Obtaining the EB-1 Green Card from L-1 Visa is Not Possible for Most Small Businesses
by Anthony Olson
Many businesspeople, who plan to maintain a business in their home country, have started a small business in the U.S. with the plan to obtain permanent residence through the EB-1 Multinational Manager and Executive category. However, the vast majority of such people fail to reach the goal of obtaining permanent residence in this category. Why? The general answer is that USCIS’s decision track record in the EB-1 permanent residence and L-1 visa categories indicates that it believes that only the employees of large corporations are worthy of the green card in the EB-1 category, and eligible for extensions in the L-1 visa category. Owners and managers in small businesses need not apply. The specific answer is that in order to qualify, a manager must be at the head of a large managerial hierarchy with several levels of management between him or her and the front-line employees, including having multiple departments. The larger the staff and more complex the hierarchy, the better the manager’s chances of L-1 renewal and permanent residence through the EB-1 permanent residence category.
The case depends primarily on the very subjective and arbitrary determination by the USCIS examiner about whether the immigrant is performing a job that is “truly executive or managerial in nature.” USCIS examines this in light of the job duties stated in the petition, but also in light of how many employees work under the immigrant in the company’s managerial hierarchy. There need to be at least 2-3 levels of management between the immigrant and the front-line workers. Best case, also with several departments, each with a head, multiple levels of management and then the front-line workers at the bottom. If the hierarchy is viewed like a tree, then the immigrant’s chances of success are greatest if their hierarchy is shaped like a broad live oak tree with many limbs, branches, and leaves, than like a palm tree with a narrow trunk and a couple of levels of branches between the top and bottom.
There is no magic threshold number of employees that will make or break the case. That being said, I would figure on having no less than 10 employees, since USCIS does not want to undermine the EB-5 category by making the EB-1 category a cheap alternative to the EB-5 category. It is a matter of numbers and structure: a manager with a complex, multi-departmental structure with 10 employees might qualify, while a manager with 20 employees, but only 1-2 managers between him and 1-19 front-line employees would likely not qualify.
Sophistication of the business is important, as well. A business with a more sophisticated business activity and higher-skilled and educated workers is also more likely to succeed than a business involving low or unskilled labor. For instance, a small technology firm (still preferably with more than 10 employees) filled with university graduates has much greater chances than a lawn care business with unskilled workers (and likely a very un-departmentalized structure).
Although the statutes and regulations for the L-1 and EB-1 categories provide for “functional managers,” in practice, USCIS does not accept the functional manager concept, and so a manager without subordinates and a whole hierarchy beneath him or her has very slim chances of success.
Another factor for an entrepreneur to consider are the hidden costs of what, at first glance, appears to be a cheaper alternative to an investment of $500,000 to qualify under the EB-5 category. Most business owners under the L-1/EB-1 scenario end up dragging down the foreign business from not being able to devote enough time and supervision to it, while trying to build up and maintain the U.S. business. At the same time, if the U.S. business does not meet with initial success, it can bleed the entrepreneur financially, particularly in light of the fact that high staffing levels must be maintained just in order to hold onto the L-1 visa while building up to the point when the immigrant entrepreneur can apply for permanent residence.
When an investor entrepreneur establishes a new business in the U.S., he can obtain the L-1 visa for only 1 year, and is not eligible to apply for permanent residence under the EB-1 category until the business has been in existence for at least 1 year. In order to extend the L-1 at the end of the first year, the entrepreneur must have created at least 5+ jobs in order to have a chance at extending the L-1 visa. If he or she succeeds in extending the L-1 visa, then the clock is still ticking because the L-1 can be extended only up to a maximum of 7 years for an L-1 manager. Seven years seem like a long time, but it is not a long time for building a business large enough to employ 10+ workers. This is particularly the case if the business owner encounters obstacles such as an economic downturn or a shift in demand in the market, given that many products have a life-cycle of just a few years, particularly if they involve rapidly evolving technology.
