EB-5 Immigrant Investor Program: Key Elements

The EB-5 Program is based on three main elements:

  1. The immigrant’s investment of capital
  2. In a new commercial enterprise
  3. That creates jobs.

In a series of blogs we will lay out what each of these three elements means for both the original EB-5 program (investment of $1 million) and the Immigrant Investor Pilot Program such as through a Regional Center (investment of $500,000).

What is “Capital”?

The word “capital” in the EB-5 Program does not mean only cash. Instead, the word “capital” is defined broadly in the regulations to take into account the many different ways in which an individual can make a contribution of financial value to a business. The regulation defines “capital” as follows:

Capital means cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. All capital shall be valued at fair market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered capital for the purposes of section 203(b)(5) of the Act. 8 C.F.R. § 204.6(e).

In a recent appeals case it was determined that the immigrant investor’s promissory note can constitute “capital” under the regulations if the note is secured by assets the petitioner owns.

  1. The assets must be specifically identified as securing the promissory note;
  2. Any security interest must be perfected to the extent provided for by the jurisdiction in which the asset is located;
  3. The asset must be fully amenable to seizure by a U.S. note holder.

All of the capital must be valued at fair market value in United States dollars, and any assets acquired directly or indirectly by unlawful means, such as criminal activity, will not be considered capital. The immigrant investor must demonstrate by a preponderance of the evidence that the capital was obtained through lawful means.

Article categories: Investors/EB-5

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