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Does Los Angeles qualify for the $500,000 minimum investment requirement?

I have a client who wants to buy an existing business, a grocery market with liquor store, in Los Angeles, California. Does Los Angeles qualify for the $500,000 minimum EB-5 investment requirement? Will the immigrant investor need to create ten new jobs for the grocery market, or simply maintain existing jobs?

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    Steffanie J Lewis

    Immigration Attorney
    Answered on

    If you could provide the street address of the potential business in which your friend considers purchasing, I could be more specific in my answer. Without the address, my answer is general regarding the legal restriction that would apply to purchasing a business in which a $500,000 investment would satisfy the EB-5 program requirements. An investment of $500,000 might satisfy if the business is in a rural or high unemployment area, referred to as a "Targeted Employment Areas" (TEA). To qualify as a TEA, the area may consist of a state, county, city or tract with an unemployment rate greater than 150 percent of the national average as reported by the Bureau of Labor Statistics. To determine whether a location is within high unemployment area, you have to identify the census tract that includes your business location. If the unemployment rate of the census tract exceeds the high unemployment threshold, the area could be approved as a TEA. Additionally, a rural area also qualifies as a TEA, but would not be applicable to Los Angeles. By definition, a rural area must be both outside of a metropolitan statistical area and outside of a city or town having a population of 20,000 or more. Los Angeles would probably not qualify as a rural area. To qualify as an EB-5 investment by purchasing an existing business, an investor must meet the job creation requirement. If the existing business is a "troubled" business, at least 10 full-time jobs must be preserved, created, or some combination of the two. If the purchase of the existing business that is restructured, reorganized, or expended so that a new commercial enterprise results, the new commercial enterprise must create at least 10 full-time jobs. Without a restructuring, an existing business can be classified as a new commercial enterprise if the investment creates a substantial increase in net worth or full-time jobs and "substantial" has been identified as a 40 percent increase in the net worth or 40 percent increase in full-time jobs.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    An economist experienced in EB-5 program would be able to advise you if a specific tract may qualify as a TEA. You may contact state authorities to inquire as well. For a direct investment, at least 10 full time jobs must be created. For a troubled business you must preserve at least 10 full time jobs.

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    Ed Beshara

    Immigration Attorney
    Answered on

    The TEA is determined by the exact location of the EB-5 project, which may be located in Los Angeles.

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    Lei Jiang

    Immigration Attorney
    Answered on

    You should check with the state government. But even if it is not, you can check the tract (based on the address). It might be in a TEA area.

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    Michael A Harris

    Immigration Attorney
    Answered on

    It could, but further study of the areas of unemployment will need to be evaluated.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    Whether the location of the project would qualify as a TEA (i.e., minimum of $500,000 investment instead of $1 million) is determined by each state''s Department of Labor, and is narrowly defined. So it would not be a city-wide designation.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    It may, but a state agency that determines TEAs should be contacted, as well as an economist experienced with the EB-5 program to get an official determination.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The City of Los Angeles does not qualify as a TEA. It may be, however, that the specific census tract or group of census tracts within Los Angeles where the business is located, might be qualified as a TEA through the state TEA designation process. An experienced EB-5 immigration attorney would be able to check the proposed business address for you and advise if a TEA is possible. For the purchase of an existing business established after November 29, 1990, you need to add 10 new full-time jobs within two years OR if the business is a troubled business (one that has suffered a financial loss of at least 20 percent of its net worth in the last year or two years), you must maintain the existing number of full-time jobs, at least 10, for the two-year conditional period.

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    John J Downey

    Immigration Attorney
    Answered on

    You would need to check with the California state government to see what division the governor has designated to approve high unemployment areas. These are named as Targeted Employment Areas (T.E.A.). If the jobs are created in that area, then a $500K investment would be allowed. You would need to contact an attorney with knowledge of the program to advise you on any specific entity''s qualification.

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