The L-1/EB-1 multinational manager route is advisable just for those entrepreneurs who have already planned to expand their existing business into the U.S. market, have conducted extensive market research on the feasibility of succeeding on the U.S. market, and have plenty of additional financial resources to see the project through to successful completion in spite of inevitable obstacles and setbacks. Many entrepreneurs come to the U.S. with unrealistic expectations of what they can accomplish. Often they underestimate how competitive the U.S. market is. Alternatively, they think that the lack of a certain good on the U.S. market means that people will immediately realize what they have been missing and buy it, rather than understanding that there are a lot of resourceful businesspeople in the U.S., and if consumers were interested in that good, then someone else would already be selling it to them.
The L-1/EB-1 path to permanent residence can be travelled successfully, but the entrepreneur must be realistic, well funded, persistent, and possibly just lucky to be offering the right good or service at the right time and location.
Conversation, Honesty and Follow Through – Important EB-5 Considerations
by Stephen Parnell of Which EB5
Being available to our clients is critical to the EB-5 decision making process.“This isn't a sales situation, this is life changing.It's making sure our potential clients know they can turn to us to get their questions answered and their fears eased”.
Conversation
I know that high pressure sales work. If it didn't, there wouldn't be so many people out there putting pressure on potential EB-5 applicants.However,I think one of the values of constant communication is that when a "I don’t really understand this program" is heard today it can often turn into a "now I get it; how do we move ahead" tomorrow, but only if you're actively engaged in conversation with EB-5 visa experts who are NOT first and foremost salespeople.
Through continuing conversation, we can often keep a more honest dialogue going than if someone were pushing for the sale. The conversation can allow you more opportunity to explain how your life, your needs, your concerns are different from anyone else’s and how we might be able to help you make a sound decision. Or to discuss your philosophy, or who our team is and the experience they bring to the table. Or... well, anything, really. The point is, if you are engaged in a conversation, things like this occur naturally.
Honesty
I have a strict "No Nonsense" policy. This can make sales difficult, because I don't tell potential clients what they want to hear, I'm going to err on the side of caution.
In my "No nonsense" approach, I always try to present my clients and potential clients with likely and worst-case scenarios. I try to make sure they fully understand that the process of obtaining an EB-5 is not a short-term, quick fix solution, but a long-term approach to their new life in the USA. I've probably lost quite a bit of business over the years by taking this approach, but a happy client is much better to work with than an angry one.
Follow Through
Following through with in-depth conversations go hand-in-hand in establishing a relationship, following up and continuing the conversation is natural. It might take days, weeks or even months, for our clients to decide if this is the right move for them but the relationship is worth the time and effort.
There is a lot more that goes into the EB-5 process, but there are a few key points to consider first. (See our “Step-by-Step Guide” and “EB-5 Flow-Chart”). The goal is to have aneasy to understandprocess that starts with you, our client and melds perfectly into your choice of Regional Center project and the whole EB-5 process; then carries over into all the conversations that potential clients need to have before they make such an important decision.
Over a period of ten years the exchange rate of the Australian dollar against the US dollar has significantly strengthened, with the result that in October 2010 parity between the two currencies occurred. Since then the Aussie Dollar has strengthened further. This was unforeseen ten years ago when the Australian dollar was at a level of only 57% of US dollar value.
The strength and buying power of the Australian dollar is a key reason for the significant increase in Australians immigrating to the USA, as well as some Europeans, who originally settled in Australia, also taking an interest in the USA as they were unable to obtain permanent residence at the time they emigrated to Australia.
For those considering relocation to America the timing has never looked better. Housing costs in many American states are down 50% from their 2005 peak and the cost of living is competitive compared to Australia. Additionally America has some excellent schools and colleges.
In recent years there has been increasing numbers of Australian families relocating permanently to the USA on the EB-5 visa. The favored reasons for wishing to move are: - income, business and employment opportunities and the quality of life for professionals is considered by many as higher in the USA. It is also felt that the USA, situated midway between Europe and Asia/Australia is a more accessible location.
Taxes on income and goods and services are typically lower in the United States. The cost of living is also significantly lower, thus making Australian
immigrants to the US better off financially on a relative comparison.
