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What constitutes maintaining the investment in a direct EB-5 business?

If I start a direct EB-5 business by investing the amount as required, but if my business does a loss of, say, $100,000 in the first year, do I have to invest further, to compensate for this loss in capital to mean that I have maintained the investment? Or if my business does a profit of, say, $100,000 in the first year, can I withdraw the said profit or make it count towards the balance investment to be made, if any, out of the required $500,000 to be made? What constitutes maintaining the investment in a business throughout two years of conditional residency?

Answers

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    Ed Beshara

    Immigration Attorney
    Answered on

    The EB-5 investment has to be sustained or maintained in the new commercial enterprise/job creating entity. That is, the required investment amount has to expended on items that would lead to the required job creation. If there is a loss, but the required investment amount has been spent and the required jobs have been created, then the investment has been sustained.

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    Melanie Yang

    Immigration Attorney
    Answered on

    1. No part of $500,000 can be returned to the investor or used for non-business related reasons. 2. If the business sustained a loss at the end of first year, but the business still can be carried out without a cash flow problem, then it is not necessary to put in more money. If the business cannot be maintained without more investment, then more money has to be invested according to necessity. 3. If the business generates profit, the shareholder can withdraw profit part. 4. Business is in active operation and 10 jobs were created.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    It is okay to lose part of the money, and you can take out profits, but you must pay taxes before you can reinvest and have it count. You cannot count retained earnings.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    Your investment must remain in the new commercial enterprise until you obtain full lawful permanent residency (that is, after I-829 approval). You can receive profit distributions or interest payments in the meantime, but the principal must remain in the entity. If the business takes a loss, you will not be required to invest further. If you want to reinvest, that is up to you, but it is not required.

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    John J Downey

    Immigration Attorney
    Answered on

    You maintain the investment by leaving the $500,000 in the entity. If you lose $100,000 in the first year then you have a business decision to make. If the business will fail without the infusion of another $100,000, then you must decide if you want to continue or quit the program. If the entity is not in existence at the end of the two year conditional period, then you have failed and will not get permanent residency.

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