The EB-5 Investor Program allows eligible foreign nationals to be admitted to the United States with a spouse and qualifying children upon investing in a commercial enterprise and planning to create or preserve at least ten full-time jobs for US workers.
In this article, you will discover whether EB-5 investors can get the invested amount of capital back.
EB-5 Investment Requirements – The Essentials
The United States Citizenship and Immigration Services (USCIS) administers the EB-5 program. Also referred to as the “million dollar visa,” the EB-5 classification holds applicants to a high bar when it comes to the required amount of investment.
Currently, the minimum amount eligible for an EB-5 investment is $1,050,000. If the applicant prefers to invest in a Targeted Employment Area (TEA), it is possible to qualify for a reduced investment of $800,000.
A TEA can be either a rural area or an area affected by high unemployment rates, which may result in a riskier investment option depending on the case. USCIS specifically provides that the capital must be “at risk for the purpose of generating a return on the capital.”
Based on this information, EB-5 investors must be aware of the fact that there are no guaranteed returns on investment. Hence, it is not possible to establish a fixed interest rate of return.
If the EB-5 project chosen by the applicant does not succeed, the capital invested may be lost. USCIS requires that the required amount of capital must be invested “at risk” in a job-creating enterprise, which does not allow the amount to remain in a bank account.
Do EB-5 Investors Get Their Money Back? – The Verdict
The possibility to obtain returns from an EB-5 project depends on whether the enterprise will succeed. If the proposed EB-5 project succeeds, the investors may get their invested money back – either fully or partially.
Please note that the return of the amount invested follows the immigration-and-investment cycle that is natural for successful EB-5 applicants. For example, USCIS expressly provides that the invested amount must remain “at risk” during the two years of conditional permanent residency.
Generally, EB-5 projects often promise investors that they can expect a return on the amount invested in five years. However, it is not possible to establish a fixed timeframe in most cases.
When an applicant invests in an EB-5 project, the invested amount must get into a new commercial enterprise (NCE). The NCE has two options, which are to invest the money or make a loan to a job-creating enterprise (JCE).
If the NCE loans the money to the JCE, the return on the amount invested depends on the repayment of the borrowed amount and the liquidation of the NCE.
Depending on the terms and conditions outlined in the EB-5 enterprise’s operating agreement, the terms of the loan and the timing of liquidation may vary significantly. As it is plain to see, navigating EB-5 investments can be complex and time-consuming.
The best strategy is to work with a well-versed immigration attorney to find an ideal EB-5 project, review the documentation, identify any red flags, and increase the chances of a return on the invested amount.