Raising the required capital for the project is a lengthy procedure. It includes various factors like creating the new commercial enterprise, identifying targeted employment area, the minimum amount of investment, the number of jobs required to successfully execute the project, etc. Each of the step involves documentation and professional execution.
Once the number of potential jobs is estimated, the number of jobs is divided by 10 and the result is multiplied by the minimum amount of investment.
For example, if the project is based in a TEA and it is anticipated to create 200 jobs, then 200 is divided by 10 which is 20. This means there can be a total number of 20 investors in this project. Each investor will be required to raise capital in the amount of $500,000. So, the total EB-5 project capital in this case will be 20 * 500,000 which is equal to $10 million.
It should be noted that the project will not always be able to create the exact number of anticipated jobs. It may also differ in terms of the forecasted total budget of the project. In such situations, there is a need to develop enough support towards creation of the minimum number of jobs by each of the investor. This can affect the green card application of the investors. The job cushion will help all the investors successfully apply and qualify to receive green cards in case where the project fails to create the minimum number of jobs for each investor.
Determining the accurate amount of EB-5 capital is a very crucial step and business decision that should be carefully appraised considering factors such as the magnitude of the project, potential job creation, and EB-5 capital required. It should also consider the cost and planning required to implement a successful EB-5 project.
Once the Eb-5 capital requirements are identified, the next step is to understand and decide the structure of the capital. As in case of any other normal organization, the EB-5 project also can structure the capital in two main categories: Equity and Debt.
The capital structure should be specific, and custom made to meet the requirements of the project as well as the investors. It is said that a debt structure is more consistent and enables an investor to exit the investment and from project if required.
It is advisable to seek competent advice from a securities attorney as they can provide guidance and advise to create and develop compliant capital structure as per the regulations.
As per regulation, an EB-5 investor is required to create 10 full time jobs from the investment. The jobs created and carried out by the investor and his family members is not counted towards the minimum 10 job creation regulation. These jobs must be offered to U.S. citizens, permanent residents, refugees and asylum seekers. These jobs can not be offered to non-immigrant visa holders including the H, L E visas.
EB-5 investors are not required to hire 10 or more U.S. workers immediately after they invest in the project. The investors can provide U.S. Citizenship and Immigration Services (USCIS) a comprehensive business plan demonstrating the need for at least 10 full-time employees “within a reasonable time” after the initial investment. USCIS considers 2 years’ time as reasonable time to complete the job creation requirement.
Eb-5 projects with direct investment will have to evidence direct job creation. However, investment through a regional center-based project can include direct jobs, indirect jobs (employment opportunities ancillary to the commercial enterprise but are created as a result of the enterprise) as well as induced jobs ( are employment opportunities created within the greater community where the commercial enterprise is located, which come about as a result of project investment, investors, employees) from the investment towards the job creation requirement.
Job creation is the primary requirement and condition of the EB-5 visa. According to the regulation, the EB-5 investment should create minimum 10 full time jobs for U.S. employees. It is the principle criteria that is required to be fulfilled when an EB-5 investor applies for permanent resident status.
In case of direct investment, the direct jobs created by the investment are calculated towards the job creation requirement. The question of job creation calculation arises when the project is sponsored by EB-5 Regional Centers. In large projects, the job creation calculation is executed using economic models which help to estimate the jobs that would be created by the investment or the project. Such models include all types jobs that would be created by the investment/project in question. The different types of jobs that are considered to calculate the job creation requirement include direct jobs, indirect jobs and induced jobs.
Each EB-5 investment must result in the creation of 10 or more permanent, full-time jobs for U.S. workers, and these jobs should be created no later than two-and-a-half years after an investor’s I-526 approval.
The job creation numbers derived through the use of economic models should be presented by the North American Industry Classification System (NAICS) code of the expenditure—and then the job creation numbers for all the NAICS categories should be totaled to give an aggregate number of created jobs. It should be noted that the job creation figures are given as final values; they are not further multiplied by project duration. The job creation report must clearly mention the total number of jobs created by the project and also specify details. The report must outline the total number of jobs that meet the requirements of the EB-5 Program and can thus be attributed to EB-5 investors.
The main objective of the EB-5 visa program is not only to stimulate growth of the economy through foreign investments but also job creation. Several questions are raised and frequently asked about the construction jobs and operations jobs created by the EB-5 investment/project.
The construction jobs are estimated and calculated by a professional expert with use of economic models. In order to count direct construction jobs, the EB-5 project’s construction must last for minimum two years. However, indirect and induced jobs count when construction takes less than two years.
The construction’s duration starts from digging to the issuance of the certificate of occupancy (or the beginning of building use, for manufacturing facilities). In absence of waiting time between the demolition and the actual start of construction, demolition may be included in the construction time.
USCIS requires construction projects that are expected to take more than two years to provide a schedule of predicted monthly costs along with the I-526 petition.
There are two ways to calculate the total number of operations jobs.
All the EB-5 projects are required to be compliant with the U.S. Securities Law. The Securities Law is aimed to protect the rights of investors. Securities are regulated by the U.S. Securities and Exchange Commission (SEC), and all securities are required to be registered with the SEC.
The securities issued by the EB-5 project are required to be registered with the SEC. In addition to federal securities laws, EB-5 investments may be regulated at the state level.
It is advised to seek expert advice from a competent attorney as the regulations of the Securities Law are complicated and very specific.