I plan to open a restaurant in the U.S. and use it as a direct EB-5 investment. If I buy an existing restaurant for $300,000 and I hire 10 full-time employees, where can I allocate the rest of the $200,000? What are some acceptable uses of the required capital in a direct EB-5 model?
Unless this is a troubled business, chances are you will be denied, especially if the buyer takes the purchase price out, as the money is not invested. Start ground-up or do a regional center project investment.
In a direct EB-5 case, EB-5 capital may be allocated in qualifying employee wages, equipment, restaurant remodel/renovation, etc. It is vital that you hire an EB-5 business plan writer and EB-5 immigration attorney who will be able to advise you and properly prepare your direct EB-5 case.
Some uses for direct investment would be to invest in expansion of the restaurant, equipment or other investment vehicles that will help grow the business. To decide the best investment vehicles and to ensure you meet the EB-5 requirements for investments, it would be best to consult with a financial advisor and/or a securities attorney who is familiar with EB-5 as well as an attorney who works with EB-5 visas.
Your plan may not be a sound plan for a direct EB-5 case. You need a consultation appointment with an immigration attorney who is experienced with EB-5 and who can give you sound advice concerning this situation.
For EB-5 purposes, the money investment must be in a "new commercial enterprise." Only exceptions would be if you purchased an existing business and significantly restructured, reorganized it or expanded upon an existing business, such that a 40 percent increase either in the net worth or the number of employees results. One other possibility in investing in an existing business is to invest in a "troubled business" that has been operating for less than two years and has incurred a net loss during the 12 or 24 months prior to the EB-5 petition filing. In this case, the preservation of the existing jobs in lieu of creating new or more jobs is acceptable, but must be no less than the pre-investment level of employees.
I am not sure what kind of business could be purchased, then hire and pay for 10-plus full-time workers with mere $300,000. Nevertheless, the remaining $200,000 should be utilized to operate and keep those jobs you created.
You could invest the capital in marketing, remodeling, equipment, wages to qualifying employees, etc.
Your entire investment must be made available to the business and placed at risk by the business. Consider providing additional services in the restaurant so that the business requires an investment of $500,000. However, if the business only needs $300,000, you should consider opening two locations.
You need to hire 10 more employees if you are buying an existing restaurant. If the restaurant was closed you must hire 10 full-time employees. If the restaurant is existing but has been losing money, you can save 10 jobs and you might not have to hire any new employees. You are allowed to have a reasonable amount of capital, but it seems to be that $200,000 is too much if the restaurant only cost $300,000 to buy. If your business plan projects an expansion or renovation of the restaurant for $100,000, then maybe what you propose will work. You need to hire a good EB-5 immigration lawyer!
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