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Questions and Answers > EB-5 Investments

Can EB-5 investors invest in a pre-existing business?

Can EB-5 investors invest in a pre-existing business? Or does the business have to have been established after 1990?

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Answers

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    Julia Roussinova

    Immigration Attorney
    Answered on

    An EB- 5 investor may invest in a new for profit business defined as any business created after 11/29/1990. There are certain exceptions to investing in a new for profit business. Exceptions include investing funds in a for profit business created before 11/29/1990 if either one of these requirements is met: 1. A business is restructured or reorganized, thus creating a new commercial enterprise (regulations provide little insight into what degree of restructuring or reorganization must be done to establish a new enterprise but simply changing the legal form of the business does not satisfy this requirement), or 2. A business is expanded which will result in an increase of at least 40% in the net worth of the business or in the number of employees of the business (this could require an investor to create more than 10 new jobs to qualify for a visa). You should consult an immigration attorney to review and analyze your options before investing into a pre-existing business.

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    Ekaterina Powell

    Immigration Attorney
    Answered on

    Investor may invest in a pre-existing business but the rules that apply to such EB-5 investment will be different from those for a new commercial enterprise. Please note that you do not have to establish a business. A business can be considered a "new" commercial enterprise as long as it was formed after November 29, 1990. Thus, if you invest in a pre-existing enterprise that was created after 1990, it will still be considered a "new" commercial enterprise. If you invest in a commercial enterprise established before 1990, it can qualify for EB-5 purposes if you "restructure/reorganize" or "expand" the existing business. By restructuring or reorganizing an existing business, you may create a "new" commercial enterprise. "Restructuring" and "reorganization" are flexible terms and there is not set standard of what qualifies under the standard. However, mere changing the legal form of the business or a few cosmetic changes to the decor do not satisfy the requirement. Expanding a business - only an expansion resulting in an increase of at least 40% in the net worth of the business or the number of employees of the business will satisfy the visa requirements. The larger the business is, the heavier is the burden on the investor to meet the standard as the investor may need to create more than 10 new jobs to qualify.

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    Ying Lu

    Immigration Attorney
    Answered on

    All EB-5 investors must invest in a new commercial enterprise, which is a commercial enterprise: Established after Nov. 29, 1990, or Established on or before Nov. 29, 1990, that is: 1. Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or 2. Expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs So, when an investor invests into an existing business, s/he must either restructure it or expand it as the law requires. Getting an EB-5 visa through this way may cause potential problems due to many legal and practical reasons. You must consult an EB-5 expert before buying an existing business if you aim to use it for your EB-5 application.

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    Karen Weinstock

    Immigration Attorney
    Answered on

    It can be an investment in an existing business but only one that has been incorporated after 11/1990.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    If investing in an existing business there are various rules such as does it qualify as a ''troubled'' business. Here are the instructions which are taken from the regulations: http://www.uscis.gov/files/form/i-526instr.pdf

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    Philip H Teplen

    Immigration Attorney
    Answered on

    Yes, EB-5 investors can investor in existing businesses. We have to create either a new business venture (which is the best idea from a business law entity to acquire the existing entity or to increase the capitalization by 150%. Clearly the best idea is to create a clean new entity and have that acquire the existing entity.

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    Lei Jiang

    Immigration Attorney
    Answered on

    Yes. Depends on the location of the business, you may have to invest $1million dollars instead of $500,000.

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    Anthony Ravani

    Immigration Attorney
    Answered on

    Pre-existing business must have been established after 1990.

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    Jennifer Parser

    Immigration Attorney
    Answered on

    An investor can invest in a pre-existing business if the investment results in a 40% increase in the business'' net worth or number of employees increases. The business must be either established after Nov. 29, 1990, or if established on or before Nov. 29, 1990, it is purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or it is expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    EB-5 requirement states that an investment be made into a new business enterprise or if investing in an existing business, that business be a failing business that had lost more than 40% in value.

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    Ron Klasko

    Immigration Attorney
    Answered on

    Yes. There must be an expansion of the net worth or number of employees by 40% or a reorganization such that a new entity is created.

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    Farah Abbas

    Immigration Attorney
    Answered on

    Yes, EB-5 investors may invest in a ''troubled business.'' A troubled business needs to show that is has suffered a net loss for a certain period of time before filing the I-526. Please seek the advice of an experienced EB-5 attorney to see if your potential business meets the qualifications of a troubled business.

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    Larry J Behar, Esq

    Immigration Attorney
    Answered on

    It is our understanding that a new commercial enterprise must be founded after 1990 however an expanding business may have been created prior to that date for EB 5 purposes as the new jobs will come on line after 1990.

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    Elizabeth Krukova

    Immigration Attorney
    Answered on

    The investor can invest in the pre-existing business. The logistics and rules might differ slightly on whether that business was established before or after 1990.

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    Ed Beshara

    Immigration Attorney
    Answered on

    Yes, however there is a calculation that needs to be implemented to show the required number of jobs have been created. You will have to determine also whether this is a troubled business and existing jobs have been saved. Most EB-5 businesses have been recently created.Remember the New Commercial Enterprise in the EB-5 Regional Center context is usually the Fund that receives the investor funds and is usually recently created.

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    Clem Turner

    Securities Attorney
    Answered on

    EB-5 is primarily concerned with Job Creation. If the pre-existing business is expanding in some way to create ADDITIONAL jobs, or if the pre-existing business is a troubled business and your EB-5 investment will be SAVING jobs, then the EB-5 investment should be allowed. However, there are guidelines that need to be met. You need to speak with an experienced EB-5 attorney so that they can give you the appropriate advice for your specific situation.

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    Neville M Leslie

    Immigration Attorney
    Answered on

    Yes, an EB-5 investor can invest in a pre-existing business.

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    Shahzad Q Qadri

    RC Creator
    Answered on

    It has to be a new enterprise established after 1990.

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    Stephen Berman

    Immigration Attorney
    Answered on

    Yes. The business does not need to be established before 1990, rather any business established after the effective date is a new business.

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    Kate Kalmykov

    Immigration Attorney
    Answered on

    The EB-5 regulations require that investors place their investment funds into a "new commercial enterprise." A new commercial enterprise is defined as any business established after November 29, 1990. However there are exceptions to this rule. Investors that place their EB-5 funds into a company created before November 29, 1990 can satisfy EB-5 program requirements in one of two ways: 1. The investor can show that they have significantly restructured or reorganized an existing business. Note, that the USCIS has not defined what this entails and has previously been restrictive in its interpretation of this requirement. OR 2. The investor may demonstrate that the investor has expanded a business that was formed prior to November 29, 1990. To do this, the investor must not only create ten, full-time U.S. jobs, but they must also expand either the net worth or the number of employees of the business by at least 40%.