By: Joey Barnett
With the minimum EB-5 investment amount increasing to at least $900,000 on November 21, 2019, Wolfsdorf Rosenthal LLP has been asked numerous times whether an EB-5 applicant can invest less than the current investment level of $500,000 to secure eligibility under the current EB-5 rules. In particular, since South Africans can each take out 1M ZAR on annual basis without clearance from SARS, the question is whether an EB-5 applicant can file now with only investing 2M ZAR (husband and wife), and pay the balance as soon as the SARS tax clearance is received?
Here are three things to know about this option:
1. What EB-5 Law and Regulations Say. The Immigration and Nationality Act states that EB-5 visas are available for those who have “invested (after November 29, 1990) or, is actively in the process of investing, capital” in a new commercial enterprise. The regulations indicate:
To show that the petitioner has invested or is actively in the process of investing the required amount of capital, the petition must be accompanied by evidence that the petitioner has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk. Evidence of mere intent to invest, or of prospective investment arrangements entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing. The alien must show actual commitment of the required amount of capital.
Thus, to qualify as an investment for EB-5, an immigrant investor must actually place his or her capital “at risk.” The mere intent to invest is not sufficient. Additionally, prospective investment arrangements involving no present commitment will also not suffice.
2. How Much Capital Must Be Invested? USCIS has not articulated how much capital must be invested to qualify for an EB-5 visa, in the event the full minimum investment amount cannot be placed prior to filing the I-526 petition. It is best practice to provide a detailed explanation of the lawful source(s) of the entire subscription amount at the time of filing, emphasizing that the EB-5 investor has already identified and sourced all the funds that will comprise the $500,000 principal investment amount. Careful consideration is required in this instance to prevent any inconsistencies that could be deemed “material misrepresentations” which would adversely affect U.S. immigration options in the future.
3. When Must Balance of EB-5 Investment Be Invested? It is critical to demonstrate an EB-5 investor’s present commitment to invest the balance of the principal investment amount when filing the I-526 petition. A partial capital contribution, a signed subscription agreement, and an attestation showing the present commitment to fund the balance within 60-120 days can assist to demonstrate the actual commitment of investing the full amount, not a prospective investment arrangement. Illustrating how and when the funds will be available in the future (a closing date for a real estate transaction, or a bond coming due) is prudent. It’s advisable to complete the full investment amount prior to any action taken by USCIS on the case, and to interfile the remaining “source of funds” documents. Additional evidence showing how the EB-5 investor has already made arrangements or formulated a strategy for transferring the balance into the new commercial enterprise’s account could be helpful, as it demonstrates real and actual steps the investor has already initiated in preparation for the transference of the full EB-5 investment amount.
While it is possible to invest less than $500,000 and file an I-526 petition before November 21, 2019, there are numerous challenges in presenting an approvable case to USCIS. A “petitioner must establish that he or she is eligible for the requested benefit at the time of filing the benefit request and must continue to be eligible through adjudication.” 8 C.F.R. § 103.2(b)(l). In addition, “a petition cannot be approved at a future date after the petitioner becomes eligible under a new set of facts.” See Matter of Katigbak, 14 I&N Dec. 45, 49 (Comm 'r 1971). It is highly recommended that prospective EB-5 investors speak with experienced EB-5 immigration counsel before moving forward with the investment decision.
While the safest route is to invest with the full amount before November 21, 2019, if that is not possible, and you feel you might be able to qualify, contact attorney Joey Barnett at (JBarnett@wolfsdorf.com) to discuss the merits of your case.