In order to make the dream of living in America a reality it is important to obtain a permanent residence (green card). There are several different routes available however, most lead to dead ends as they do not provide for permanent residence status. There is no retirement visa as such. Thus, fairly recently the increasingly popular route for high net worth Australians who want to move to the States is the EB-5 immigrant investor visa, which has a pilot program currently available until 2012.
The EB-5 visa requires investment of $500,000 in one of a number of regional centers that have been approved by the US government to attract foreign investment and jobs into America. In return for investing $500,000, usually for a minimum period of five years in one of these qualifying programs, applicants receive green cards for themselves, their spouse and all their unmarried children under 21. After five years they are able to become US citizens if they so wish.
The EB-5 visa is seen by some Australian immigrants as preferential to other more risky options which do not provide the benefits of permanent residency and require ongoing renewals. Successful applicants are free to live, work, retire or study wherever they wish in the USA.
Investment in an EB-5 program is ideal for affluent Australians who want to live the US lifestyle or to improve job or business prospects in the USA.
Is the EB-5 visa your best chance of obtaining permanent residency in the USA?
The EB-5 visa provides green cards for an increasing number of families seeking permanent residency in the USA. The visa requires an investment of $500,000 in one of many regional centers authorized to offer qualifying programs in specific targeted employment areas.
The visa has proved particularly popular with aspiring immigrants from many countries throughout the world, as well as families already in the USA on a variety of visas including the E2, H1B, L1, F1 etc who subsequently faced problems with visa renewal.
When carrying out due diligence on the various EB5 visa programs, some families have often found it extremely difficult to obtain the impartial information necessary to make a knowledgeable decision. All too often those seeking due diligence have discovered that some attorneys and consultants may be working closely with a particular center or have actually visited very few, or indeed no programs, and have very little in-depth impartial, practical knowledge of the needs and desires of EB5 applicants.
Many potential applicants have three specific requirements they need to satisfy prior to investing in a program:
Will my application be successful?
Will the necessary 10 jobs per investor be created so conditions will be removed from the visa after two years?
Will I get my $500,000 back and if so when?
The regional center programs typically fall into three main types:
Equity based – often in property such as hotels, offices, hospitals etc
Loan based – ranging from quasi government infrastructure projects to new developments.
Investment based in a variety of sources.
Those of you researching the EB-5 visa programs have discovered a number of issues that may have far reaching implications and require caution. There is a need to be cautious of claims made by a number of regional centers.
Some regional centers may be strong on selling but may not necessarily offer the most appropriate program for those wishing to see the return of all their $500,000 investment in a timely manner.
Some programs may not create the necessary ten jobs per investor.
Some centers lay emphasis on points which fail to tell the full story, such as they are “government operated” or they “obtain visas quicker”
A very small number of centers have experienced losses on the investment, face dispute, face closure by USCIS or have adverse trade or local press coverage which you need to be aware of.
Some centers work closely with consultants and attorneys who act more in the capacity of agents rather than advocates of independent advice.
Some centers work with commission earning agents in Asia whose clients may not speak English or be fully conversant of what they have signed up for. (This MAY be very important to you without you fully realizing the implications)
These points were highlighted at a series of overseas seminars attended by a panel of experts, including people who had successfully obtained permanent residency in the USA a few years ago, and were therefore in a good position to talk about their experiences.
The EB-5 pilot program, which is currently due to end in 2012, has now been operating long enough for investors in some of the most established programs to have had all or part of their investment refunded and indeed some of the earlier investors have decided to become US citizens.
It is important if you are considering this specialist visa route to obtain advice from experienced experts who have visited many regional centers including CMB, Jay Peak, American Life, New York, South Dakota, California Agriculture, Lake Buena Vista and more and are aware of the pros and cons of these and other centers, otherwise you may only find out, several years after investing, that you may not have been given information that could have been important in choosing the most appropriate regional center program that best matched your needs.
Where do you have to live in the USA if you use an EB5 visa?
A number of the families looking at the hundred plus programs that have been approved by The United States Citizenship and immigration Service (USCIS), to offer the EB-5 investor immigration visa, assume that they should select a regional center in the specific State they wish to live in.
It is interesting to discuss why they should decide to use such a criteria and what the likely implications are.
