The EB-5 direct investment program requires foreign investors to invest directly into new commercial enterprises in the US. There are specific requirements regarding the amount invested and job creation that must be met. Generally, investors are required to invest at least $500,000 or $1 million depending on project location and create at least 10 full-time jobs for US workers. The invested capital cannot be obtained from illegal activities and must be at risk of partial or total loss. Investors must also demonstrate they will be engaged in the management and direction of the business. Meeting all EB-5 direct investment requirements demonstrates the investor’s commitment to the US and contributes to economic growth and job creation.
Minimum Capital Investment Thresholds for EB-5 Direct Investment
The minimum EB-5 direct investment amount is either $500,000 or $1 million, depending on the project location. For projects located in Targeted Employment Areas (TEAs), which are rural areas or areas with high unemployment rates, the minimum investment threshold is $500,000. For projects in other areas, the requirement is $1 million. The invested capital must be placed at risk and may be subject to partial or complete loss if the investment fails. Simply showing funds were spent is not enough – investors must demonstrate their capital has been truly invested and they face a genuine risk. The funds also cannot be derived from unlawful activities and the investor must provide documentation on the lawful source.
Job Creation Requirements for EB-5 Direct Investments
In addition to the minimum capital investment thresholds, EB-5 direct investment projects must create at least 10 full-time jobs for qualifying US workers within 2.5 years of the investor’s admission to Conditional Permanent Residence. A “full-time” position means employment of at least 35 hours per week. Jobs that are intermittent, temporary, or seasonal cannot be counted. Independent verifiable documentation must be provided to show the requisite jobs have been created, such as payroll records or relevant tax documents. Jobs must also be created directly as a result of the EB-5 direct investment into the new commercial enterprise and allocated based on the proportion of the total investment into the project that comes from EB-5 investors.
Engagement in Management and Direction
To qualify for EB-5 direct investment green cards, investors must be engaged in the management and direction of the new commercial enterprise, either through day-to-day management and operation or through policy formulation. This means the investor is not merely a passive investor and there must be a demonstrated causal relationship between the EB-5 capital invested and jobs created. Investors can show engagement either by having at least 50% ownership of the enterprise, or less if they otherwise have some other corporate position or legal agreement that provides operational control.
Sustainment of Investment Requirements
Historically, EB-5 direct investments only had to be sustained until the conclusion of conditional permanent residence. However, under the USCIS Policy Manual updated in 2022, the EB-5 capital investment must now be sustained throughout the period of conditional residence and until the I-829 petition to remove conditions is approved. This means investors may have to redeploy funds after the completion of the initial project to keep their investment “at risk” even after fulfilling job creation requirements. Specific requirements regarding redeployment activities remain unclear, though actions like buying bonds, securities or re-lending may not meet requirements for keeping capital invested in job creating enterprises.
EB-5 direct investment has specific requirements regarding capital investment amount, job creation, engagement in management, and sustainment of investment. Meeting all standards demonstrates the investor’s genuine commitment to the US economy. Chinese investors should carefully evaluate projects to ensure they select compliant EB-5 opportunities that position them for success.