What requirements should a start-up meet in order to use EB-5 funds?
We are a start-up looking for an angel investor to provide capital so we can build the commercial version of our working prototype. We think an EB-5 investor could be a perfect candidate. Are there any special requirements we need to meet? We want to make sure that the angel investor can enjoy the immigration benefit.
Depending on your product/business, the biggest challenge for you if you're seeking one investor is whether you can create 10 full-time jobs. That's a substantial overhead to sustain once you've got your working prototype off the ground.
Make sure the requisite number of jobs are created.
Are you in a high unemployment or rural area? If so, the minimum is $500,00 (but Congress is going to raise that to over $1 million soon). If not, then the minimum right now is $1 million. For each investor family, you will have to create 10 new full-time jobs for U.S. workers.
With the right structure and a plan to create 10 full-time jobs, it could work! You should work with an immigration attorney with experience in EB-5 to put together a team for a project structure and documents.
It appears like you have done your homework on this and know that you will need to do this as a direct EB-5 investment project. What that means is that you will need to be able to create full-time positions for at least 10 qualifying employees. As for the investment, if your project is not in a targeted employment area, the required investment amount will need to be $ 1 million. If you could achieve TEA status for the location of your project, then the minimum required investment amount will drop to $ 500,000. One word of caution, though: It is very hard to find these investors nowadays who are willing to invest in a more risky situation for potentially higher returns. EB-5 investors are generally opting for the safety of their investment. That is, they want a return of their investment rather than return on their investment. Moreover, almost none of them want to risk not getting their green cards in this process. That is why most applicants are opting for the regional center instead of direct investment route. That said, it sounds like you believe in your project and think that it is safe. If you could convince the EB-5 investor that your project is relatively safe, and his funds will not only be returned but he will be able to make a nice profit along the way, he might be very interested.
As a start-up, prepare a Ho-compliant business plan that details how your business will be set up, operated and meet the EB-5 requirements. It is advisable for you to consult an EB-5 attorney so as to plan every step you need to take in order to ensure relevant EB-5 requirements are met.
A business plan is required. You will need to show how the money can be used in the business and the 10 jobs that will be created. You, of course, also need complete business documents to show the foreign investor what he is getting for his investment.
There are several requirements your business would need to meet. Most importantly, however, as a start-up you face the issue of feasibility and "permanent" job creation. You need a proper consult with a direct EB-5 immigration lawyer.
First, your business must be principally doing business in a designated targeted employment area (TEA) to qualify for a lower EB-5 investment threshold, currently at $500,000 if you wish to attract potential EB-5 investors based on a lower investment threshold. Otherwise, the minimum current investment for a direct EB-5 case is $1 million per EB-5 investor. Second, the EB-5 investment must create the minimum 10 full-time permanent positions per each EB-5 investor. A full-time position must be at least 35 hours a week. Third, your business should be properly structured and a comprehensive EB-5-compliant business plan should accompany each EB-5 investor's individual I-526 petition along with the required business documentation. If you think you may meet the above criteria, you should consult an experienced EB-5 immigration attorney to discuss your case in more specific detail and hire him or her to competently structure the business and prepare appropriate documentation as soon as possible, as EB-5 investment amounts are expected to increase significantly either through the legislative process or regulatory reform.
Will full-time jobs be created as a result of your project? Will it involve construction costs? Aside from the investment issues, understanding more about the potential jobs to be created can help to evaluate the impact your project will have.
Your business must have the capability of creating at least 10 full-time jobs, maintaining the jobs, showing a solid business plan and the investor must have an active role in the business. Also, depending on the location of the business, the EB-5 investor must invest the requisite minimum capital of either $500,000 for a targeted employment area or $1 million if not.
Yes, it is possible. It looks like this would have to be structured as a direct EB-5. You would need to retain an EB-5 attorney who specializes in such structures and provides guidance on the best approach.