To begin on an important point of detail, there is no reason why, when applying through the EB-5 regional center visa program, the applicants have to live in the State they are investing in. Indeed you are completely free to live, work, study or retire anywhere you want in the USA regardless of which regional center you choose.
However, certain families feel a degree of reassurance by choosing a program in the State they intend to settle in, believing they can keep a watchful eye on the program of their choice. There are a number of reasons to believe that far from being a positive thing to make such a decision it could be potentially damaging in certain cases.
Given the enormous variety of projects and the huge difference in experience between them, as a general rule the quality of the project should always be the prime reason for choice.
A few projects are completely proven, iapplicants have a 100% success record of both achieving their I-526 applications and I-829 applications and indeed in certain cases a very few programs have been in operation for a long enough period for their original investors to have their funds returned.
Now taking the regional centers in some States as an example, few of the centers have been operating for long enough periods for these statistics to be available. At the time of writing, potential investors have very little in the way of hard facts to back up their $500,000 decision.
Additionally, for those looking at choosing a program focused on non-commercial property, the devastating impact of the real estate crash which hit the USA continues to wreak a devastating impact. There are still masses of foreclosures and short sales dragging down prices and there can be no guarantees that such property will be worth the investment value of $500,000 when it comes to sell it on.
Another point relates to the necessity of creating ten jobs per investor or indeed in the event of a failed business protecting the jobs that would have been ended if the business had folded.
Therefore, given the importance of obtaining the visa, keeping the visa and obtaining the return of the full $500,000 invested, potential applicants may wish to lay greater emphasis on the selection of the best regional center that meets their criteria and is backed up by a substantial and successful track record rather than simply select an unproven one in an area they wish to live in.
It is therefore important when searching for as much information as possible to be given all the facts from an impartial and experienced source.
This question is frequently asked by families who consider the EB5 visa as the best method of gaining permanent residence in the USA.
The EB5 has been an increasingly popular visa for permanent residency in the USA and for many families timing is a key consideration for several reasons:-
You need to raise $500,000 to participate in one of the US government approved regional centers; this may require the sale of your home or business, or cashing in an investment. All these processes may take time.
You may need to plan your arrival in the USA to match with the start of the school or college year for your children.
You may need to have your application approved prior to your children turning 21 so they can be included within a single EB5 visa application.
The actual processing time from when your application is submitted, to the approval of your visa, will depend upon a number of factors such as –
Which regional center you select
Which project within that regional center you chose
Which attorney is preparing your application
The USCIS processing times that are in place when you apply
Whether you are applying from the USA or overseas
Depending on these circumstances total processing time is likely to be between six months and one year.
Currently the EB5 visa regional center pilot program is due to expire in 2012.
The next question many ask is; will the pilot program be extended beyond that date?
The history of the pilot program has seen a series of extensions as the program was about to expire with extensions granted several times. However, to date, despite a series of plans at the time of writing, the program has not been made permanent.
Some argue that as the EB-5 program is tied to the creation of much needed American jobs at a difficult time for the nation’s economy it would seem only logical that the program is made a permanent.
However, no one could ever say that logical thought should interfere with political reality and there are a number of political issues at work that are not always apparent. Although there is strong support by influential members in Congress to make the pilot program permanent, there are other issues to consider.
To some extent all immigration is caught up in the issue of comprehensive immigration reform which has been on the agenda for some time. This is not necessarily a popular issue with voters and with elections in 2012, timing for further extensions or making the program permanent may not be good.
Within congress the Hispanic caucus has its own agenda and with their votes important in any moves for an extension they may not be inclined to vote for the extension of any immigration program, including the EB5 visa pilot program, without obtaining concessions for their own immigration priorities.
When looking at the overall picture there can be no certainty that the program will be made permanent or indeed extended for a further period.
Therefore, if you are considering the EB-5 immigrant investor visa regional center pilot program as your favored choice of entry into the USA it may be prudent to consider starting the process sooner rather than later.
You can find out everything you need to know about a regional center from a tour of the project.
Certainly a tour of the regional centers a potential EB-5 investor has shortlisted can be useful. However, it is important to seek experienced and independent advice on the questions to ask and what to look for. Some tours are more of a hard sell to showcase the selling points of the center and it is very important to get behind the sales talk and discover the hard facts.
