Can EB-5 investors invest in a pre-existing business? - EB5Investors.com

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?

Answers

Julia Roussinova

Julia Roussinova

Immigration Attorneys
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.

Ekaterina Powell

Ekaterina Powell

Immigration Attorneys
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.

Ying Lu

Ying Lu

Immigration Attorneys
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.

Karen Weinstock

Karen Weinstock

Immigration Attorneys
Answered on

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

Lynne Feldman

Lynne Feldman

Immigration Attorneys
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

Philip H Teplen

Philip H Teplen

Immigration Attorneys
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.

Anthony Ravani

Anthony Ravani

Immigration Attorneys
Answered on

Pre-existing business must have been established after 1990.

Lei Jiang

Lei Jiang

Immigration Attorneys
Answered on

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

Jennifer Parser

Jennifer Parser

Immigration Attorneys
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.

Ron Klasko

Ron Klasko

Immigration Attorneys
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.

Jinhee Wilde

Jinhee Wilde

Immigration Attorneys
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.

Farah Abbas

Farah Abbas

Immigration Attorneys
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.

Elizabeth Krukova

Elizabeth Krukova

Immigration Attorneys
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.

Larry J Behar, Esq

Larry J Behar, Esq

Immigration Attorneys
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.

Clem Turner

Clem Turner

Securities Attorneys
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.

Ed Beshara

Ed Beshara

Immigration Attorneys
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.

Shahzad Q Qadri

Shahzad Q Qadri

RC Creators
Answered on

It has to be a new enterprise established after 1990.

Stephen Berman

Stephen Berman

Immigration Attorneys
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.

Neville M Leslie

Neville M Leslie

Immigration Attorneys
Answered on

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

Kate Kalmykov

Kate Kalmykov

Immigration Attorneys
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%.

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