The Immigrant Investor Program was created for qualified non-US citizens seeking permanent resident status on the basis of their investments in the American economy. Investors, their spouses, and their children under the age of 21 are granted permanent residency if they qualify for the EB-5 (Employment-Based Immigration: 5th Preference) program. The program reserves 10,000 visas per year for immigrants seeking to enter the United States who invest at least $1 million ($500,000 in Targeted Employment Areas) in new commercial enterprises that will create at least ten full-time jobs for U.S. citizens, lawful permanent residents or other employment authorized aliens. The ten workers cannot include the investor or the investor’s immediate family.
Immigrant investors who wish to participate in the EB-5 Program must invest the required minimum amount of capital into a
new commercial enterprise or troubled business in the U.S. These foreign investors must establish that the investment capital derives from a lawful source, and that the money is both fully invested and at risk in order to qualify. The immigrant investor must file a Form I-526, Immigrant Petition for Alien Entrepreneur. If approved, the alien is granted conditional permanent residence.
Approximately two years later, the immigrant investor files a Form I-829 – ‘Petition by Entrepreneur to Remove Conditions’. At the time of the I-829 adjudication, the investor must demonstrate that the investment business plan was followed, the money remained fully invested in the business and at least ten full-time jobs were created for U.S. workers as a result of the investment.
Congress created the Employment Based Fifth Preference Visa Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Congress created the fifth employment-based preference EB-5 in 1990 as part of a general overhaul of the legal immigration system. INA § 203(b) (5), 8 U.S.C. § 1153(b) (5).
On October 28, 2009, President Obama signed into law the fiscal year 2010 appropriations bill for the Department of Homeland Security. The law (Pub. L. No. 111-83) extended four immigration programs: (1) the non-minister religious worker program (section 568 of the law); (2) the “Conrad 30″ program for certain J-1 foreign doctors (section 568); (3) the EB-5 immigrant investor pilot program (section 548); and (4) the E-Verify program for electronic verification of workers’ eligibility (section 547). All four programs were extended for three years, until September 30, 2012.
On September 28, 2012, President Obama signed bipartisan legislation extending the EB-5 Regional Center Program for an additional three years. The new sunset date for the program is September 30, 2015. Additionally, the legislation removed the word “pilot” from Section 610 of Public Law 102-395 (Oct. 6, 1992) when describing the program. The legislation had initially been introduced by Senator Patrick Leahy (D-VT) into the U.S. Senate on May 24, 2012 as Senate Bill 3245. Following several amendments, the U.S. Senate unanimously passed the bill on August 2, 2012. The U.S. House of Representatives subsequently approved the legislation on September 13, 2012 in a nearly unanimous decision (412-3).
As previously mentioned, the EB-5 program has been continually renewed since 1990, with the most recent renewal extending the program through September 30, 2015.
Over the last three years, the number of EB-5 visas issued has continually doubled, with the majority of visas being issued to Chinese citizens.
Since the creation of the program, visa numbers for qualified foreign investors have always been current. Every country, including mainland China, has been able to receive an immigrant visa through the EB-5 program without having to worry about cut off dates or priority dates on visa bulletin. Per country limits and cutoff dates are only triggered when the total demand for immigrant visa numbers in a category exceeds visa limits as set by U.S. immigration law. For previous years, total demand has been well below statutory limits. However, as the demand for EB-5 visas exceeds the statutory limit, a per-country limit will be triggered. If per-country limits are put in place cutoff dates and a visa backlog will be created for the EB-5 category.
Since Chinese investors make up such a large portion of EB-5 visa applicants, it is likely that total demand for immigrant visas (based on I-526 approvals) will outstrip total visas availability in the near future. According to U.S. federal law controlling immigration, the EB-5 category is allocated 7.1% of all employment-based visas in a given year. Based on historic data and growth trends in the demand for EB-5 visas, the U.S. is likely to temporarily restrict issuance of EB-5 visas to Chinese applicants around April 2013.
KCI’s EB-5 program’s project investment criteria vary, depending on the level of development and needs of each individual project. However, for early stage “at risk” financing, we rigorously screen and invest only in companies that we are confident will meet the requirements for EB-5 program compliance. In such instances the Company will look for the following:
- We will hand pick the key leadership of the project or company
- We will be actively engaged in the companies’ operations including, but not limited to, periodic reviews of key functions such as sales, operations and financial performance
- Investments that we secure on behalf of our investors will be equity in the form of preferred convertible equity or common stock
- Majority control will be necessary as required by the USCIS’s EB-5 rules and regulations
- Ability of project to comfortably meet or exceed USCIS job requirements
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