California EB-5 investors must follow the job creation rules

On Behalf of | Aug 17, 2021 | immigration law

Immigration has grown more complex in recent years with legal challenges, changes to the process and more. For people from other countries who want to invest in California under EB-5, there are fundamental requirements that must be adhered to. In addition to the basics of EB-5 investment such as investing in a commercial enterprise that was established after a certain date, was reorganized, expanded and is a specific type of formation like a sole proprietorship, there are also rules for job creation. Understanding these requirements is a critical part of EB-5.

EB-5 and its job creation requirements

If an EB-5 investor wants to move forward with doing business in the United States, it must include job creation. With that, full-time work must be provided for a minimum of 10 employees. The business itself and where it is located will be critical in how it is determined if the investor is following the rules. For example, if it is a new commercial enterprise but its location is not in a regional center, it must create the jobs directly. If it is in a regional center, it does not need to create the jobs directly. It can be either directly or indirectly.

Some investors take over a troubled business in the hopes of fixing it and making it functional and profitable. Troubled businesses are defined as those that existed for a minimum of two years and suffered a net loss of 20% of its net worth within one or two years. This too is assessed under how many jobs it creates or maintains. For a troubled business, the investor can simply maintain jobs to qualify under this rule. It is, however, imperative that the investor show that the number of employees that are already in place will be no fewer than the number during the time before the investment was made. The work must be for at least 35 hours per week to be considered full-time. If employees share duties, then this too can meet the criteria for full-time employee in combination of hours.

Adhering to the EB-5 rules is critical to success

No matter the goal or financial wherewithal a foreign investor is bringing to the U.S., there are basic rules under immigration law and EB-5 that must be followed to be allowed to move forward. One is based on job creation. Since some laws and requirements can be complicated and confusing, before starting the investment process, it is useful to have legal assistance. This can be helpful with following the rules and avoiding problems that can hinder the chance at starting a successful business or turning around a troubled one.