For many immigrant investors, systemic predictability and stability matter just as much as the potential return on their investment. In fact, many immigrant investors prefer to invest in the United States precisely because of the predictability and stability that our legal and political systems have historically afforded.
The EB-5 Program
For the better part of the last quarter century, immigrant investors who participated in the EB-5 immigrant investor program benefitted from the program's relative stability and predictability. By investing $1,000,000 (or $500,000 in one of the approved regional centers in certain high unemployment areas) in a new job-creating business, investors could become conditional permanent residents in the U.S., and two years later, could have those conditions removed upon showing that each investment created at least 10 full-time jobs for American workers.
The EB-5 program, however, is a pilot program, and its regional center provision expired on September 30, 2015. Even though Congress temporarily extended that provision through December 11, 2015, the entire program faces intense Congressional scrutiny in light of lower-than-advertised job growth and ineffective regulatory oversight. A longer extension of the program seems improbable unless the investment threshold is increased and stricter governmental oversight procedures are enacted.
The EB-1C Alternative
Investors who hold executive or managerial positions in profitable businesses or multinational corporations overseas, and can acquire or grow a thriving U.S. company, find the EB-1C path of permanent residency much more streamlined than the rocky EB-5 route. This is especially true for investors from Mainland China who, because of the overwhelming demand for EB-5 visas from others like them, presently face a two-year backlog on top of the fifteen months processing time to become conditional permanent residents.
The term "EB-1C" refers to section 203(b)(1)(C) of the Immigration and Nationality Act, and is often used interchangeably with "EB-13." To qualify for EB-1C immigrant visa and permanent residency, the executive or multinational manager must be petitioned for by a U.S. company that has been doing business for at least a year. Additionally, the U.S. company must be either a parent, a subsidiary, or an affiliate of the overseas entity, and the individual must have been employed abroad as an executive or a manager for at least one year within the last three years.
The EB-1C Advantage
The underlying purpose of the EB-1C immigrant visa is to foster the transfer of valuable skills and knowledge of commercial practices between American companies and their overseas parents, subsidiaries, or affiliates. By enabling this, the EB-1C offers several tactical advantages over EB-5.
First, an investor who has the requisite experience with the overseas entity does not need to wait outside the U.S. for dozens of months before entering the U.S. in a work-authorized capacity. Instead, the U.S. company can file an L-1A petition on behalf of the investor and upon its approval in as little as two weeks, the investor can enter the U.S. to ramp up U.S. operations. The investor's family members can also qualify for companion L-2 visas, which include work authorization for spouses. So long as they maintain their nonimmigrant status, L-1A visa holders and their families are permitted extensions to remain in the U.S. for a maximum of seven years.
Second, under EB-1C, it is often less cumbersome to document the lawful source of funds than it is under EB-5. Unlike EB-5, where the individual investor must trace and document the lawful acquisition of personal funds, EB-1C requires evidence of the corporate funding relationship between the U.S. and overseas entity. As a result, corporate and financial documentation created in the ordinary course of business, which will establish and maintain that the business entity is in good standing, significantly eases the individual investor's burden of documenting the legitimacy of funds.
Third, unlike the EB-5 program, which has strict investment and job creation thresholds ($1,000,000 or $500,000 of funds and 10 jobs for American workers in the first two years after investor obtains conditional permanent residency), the EB-1C option enables the investor to think long term by hiring employees incrementally in positions that become a regular part of the company's operations. This permits small- and mid-size companies to grow organically rather than hire a handful of workers at once and run the risk of not being able to sustain them over time.
Lastly, the EB-1C path offers greater stability and security by allowing the investor to maintain temporary L-1A status in the U.S. for a period of up to seven years while the EB-1C petition is pending. If the EB-1C petition is denied, then the investor does not automatically lose the underlying L-1A status. Instead, the investor can simply refile the EB-1C petition the very next day or, if needed, several months or years later, once the company has sufficiently grown and the right evidence been gathered. This advantage is particularly attractive to investors with spouses who may be working, and/or children who may be attending school, because a denial of the EB-1C does not automatically jeopardize the family members' status and authorization to remain in the U.S.
The EB-5 visa has traditionally offered a stable and predictable path to permanent residency. The program has yielded many profitable ventures, new jobs for thousands of American workers, and permanent residency for numerous investors and their family members. In the face of backlogs and backlash, however, savvy investors are seeing the EB-1C option for permanent residency as a sound, strategic, and sustainable option.
Akshat Divatia, Director of Immigration Practice at Desh International and Business Law, specializes in providing simplified immigration solutions and creative advocacy to entrepreneurs and individuals. He represents clients in a wide variety of nonimmigrant and immigrant visa matters, including visas for trainees, interns, investors, specialty occupation temporary workers, intracompany transferees, athletes and entertainment groups, religious workers, NAFTA professionals, and permanent residence for companies and self-petitioners. Akshat also finds immense satisfaction reuniting families by helping obtain visas for visitors, fiances, spouses, parents, and battered individuals, in addition to helping permanent residents preserve their status in this country and become naturalized citizens. Akshat can be reached by email at firstname.lastname@example.org and by telephone at 425.455.7611.
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