What happens if the JCE does not maintain the required jobs for the EB-5 Program?

Depending on what stage of the EB-5 processing you are in, that may result in a denial of the Petition. In an EB-5 investment, there is no guarantee of repayment of investment since one of the requirements of EB-5 is an "at-risk" investment and not a loan.

Maintaining the required number of jobs is a criterium for EB-5. The answer to "what happens when the developer does not have the money to repay” should be contained in your contract with the developer.

Unless it is a “troubled business,” there is no requirement for the new commercial enterprise (NCE) to maintain jobs. The requirement is to create the ten full-time positions within the conditional period (two years) or within a reasonable period of time (one year) thereafter. In practice, however, it is better to show the USCIS that the 10 jobs were created within the conditional period. As for sustainment, the requirement is to show that the investor sustained his or her capital investment in the NCE for the entire conditional period. This usually means the most recent K-1 tax form will reflect a capital account equal to the initial EB-5 investment ($500,000 in most cases). The terms and conditions of the investment (i.e., the arrangement between the EB-5 investor and the developer regarding the repayment of invested funds) are contained in the agreements signed by the parties. As long as there is no prohibited redemption agreement, loan arrangement, or guaranteed return, these agreements will comply with the EB-5 rules. In other words, the failure of the developer to “make good on its promise” to repay an investor should not affect the removal of condition.

If the JCE does not maintain the required jobs, it could negatively impact your ability to remove conditions at the time you file your petition on Form I-829. It also depends on how the jobs were counted. If it is a direct investment, then these are direct jobs; if it is through a Regional Center, it may have relied also on economic formulas showing that the jobs were created indirectly or induced. There is always a risk that the developer may not have the funds to repay the investment after the required 5 years. This is why it has to be a true investment, which by definition means there is risk involved and no guarantee that your funds would be repaid. If your fellow developer does not have the funds to repay after 5 years, your best bet is that you have a responsible developer who will work these issues out so that your funds are still repaid even though it may take longer than 5 years.

At the time of filing the I-829 petition to remove the conditions to obtain unconditional residency, the JCE must show the required number of jobs have been created. However, if the required number of jobs have not been created, then the JCE can show substantial compliance that the required jobs can be created within a reasonable 12-month period. The immigration process is different from the investment risks and the risk of not having the loan repaid in a loan model context. Your personal investment is 100% at-risk and you may obtain your permanent residency while the business investment may fail. Your immigration attorney may review the project to determine if the exit strategies will be available.

If the jobs are not created, then your I-829 will be denied. If the project cannot repay your investment, you would need to read the paperwork between you and the project. Remember, your money was at-risk so repayment was not guaranteed.

If the required jobs are not maintained, there is some risk the application may be rejected. Although, there might be exceptions for force majeure or other extraordinary circumstances where the government might provide some leeway. There is no immigration requirement to repay the loan. The USCIS is not concerned with the return of capital but rather with the creation of jobs. In business, sometimes businesses succeed and sometimes they do not. The success of the business in making money and returning capital is not critical to the approval of the visa.

These are two unrelated questions that may result in different scenarios. Generally, JCE must create a requisite amount of jobs for I-526 to be approved and for the subsequent removal of conditions. If jobs have not been created, the petition will be denied. However, it is not unheard of the situation when JCE did not employ the requisite amount of people but still managed to create employment opportunities in an amount consistent with the business plan. In this case, it is possible to avoid the denial. On the other hand, repayment of the investment funds is not a requirement for the approval of the petition. Thus, it is still possible to retain the immigrant status even if the capital has not been repaid.