01 Sep What is an At Risk Investment?

In order to be successful in securing EB-5 Visa status, all EB-5 investors must Invest In A New Commercial Enterprise that either creates or preserves at least 10 permanent full-time jobs.  The minimum qualifying investment is $1,000,000 while the minimum qualifying investment either within a high unemployment area or rural area in the U.S. is $500,000 (defined as a Targeted Employment Area).[1]

eb-5 business plan

Additionally, according to 8 C.F.R. § 204.6(j)(2)[2], the EB-5 applicant must be able to show that s/he “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 (emphasis added).”

The regulation does not define what “at risk” means, so we need to look at case law to determine what USCIS uses as a guide.  It is clear that if the agreement indicates that the investor is guaranteed even a portion of a return on his/her investment, then the investment will not be considered at risk.[3]  In the case, Matter of Izummi, 22 I&N Dec. at 183-188, it was determined if the investment is governed by a redemption agreement which protected against the risk of loss of the capital, then this was not an at-risk investment.  Moreover, there cannot be an agreement that the investor can demand a portion of the capital or ownership such as real estate after obtaining conditional lawful permanent status.[4]

The law further requires that the investor cannot get a return on the principal amount invested until after the I-829 stage. This stage is usually approximately four to five years after the initial application has been filed.  Choosing a reputable Regional Center is an important part of the process and to keep in mind that no center should guarantee a return on investment because this is a clear violation of the EB-5 requirements.

In conclusion, EB-5 investments MUST be at risk to qualify. Therefore, it is imperative for investors to utilize the services of a professional team to provide the correct guidance and to perform appropriate due diligence (as discussed in a previous e-Council Inc.com article) to ensure that the prospective project qualifies for EB-5 and/or for EB-5 investment. Otherwise, if the regulations are violated, then USCIS will deny the petition.

To find out about professional, well-researched, articulate, expository narrative Visa Business Plans, whether for EB-5 or any other business-related Visa, as well as a variety of ancillary services, all of which are designed to specifically address USCIS’s concerns, contact e-Council Inc.com at info@ecouncilinc.com.

eCouncilInc.com’s website, newsletter and other forms of communication contain general information about legal matters. The information is not legal advice, and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.

[1] A targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate.  A “rural area” is defined as any area not within either a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more (based on the most recent decennial census of the United States). 8 U.S.C. § 1153(b)(5)(B)(ii), (iii); 8 C.F.R. § 204.6(e).

[2] http://www.law.cornell.edu/cfr/text/8/204.6

[3] http://www.justice.gov/eoir/vll/intdec/vol22/3360.pdf

[4] Id at 184