My retail business has experienced some loss, and I want to see if it qualifies as a troubled business under the EB-5 program. What does USCIS consider a troubled business for EB-5 investment purposes? What proof will I need to provide to show that it is troubled? If I currently have 8 employees, and get an EB-5 investor to invest, will they just have to preserve those jobs or create new ones?
Troubled business means one that has experienced a net loss for 1 or 2 years immediately before filing the I-526 in excess of 20% net worth for accounting purposes. Even though regulations address preserving only the existing number of jobs, USCIS maintains that 10 jobs must be preserved. Thus, you must create an additional two.
A troubled business is defined as a business that has been in existence for at least two years, has incurred a net loss for accounting purposes during the twelve-or twenty-four month period prior to the priority date on the foreign investor's I-526, and the loss for such period is at least equal to twenty percent of the troubled business's net worth prior to such loss. You may present your business tax returns, and accounting records to show the qualification. In the case of a troubled business, 10 jobs must be preserved, created, or some combination of the two. This means if you currently have 8 full time employee, the new investment needs to create an additional 2.
The rules defining what constitutes a troubled business are complex. It would be best if you consulted with an experienced EB-5 immigration attorney who can review your company financials with you and your accountant to determine if the requisite 20% loss equal to revenue or assets has occurred during the last two years and what that means for a potential EB-5 case. Also, you must have at least 10 employees and maintain the pre-investment employment levels. Therefore, it appears that any EB-5 investor would have to create new jobs because you do not have enough.
A troubled business is one that has been in business at least two years and has suffered a net loss (by using GAAP) in the last 12 or 24 month period, and that loss is equal to at least 20% of the business' net worth prior to such loss. If the business meets that requirement, then you must keep the number of jobs at the pre-investment level for at least 2 years.
According to USCIS, a troubled business is "a business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve- or twenty-four month period prior to the priority date on the alien entrepreneur's [immigrant investor's] Form I-526, and the loss for such period is at least equal to twenty percent of the troubled business' net worth prior to such loss." There are indeed specific and unique job creation requirements and other matters to consider, so please retain EB-5 counsel who can lead an experienced team of professionals (especially an economist) to assist you.
A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to the priority date on the immigrant investor's Form I-526. The loss for this period must be at least 20 percent of the troubled business' net worth prior to the loss. For purposes of determining whether the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded. This can be shown through audited financial statements and tax returns for the company. If you already have 8 jobs, then you need to preserve those jobs and create 2 more, to fill the 10 full-time job requirement.
An experienced EB-5 immigration attorney will be able to clarify and define what a troubled business is. Basically, the business must be troubled for a couple of years. The EB-5 investor in this troubled business will have to invest the minimum requirement and preserve and/or create new jobs. That is, preserve the 8 jobs and create 2 new full-time jobs.
