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The EB-5 Direct Investment Immigrant Visa - Unique Advantages

By:  Santiago J. Padilla, Esq.

Many clients are aware of the EB-5 Regional Center Program and the path to obtain a Green Card by investing in a project that is promoted by a Regional Center. Indeed, there are a great multitude of EB-5 Projects and there is much discussion regarding which project has more advantages. However, some investors find the EB-5 Regional Center Program undesirable for several reasons, including but not limited to (a) the lack of control that they have over the direction of the business, (b) the limited upside potential of the business, and (c) the inflexibility of changing the nature of the business should something go wrong. Indeed, many entrepreneur investors would rather invest in their own business where they themselves determine and are responsible for the success or failure of the business.

For those entrepreneur investors, there is the EB-5 Direct Investment Program, which is actually the original formulation of the EB-5 Immigrant Visa. Under that program, the investor invests the required $1 million (or $500,000 if the business is located in a high unemployment area) in his or her own business and creates the requisite number of jobs within the time period required. Because I believe that this option is attractive for many entrepreneurs, in this blog, I indicate a couple of unique aspects of the EB-5 Direct Investment that should be taken into consideration.

First, under the EB-5 Direct Investment Program, in some cases the investor does not have to start a new business, but rather, he or she can invest in an existing business. Specifically, the immigrant investor can invest in a business, regardless of when that business was first created. The only condition is that a "substantial change" result in the net worth or the number of employees. In this respect, "substantial change" is defined as a 40 percent increase either in the net worth, or in the number of employees, so that the new net worth, or number of employees amounts to at least 140 percent of the pre-expansion net worth or number of employees.

For example, if an immigrant investor invests in an existing restaurant business which has 8 full-time employees, that investment would meet the requirements of the EB-5 Direct Investment Program if the number of full-time employees is increased to 12. As such, in this example, the investor was not required to hire 10 new full-time employees (as is usually the case under the EB-5 category), but rather only enough employees to increase the number of full-time employees by 40%.

A second unique aspect that I want to emphasize is that the new full-time jobs need not be created immediately. The immigrant investor has a reasonable period of time not exceeding two years within which to create the new full-time jobs. Therefore, in the example above, the additional 4 full-time jobs can be created within two years after the adjudication of the I-526 Petition. This gives the immigrant investor a significant period of time within which to actually hire the new employees. However, it should be noted that the Business Plan should clearly identify the new jobs that will be created, why the new jobs will be needed, and when the new jobs will be created.

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If you have any questions regarding investor visas, real estate investments or any other immigration law issues, please do not hesitate to contact me, Santiago J. Padilla, Esq., either at 800-483-7197800-483-7197 FREE FREE FREE, at spadilla@frfirm.com, or on the internet.

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