The United States’ green-card-by-investment program, also known as the EB5 Immigrant Investor Program, offers a pathway to US permanent residency for foreign nationals who make qualifying investments in the United States. This program has provided thousands of families with the opportunity to establish a future in the US, whether they desire business growth, career advancement, retirement, or education for their children.
Although the program presents a compelling route to residency, it also comes with stringent regulatory requirements. One of the most critical aspects is ensuring that the investment remains “at risk” throughout the process. Understanding what this entails, along with investment minimums and how EB5 investments fulfill green card eligibility, is crucial for any prospective investor.
Investment Minimums and EB5 Categories
Under the EB5 program, investors must meet specific capital thresholds. Since the enactment of the Reform and Integrity Act of 2022 (RIA), the standard minimum investment has been $1,050,000. This minimum drops to $800,000, however, if the investment is made in a targeted employment area (TEA). TEAs include rural areas or regions with high unemployment, and they incentivize job creation where it’s most needed. Regardless of the amount or category, the investment must be made in a new commercial enterprise (NCE) and generate at least 10 full-time jobs for US workers for an EB5 applicant to qualify for residency.
Investors seeking to qualify for an EB5 visa must also adhere to strict documentation and fund-sourcing requirements. They must demonstrate that their capital was lawfully obtained and fully deployed into the project to meet the “at risk” mandate.
What Does ‘At Risk’ Mean?
For an EB5 investment to qualify, US Citizenship and Immigration Services (USCIS) requires that the investor’s capital remains “at risk” throughout the so-called “sustainment period.” This rule ensures the funds actively contribute to the US economy rather than serve as a mere deposit or guaranteed return. The key characteristics of “at risk” investments are as follows:
- No Guarantee of Return
The investment cannot offer guaranteed repayment of the principal amount. For example, funds held in escrow awaiting a visa decision may not fulfill this requirement unless released into the project.
- Active Deployment
The capital must be actively used in a job-creating business or project. Passive investments, such as those in stocks or savings accounts, do not qualify.
- Risk of Loss and Opportunity for Gain
Investors must face the possibility of financial loss, as well as the potential for profit, aligning the investment with market-based dynamics.
Job Creation Requirements
The cornerstone of the EB5 program is its job creation mandate. Each investor’s capital must create or preserve at least 10 full-time, domestic jobs. These jobs can be direct (onsite positions created by the enterprise) or indirect (roles resulting from economic activity, such as suppliers or contractors).
Failure to meet the job creation requirement may jeopardize an investor’s immigration process. Therefore, selecting a project carefully is critical, and many investors choose regional center projects with strong track records and solid business plans to minimize their risk.
How Long Must the Capital Remain ‘At Risk’?
USCIS requires the capital to remain at risk through a two-year “sustainment period.” The concept of a “sustainment period” has been discussed and evolved through the years. Based on our most recent clarification from USCIS in October 2023, this two-year sustainment period begins at the point when the capital is invested.
However, the period can be longer than two years for a few reasons. First, the most recent update from USCIS does not clarify the time frame in which the capital is considered “invested.” Overall, the start of the period has been considered the point when the money is deployed to the entity responsible for job creation. Second, if the required jobs have not been created within the two years, then the investment must remain at risk until they have been. Last, the concept of “sustainment period” is actively being discussed in the courtroom, so it is important that prospective investors understand the rule as it stands at the moment they decide to apply for the EB5 visa, because—according to the grandfathering provision that went into effect with the RIA 2022—this is the rule that will apply whenever their petition is adjudicated.
In the past, to remain compliant, some projects redeployed funds into alternative ventures once the initial project was completed. This practice emerged due to long delays in USCIS processing times. The new “sustainment period” clarification aims to avoid this redeployment of funds. If redeployment occurs, it must follow USCIS guidelines, ensuring the capital continues to meet the “at risk” criteria while preserving the investor’s eligibility for the EB5 program. Having a knowledgeable team of EB5 professionals on your side is key to ensuring that everything moves smoothly and complies with regulations.
Return of Capital in EB5 Projects
Although the EB5 program mandates risk, many projects are structured to provide a pathway for investors to recover their capital in full. Typically, this recovery of funds occurs once the job creation requirements have been fulfilled and the funds are no longer required to remain “at risk.”
Returns on investment vary by project, with some projects offering nominal interest during the investment period. Investors should thoroughly review the project’s exit strategy and financial terms before committing to them, since these details significantly impact the likelihood and timing of capital recovery.
Learn more: Understanding the Return of Capital in the EB5 Process
Conclusion
Understanding the “at risk” requirement is vital for EB5 investors. This principle underscores the program’s intent to foster genuine economic activity and job creation in the United States. Although the investment comes with inherent risks, careful project selection and compliance with USCIS guidelines can help investors achieve their goal: permanent residency for the investor and their family and the eventual return of their capital. With proper due diligence and professional guidance, the EB5 program offers a valuable opportunity to contribute to the US economy while securing a green card.
