Contributed by Koby Polaski, Senior Attorney
When a client or potential client is exploring the
different avenues through which he or she might immigrate to the United States
– temporarily or permanently – the option of investing in a company in the
United States often comes up.
The “traditional” investor visa that most have in
mind when exploring this possibility is the EB-5. Perhaps the main advantage to
the EB-5 is that it grants lawful permanent residence on day one, and the EB-5
visa category has traditionally remained “Current.” This trend looks like it
will continue, as the Department of State’s Visa Bulletin for April 2014 states
that the EB-5 category will remain current for the foreseeable future.
However, despite the allure of permanent residency,
the EB-5 has other requirements that are often impossible for an entrepreneur
to satisfy. Two such requirements include a $1,000,000 investment and ten jobs
for United States workers within two years. (If the investment is made in an
area that has high unemployment (or a rural area), the investment requirement
drops to $500,000.)
Although the EB-5 is often thought of as the only
option for an intending immigrant looking to invest in a United States
business, 2013 data from the Department of State revealed that it is not, in
fact, the most sought after visa. The number of E-1 treaty trader and E-2 treaty
investor visas filed in fiscal year 2013 was substantially higher than the
number of EB-5s. In 2013, there were over 40,000 E-1 and E-2 visas issued,
compared with only 6,434 EB-5 petitions.
It is important to explore the pros and cons of each
visa before deciding which to pursue.
Pros and Cons of the EB-5
As mentioned initially, the clear advantage to the
EB-5 is that the applicant gains permanent residence upon issuance of the visa.
However, the required investment is significant, as is the requirement that the
business generate ten new jobs.
One way around the job creation requirement is for
the investor to invest in a Regional Center, rather than directly investing his
or her money. A Regional Center is an area designated by United States
Citizenship and Immigration Services as eligible to receive immigrant investor
capital. The Regional Center must focus on a geographical region within the
United States and must strive to achieve a certain level of economic growth
within this regional area. It must also create jobs – directly or indirectly –
through capital investments made in accordance with the Regional Center’s
business plan.
The major advantage to the Regional Center over
direct investment is that the intending immigrant can take advantage of
indirect job creation. Regional Centers can satisfy EB-5 job creation
requirements by creating ten direct, indirect or induced full-time jobs.
However, the risks that arise after investment are several; first, there is no
guarantee that USCIS will approve the application for lawful permanent
residence even after the investment; secondly, after investing in a Regional
Center, the investor loses control over the investment because he has given his
money to a third party – an investment vehicle that was created with the
purpose of using EB-5 investors’ funds to create jobs on a larger scale. The
upside to the Regional Center investment is that the EB-5 investor can gain
permanent residence quickly without having to manage an investment or run a
company’s operations.
E-Visa
The E-visa category
encompasses treaty traders and treaty investors who come to the United States
under a treaty of commerce and navigation between the United States and the
country of which the treaty trader or investor is a citizen or national. The
E-1 Visa, for Treaty Traders, allows the visa holder to work in the United
States on a visa where more than 50 percent of the business is trade between
the United States and the home country. The E-2 Visa, for Treaty Investors, is
for visa holders who will direct the operations of an enterprise in which they
have invested a substantial amount of money.
An
advantage of the E-2 visa is that it is not subject to a cap, like the H-1B, or
a numerical limitation, like the EB-5. The E-2 does not require a certain level
of education, nor does it require a minimum investment. The investment must be
substantial and cannot be “marginal.” An investment is considered marginal if
it does not have the present or future capacity to generate more than minimal
living for the investor and his family.
The
biggest difference between the EB-5 and the E Visa is that the E Visa does not result
in lawful permanent residence. The E Visa is a nonimmigrant visa that can be
renewed indefinitely as long as the investor continues to operate the business
venture. The E visa is initially valid for up to five years, with the
possibility of two year extensions.
Ultimately,
after weighing the pros and cons of each visa, only the individual investor can
choose which option is right for him or her.
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