Aug 29, 2011 Article #75 Author: Jessica Weiss, Esq.
The low valuations for US. businesses and the weak dollar has led to a hot market for foreign investors to buy businesses, and US. Immigration laws can help investors stay here on a long term basis and possibly get a green card through a qualifying investment. Generally, there are two types of investor visas EB-5 immigrant and E-2 nonimmigrant visas.
The EB-5 Investor Immigration category to immigrate to the U.S. has become the way for many foreigners to get that elusive permanent residence status often called a green card. In 1990 Congress created a category to permanent residence called EB-5, Employment Based Immigrant category for those individuals investing a million dollars in a new US commercial enterprise that creates 10 full time jobs (35 hours a week or more) within a conditional two-year period usually. With this economy, every state is hoping for more EB-5 visas.
How hard it is to get one? Well maybe harder than it seems in these tough economic times. That’s why Congress developed ways to help facilitate issuance of EB-5's easier for investors. One of the ways is called the Regional Center.
A Regional Center is defined by Immigration as any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment. This type of Center once approved by Immigration, would require each investor to put in $1 million dollars and indirectly maintain the jobs there and if the location of the Center is in a “targeted employment area,” that is an area that the state has determined is rural and has high unemployment figures (CALIFORNIA), then the investment could be as little as $500,000.
The Regional Centers are growing in popularity, as more and more “well-to-do” foreigners want to reside in the US on a permanent basis. If they have the financial means they will put money into a Regional Center to oversee their investment at some level. By creating the Regional Centers, Congress was trying to create jobs for Americans and increase capital growth in our Country, exactly what needs to be done in these hard economic times. This is why the EB-5 visa has become so popular. Foreigners are looking at US businesses to purchase like never before, and the timing couldn’t be better to find bargains! Prices for businesses are lower than ever for foreign buyers and our Immigration system now has several ways for foreigners to buy businesses and stay here on a long term basis.
Once the investor is committed to buying a new commercial enterprise, the issue arises will they properly comply with the conditional status that is initially given for a two-year period. Many EB-5’s fall apart because they can’t invest the money they have committed to over that two year period, the money isn’t “at risk” or they can’t hire the 10 full time workers that they promised to. Immigration Regulations require the money for EB-5 to be “at risk” that is irrevocably committed to the US business and if it isn’t then it is not a true investment for EB-5 purposes. Investments do not always pan out as they were expected, so the government put in place rules to make sure the money stays in the U.S. on a long term basis in order to qualify for an EB-5. The long-term expectations of the investor need to be clearly understood to see if they qualify for an EB-5.
Sometimes investors will seize opportunities to buy troubled businesses and Immigration has issued EB-5 visas for “troubled businesses” when the business has been in existence for at least two years and has incurred a net loss during the 12 to 24 months period prior to the priority date on the immigrant investors application. The loss for this period must be at least 20 percent of the troubled business net worth prior to the loss. For those investors that purchase “troubled businesses” the investor does not have to create 10 new employees but maintain what is there, which can be much easier to do in this day and age.
If you don’t meet the requirements for an EB-5 immigrant visa, another way to gain entrance into the U.S. on a temporary basis is E-2 nonimmigrant investor visa. Presently, individuals from Canada are heavily investing in our country and this nonimmigrant E-2 visa is becoming more and more popular for smaller investments. There are no minimum investments amounts like the EB-5 but the regulations set forth by Immigration a “substantial investment.” In my practice of immigration law “substantial” has been as little as $50,000 in any type of business. Be careful though, immigration doesn’t consider purchasing residential real estate as a business per se. But the purchase of a residential real estate franchise company could be a business. Once E-2 classification is granted, the applicant can have it as long as they qualify and the regulations set forth by Immigration are in place for this type of visa category, but some individuals will continue to invest in their E-2 business till they have put $1 million of their own personal funds into the US business and turn their E-2 status into EB-5. The reason to switch to an EB-5 is this allows for a path to a green card which the E-2 does not have.
There are many ways for foreign investors to come here, stay here and buy small to large businesses. With a little knowledge and understanding a foreign investor can remain in the US on a short or long term basis on an investor visa.
Jessica Weiss, Esq. is an Immigration Attorney with the law firm of Weiss & Moy, P.C. and she can be also contacted at her email of [email protected] or call her at 1-888-689-1862.