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Do I need to make significant changes to an existing business to qualify for EB-5?

I plan to buy an auto repair shop from the current owner. The shop has the proper equipment installed and is ready for business. I want to invest $500,000 in it and apply for EB-5. However, since the business is ready for operation, I do not plan to make significant changes to it. I''ll just use the investment funds to pay the owner, hire more people and maintain the daily operation of the shop. Is this acceptable for EB-5?

Answers

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    Investing in an existing company has different rules. The critical element is to create new jobs but proving that comes more difficult. There are three possibilities for "establishing a new commercial enterprise" when investing in or purchasing an existing business with regards to meeting the requisite employment criteria. You can: create an original business; purchase an existing business and simultaneous or subsequent restructuring or reorganization such that a commercial enterprise results; expand an existing business, such that a 40% increase either in the net worth or the number of employees results. If a troubled business, sometime you can save the potentially lost jobs. But the bottom line is will you create 10 additional jobs and is there a 40 percent increase either in the net worth or the number of employees that results, and not less than 10 jobs.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The business model you described would be acceptable for EB-5 purposes if the business was formed after Nov. 26, 1990, your capital will be fully at-risk in the business (not just paying the previous owner for the business), and the business can create 10 new positions for qualifying U.S. workers.

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    Marko Issever

    EB-5 Broker Dealer
    Answered on

    If you plan to invest only $500,000, make sure that the business is located in TEA that is in a targeted employment area. You must also make sure that you are either creating or preserving 10 full-time positions. The definition of preserving is not simply keeping the existing employees. You need to be able to demonstrate that if it weren't for your acquisition, all the existing positions would have been eliminated. If the enterprise you are buying was established on or after Nov. 29, 1990, then it is considered as newly created enterprise. Therefore, under this scenario, you do not need to restructure the business which I believe was the result you were looking for.

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    Charles Foster

    Immigration Attorney
    Answered on

    In order to make a direct investment in an auto repair shop of $500,000 you would have to determine if it's located in a targeted employment area (TEA). Also, you would have to establish that as a result of your investment, you're going to employ an additional 10 additional U.S. workers for over a two-year period, up until the time you file your I-829 petition to remove conditional residency.

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    Phuong Le

    Immigration Attorney
    Answered on

    If it's a currently existing business, you need to show an expansion of at least 40 percent (whether it's by employees, etc.). Here this doesn't seem to qualify because it's a straightforward acquisition.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You may invest in a new for-profit business defined as any business created after Nov. 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 Nov. 29, 1990, if either one of these requirements is met: One, 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 two, a business is expanded which will result in an increase of at least 40 percent in the net worth of the business or in the number of employees of the business (this could require you to create more than 10 new full-time positions to qualify for an EB-5 visa). A full-time position means a position of at least 35 hours/week. You should also be careful how the purchase transaction is structured. EB-5 funds must be used for job-creation purposes. Furthermore, to qualify for a lower investment threshold of $500,000, a direct EB-5 business must be designated as principally doing business in a targeted employment area. You should consult an experienced EB-5 immigration attorney to review and analyze your planned purchase before investing into a preexisting business.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    It should work, depending on when the original business was formed.

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    Blake Harrison

    Immigration Attorney
    Answered on

    You could qualify under the EB-5 program if your investment results in the creation of an additional 10 full-time employees.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    Yes, your plan is feasible. This type of direct investment is an acceptable form of EB-5. However, before buying this business, you need to do due diligence and put together a business plan that shows that as a new business you will provide jobs for at least 10 people within two years. You will also have to provide information that the fund for the investment is from a legal source. It is advisable that you should employ an EB-5 attorney to help organize the business in proper form and eventually file the petition.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    What year was the shop created? You must invest in a new commercial enterprise. That means one created after a certain date in the 1990s (Nov. 29, 1990). If created after that date, you must make some substantial changes to the business to qualify. Otherwise, you need not make any changes and just hire 10 new full-time employees. Let us know if we can assist you with your EB-5 case.

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    Hassan Elkhalil

    Immigration Attorney
    Answered on

    Is the business you are buying in a high unemployment targeted area or rural area? To apply for EB-5 based on the minimum qualifying investment, $500,000, the investment should be in either high unemployment area or in a rural area! A targeted area is defined as unemployment at least 150 percent of the national average. A rural area is defined as any city or town having a population of 20,000 or more, according to the most recent census.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    If the business was established after 1990, it is still considered a new commercial enterprise, but either way, you need to create 10 jobs, not preserve existing jobs, unless you can show the business is "troubled."

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