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What are acceptable uses for EB-5 funds?

I want to open my own business in the U.S. using the EB5 program. I am looking opening the business in Florida (Orlando or Jacksonville). I know that to qualify it needs to be a minimum investment of $500.000 and it must create 10 jobs until the I-829 is approved. My question is does the business needs to cost $500.000 or can it cost $200,000 and the remaining $300,000 be used as cash reserves?

Answers

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    Ying Lu

    Immigration Attorney
    Answered on

    As a rule of thumb in EB-5, all EB-5 funds must be placed at risk and used for job creation. Excess cash reserves will generally not be allowed.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    You will need to show the uses of the funds and that the required number of jobs will be created. Leaving so much of the investment as a reserve (not for the business activities or job creation) may be problematic.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    Generally, the entire amount must be proven at risk and committed for job-creation purposes. A well-drafted comprehensive business plan must outline these issues. The investment amount also depends on whether your business will be in a targeted employment area to qualify for a lower $500,000 investment; otherwise, the minimum required is $1 million.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    The rule is that an EB-5 investor must invest $500,000 in the business within two years of approval of your conditional green card. Setting aside $300,000 as cash reserves is not likely to meet the standard. The reserve amount appears to be unusually high considering that it represents almost 60 percent of the amount that needs to be invested.

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    Boyd Campbell

    Immigration Attorney
    Answered on

    You should be able to prove that you fully invested the $500,000 during the two-year conditional residence period.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    A reasonable amount of cash reserves is allowed, but the full amount of the capital must be at risk and available for job-creating purposes. In other words, if most businesses in your industry require $300,000 in cash reserves to properly function, then you could document that through a market study and make a strong argument that the full amount is available to the new commercial enterprise for job creation. I think it would be difficult to find a business industry that normally would have such a high level of cash reserve. More likely, you are going to have to show how the money is at risk and how it will be spent over the next two years to create the required full-time jobs. A good EB-5 business plan writer or business advisor can help you on this matter. Also, note that the required amount of capital normally is $1 million; $500,000 is for an investment in a targeted employment area (TEA).

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    Ed Beshara

    Immigration Attorney
    Answered on

    There will be different requirements for the expenditure of the EB-5 funds depending on whether this is a direct or regional center EB-5 project. The business plan or economic report will detail the timeline for the commitment of funds and the nexus with the required job creation.

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