The E-2 and EB-5 visas open a world of opportunities for foreign investors. We can help you achieve your American dream of living and running a successful business in the U.S.
Luckily, the U.S. government has created programs to allow for foreign entrepreneurs to invest in a business in the U.S. and use this investment as an opportunity live in the U.S. and even earn citizenship. This model has worked exceptionally well in franchising for several brands. Think of Subway, 7-11 and many other franchise brands.
We strive to understand each entrepreneur’s investment goals, desired location, and industries of preference, among other important factors, in order to find the best U.S. business opportunities for them and their family based on their own unique goals. We coordinate with their immigration and corporate attorneys to ensure their U.S. immigration and investment objectives are met.
We have advised several entrepreneurs from different countries around the world achieve their dream of owning a business and moving to the U.S.
The E-2 Treaty Investor visa grants nationals of a qualifying country temporary stay in the United States in exchange for investment in a U.S. business. To qualify for the visa, investors must:
Be a national from a qualifying treaty country (A full list of qualifying countries can be found at the U.S. Department of State website, www.travel.state.gov.)
Invest a substantial amount of capital in a U.S. commercial enterprise, and
Maintain equity ownership and be in control of the business.
Unlike the E-2 visa, the Immigrant Investor Program, more commonly referred to as the EB-5 Program, is a pathway to permanent residency in the United States and eventual U.S. citizenship. Overseen by U.S. Citizenship and Immigration Services, the EB-5 Program was created in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. There are 10,000 EB-5 green cards available each year, with 3,000 reserved for those who would prefer to invest through a Regional Center. Though a nuanced process, generally the EB-5 Program requires a capital investment of $1 million in a new commercial enterprise, $500,000 if the business is in a Targeted Employment Area. An EB-5 applicant must also create or preserve at least 10 full-time jobs within two years. Applying for an EB-5 green card is a highly documented process that includes extensive vetting procedures.
Similar to the E-2, the business opportunity and investment must be fully developed before moving forward with the application. In other words, the foreign investor must have a franchise agreement, lease agreement and sophisticated business plan to demonstrate the validity of the business. Through the application process, the investor is granted a conditional permanent residence for a two-year period. The condition is lifted when the investor submits a petition for removal 90 days prior to the two-year anniversary of receiving the conditional status. Once approved, the restrictions are removed, and the EB-5 investor receives a permanent green card. Franchise consulting specialists like Torres and Armstrong, agree that E-2 rather than EB-5 investors are much more prominent in the franchise industry.
The investment level of $100,000 to $150,000 is better aligned with a greater number of franchise concepts in the market. Also, the number of E-2 visas distributed each year is not restricted. The idea of starting a business from scratch can seem daunting to any entrepreneur. For foreign investors looking to establish themselves and their families in the United States through business ownership and franchise opportunities, the E-2 and EB-5 visas are ways to achieve both. Similarly, for a franchisor looking for a franchisee who is entrepreneurially spirited, financially qualified and has past business experience, a foreign investor fits the profile. Whether your franchise is booming or has hit a wall in finding qualified franchisee candidates, it may be time to evaluate how your system could benefit from gaining exposure to a growing market of entrepreneurs.
EB-5 refers to “Employment-based fifth preference,” which is a category of immigrant visa classification based on employment creation, under section 203(b)(5) of the Immigration and Nationality Act. The fifth preference refers to the numerical quotas that apply to most employment-based immigrant visas.
EB-5 law requires a foreign applicant to demonstrate that he or she is investing $1,000,000 USD in a “new commercial enterprise” that will create a minimum of ten (10) jobs for U.S. workers. If the new commercial enterprise (and thus the jobs) will be in “targeted employment area,” then the threshold investment amount is only $500,000. A “targeted employment area” is a rural area (a geographic boundary outside a metropolitan area, with a population of 20,000 or less) or a political or geographic subdivision that has suffered at least 150% of the federal unemployment rate for the preceding twelve (12) months.
In addition to proving the job creation and investment in a new commercial enterprise, the foreign applicant will need to demonstrate that the investment funds were acquired legally. The foreign national must also prove that he or she is “admissible” as an immigrant to the U.S.
In 1990 the United States Congress enacted legislation that created a pilot program for foreign investment in “regional centers.” A “regional center” is a business entity, public or private, that has received regional center designation by the United States Citizenship and Immigration Services (“USCIS”). This means that the regional center has proven that investments in projects under its regional center designation will promote economic growth within its geographic parameters. In addition, a regional center, unlike a “stand-alone” EB-5 project, can prove job creation through econometric analysis, and may include indirect and induced jobs in the calculation. This is a significant advantage, because foreign investors in a regional center project do not need to worry about hiring people or showing that they themselves have hired ten U.S. workers.
Other advantages to investing in a regional center project (as opposed to a “stand-alone” investment) are:
It allows for many foreign investors to “pool” their funds in large capital projects;
The foreign investor does not have to actually run the business;
The foreign investor does not have to live near the project he/she has invested in;
Reporting and job creation requirements are handled by the regional center administrators.
Some businesses are particularly well-suited to receive EB-5 financing, because of the types and numbers of jobs they require and because of their financing structure. These include
Incubation and loan program with wholly-owned subsidiaries;
Real estate development with property ownership and management;
Mixed-use commercial/residential developments;
Health services (hospitals, assisted living facilities);
Media software and development;
Large residential developments, including single family homes and condominiums;
Personal services (spas, health clubs);
Certain agricultural uses;
Public works projects and infrastructure;
Logistics and warehousing;
Importing and distribution;
The above list is by no means exhaustive.
In order for a large capital project to be eligible to accept EB-5 financing, it must be associated with an approved EB-5 Regional Center. A project developer may apply for its own Regional Center designation; however, this is a long and expensive proposition which takes a minimum of twelve months and has no guarantee of being approved. Often, a more viable solution is to become associated with an existing Regional Center as a business affiliate, for a fee.
Either way, the project will need to put together a proposal, which will consist of the following:
Comprehensive business plan that complies with EB-5 policy and regulations and includes a marketing plan;
The above should be prepared by experienced professionals to ensure proper compliance with EB-5 and securities regulations.
Once the project developer has completed the above, he/she can begin marketing the project to potential investors. This is normally done using the services of overseas agents.
From my experience working with EB-5 Franchise Buyers, we recommend a qualified attorney or counsel who has experience in this particular segment of work.
Register and one of our trusted advisor will contact you