How can the purchase of an existing business qualify as an EB-5 investment?

The EB-5 law and regulations require that a commercial enterprise be "new," which is defined as a commercial enterprise that was formed after 11/29/1990 or one that was formed before that date which has been restructured or reorganized such that a new commercial enterprise results. In addition, an existing commercial enterprise will qualify as new if it has undergone a substantial change (at least 40 percent expansion) in its net worth or number of employees. The new commercial enterprise also must create at least 10 new full-time jobs for U.S. workers within two years. Therefore, since this business appears to have been established before 1990, it would need to be restructured/reorganized or expanded by 40 percent AND it still must meet the 10 new full-time jobs within two years. Current average I-526 processing time is 14.7 months and NVC and immigrant visa processing will be another six months at least, so your sister faces about two years of processing before she could come to manage the business as an EB-5 conditional green card holder.

The business has to create 10 new jobs. You can qualify by buying an existing business, but you still need to create the jobs. Seek out an attorney experienced in EB-5 matters and ask about the concept of "troubled business."

This will be tricky unless it falls under the definition of a troubled business.

If you purchase this business it will only be considered "new" under the law if you engage in a kind of substantial restructuring/reorganization, or if you increase the net worth (as determined under general accounting principles) or the number of employees by 40 percent. This is because the commercial enterprise was formed prior to November 29, 1990.

Existing businesses can qualify for EB-5 investments, but the job creation requirements will change from a new commercial enterprise investment.

Purchase of an existing business (established before November 1990) can qualify as an EB-5 investment assuming other conditions are met. The investment will have to result in creation of ten (10) permanent positions (i.e., existing positions will not count toward meeting the job creation requirement). In addition, the EB-5 investment into an existing business will need to result in either (1) restructure or reorganization of the business, or (2) expansion of the business such that a 40 percent increase in the business'' net assets or employees results. As to when your sister would be able to come to the United States to manage the business, that depends on several factors including your sister''s country of origin and whether your sister is interested in and eligible for shorter term immigration solutions that may allow her to wait for the processing of her EB-5 petition in the United States. Please consult with EB-5 attorneys who can evaluate the specifics of your sister''s situation and help her reach her immigration goals.

To buy an existing business to establish EB-5 eligibility is possible, but with lots of pitfalls. Here are a few for you to consider: (1) Whether the investor creates an original business, purchases an existing business, expands an existing business, or joins with a pool of investors who have already invested in an existing business, his or her action must be taken after November 29, 1990. The statute requires it, and the definition of the word "new" means created after November 29, 1990. (2) If the investor has invested in an existing enterprise, he or she must demonstrate how the investment will cause the creation of at least 10 additional full-time positions. Merely purchasing a share of a business from an existing shareholder, without more, will not qualify, since the payment goes to the former shareholder rather than towards the development of the enterprise. (3) If the investor purchases a troubled business, it must be demonstrated that the number of jobs at the pre-investment level will be maintained for at least two years. To qualify as a troubled business, it must have been in existence for at least two years and have incurred a net loss for accounting purposes of at least twenty percent of the troubled business''s net worth prior to such loss. The loss must have been incurred during the twelve or twenty-four month period prior to the priority date on the Form I-526.