technical skill is required.
The Petitioner and Beneficiary
An EB-1C is an employer-sponsored petition; the qualified U.S. entity is the petitioner, and the alien manager or executive is the beneficiary. To apply, the employer files Form I-140.
For EB-5s, the individual alien investor is the petitioner; there is no sponsoring employer. To apply, the alien files Form I-526
For EB-1C applications, in addition to Form I-140, the employer submits the following:
Articles of incorporation or association
Financial documents, such as tax returns, bank statements, and major business contracts
Description of the company’s organizational structure
The alien transferee is required to submit evidence proving his or her qualifications to hold the offered position.
For EB-5 applications, in addition to Form I-526, the alien investor submits the following:
Documentation proving the investment has been or will be made
Documentation demonstrating the lawful source of the capital
Evidence of the existence of the new commercial enterprise (e.g., business organization documents)
Further, the investor must produce evidence showing that the commercial enterprise has led to the creation of at least 10 jobs for U.S. workers. If the new enterprise has already hired employees, the investor can submit Form I-9 and tax records. If no employees have been hired, the investor can submit a business plan demonstrating that 10 U.S. workers will be hired within two years’ time.
Requirements for the U.S. Company
The key to success in EB-1C cases is proving that the petitioning U.S. entity has established a corporate structure that allows the transferee to act in a high-level managerial or executive function, not just in daily operations. Accordingly, although no specific statutory requirement exists, a business structure that includes a minimum of five full-time employees is generally needed. In addition, the U.S. entity must partake in substantial business operations with commensurate revenue.
Proving that the investment created no fewer than 10 full-time jobs for U.S. workers is the essential company requirement for EB-5 visas. If a Regional Center was the recipient of the investment, then indirect job opportunities may fulfill the job creation requirement.
Permanent vs. Conditional Green Card
Once an EB-1C petition is approved, the transferee and his or her immediate family members are eligible to adjust status if they are already in the U.S., or to apply for immigrant visas at a U.S. consulate abroad. After obtaining visas and entering the U.S., or after adjusting status, they will receive permanent green cards, without any conditions.
In contrast, beneficiaries of the EB-5 category undergo a conditional green card period. Once an EB-5 petition is approved, the investor may file for an immigrant visa or adjust status, but the resultant permanent resident status is conditional for a period of two years. Note, however, that conditional green cards confer the same rights during this period as do permanent unconditional green cards.
In order to eliminate the conditions on green card status, alien investors (as well as their family members) must request removal within the 90 days preceding expiration of the green card. To this end, they file Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status. At this time, investors should submit evidence proving they’ve met all EB-5 requirements.
While the I-829 application is pending, investors retain valid status and are allowed to travel. If the request to remove green card conditions is denied, conditional resident status is terminated. If the request is approved, investors and their family members receive permanent unconditional green cards.
Compared to the EB-1C application process, petitioning for an EB-5 visa might take longer and involve more uncertainty, not least because of the conditional nature of alien investors’ status, and the visa backlog for applicants from mainland China. (For more information on visa number availability, click here.) Ultimately, though, if the investment program is stable, unconditional permanent residency is standard in the majority of EB-5 cases.
Since both EB-1C and EB-5 visas involve complicated business and legal issues, we urge companies or individuals interested in these categories to seek advice from experienced immigration attorneys at the beginning of the process to avoid unnecessary mishaps or mistakes.
For more information on the EB-1C visa, refer to the following links:
Our experienced immigration attorneys are here to assist you in your EB-1 application. For more detailed information on the EB-1 category, including minimum requirements and USCIS policies, refer to the following links:
For more information on the EB-5 visa, click here.