Any attorney alone can provide you with all the information you need to make a decision regarding regional center programs.
While it is critical that an experienced EB-5 immigration attorney is used as part of your team in this visa process it is interesting that a number of the leading and most experienced EB-5 immigration attorneys have expressed reservations about attorneys providing detailed advice on which regional center is most appropriate for you. For a start many attorneys are unlikely to have visited the centers and seen behind the scenes, additionally their focus is on the immigration law aspects of the process. There is far more to take account of in the EB-5 process that you need to be fully aware of.
You do not need an intermediary or specialist Consultant as you can obtain all the information you need direct from the regional center.
There are many, many regional centers competing for your business. Some are very good at selling you a place in their program regardless of the merits of your other options. Certainly there are some excellent programs. There are also centers that have had refusals, a center that that has had its designation taken away by the USCIS, a center where there may be concerns regarding meeting the required 10 jobs per investor criteria. Are these regional center projects highlighting these points to potential investors?
There will be no issues if your consultant carries out both paid advice for regional centers and advises you.
A number of EB-5 consultants are paid by regional centers to advise them on setting up a program, marketing and / or sales regarding their program etc. If they are paid to advise centers on how to recruit clients there may also be issues of conflict of interest to consider. Do you want your consultant working for you or the regional center?
The regional center project brochure contains all the information you need.
A brochure is generally a sales document intended to inform and persuade you to buy into a particular program. A number of regional centers seeking to raise funds for a particular project they are promoting begin by recruiting a sales team and produce sales / marketing brochures. Brochures or DVDs are not necessarily the best way to obtain objective information on a particular program.
No one has yet got their money back from any EB-5 program.
This is a point sometimes seen in out of date immigration blogs. The EB-5 pilot program commenced six years ago in its present format and a number of people who invested in the earlier program have recently received their funds back, having said that some programs look a very long option.
The older the regional center the better.
While it is certainly true than a regional center established for many years will have a more measurable track record, there are other issues which should be taken into consideration. For example, programs that may have been popular a few years ago may now face a very different outlook given the current economic climate.
The highest rate of capital return on the project is the most important criteria for me.
Some potential EB-5 visa applicants seeking to choose between the programs, place an overriding emphasis on the rate of return on their capital. The problem is that they are applying for an investment visa. If they invest in a program that fails, or does not create the necessary jobs they could fail to get the conditions removed from their visa and / or lose some or all of their investment. Security of the program, employment creation, and a sound exit strategy so that their investment is returned in a specific time frame, may be more valuable considerations.
Is the EB-5 visa going to buy you the American dream?
The EB-5 visa regional center pilot program is increasingly becoming the visa of choice for suitable applicants. For those prepared to invest $500,000 into one of the government approved regional center offering a suitable program, the reward can be one of the fastest routes into the USA; offering permanent residency for the applicant, their spouse and their unmarried children under 21.
One of the most interesting ways to look into the positives and negatives of the program is to consider the types of applicant the visa may appeal to, using a couple of examples from over 200 families who have successfully made the move and now live their American dream.
A family had travelled extensively throughout the USA both for business and holiday reasons over the past twelve years and wanted to relocate permanently. The family consisted of three groups, the grandparents, their two grown up married children and their spouses plus their children.
Following the sale of various business interests they were looking for a visa to provide secure permanent residence in the USA that would allow them to establish businesses in the USA, but would not be tied to restrictive conditions as would be the case with the E2 and L1 visa.
Having looked at the range of alternative regional center programs their specifications included, a clear and specific exit route after five / six years, preferably a program that loaned the funds rather than a more speculative investment, a program working with government agencies and a program likely to be processed quickly, given that they wanted the younger children to be relocated in time to start school at the beginning of the term.
They decided to invest in a well established center that had an existing program loaning development funds over five years for the expansion of a major state/city facility. They were less concerned about the modest interest rate on the loan as their focus was on minimizing risks as far as possible regarding the return of funds.
The initial I-526 approval took three months and the families were then interviewed at the U.S. Consulate and granted immigrant visas six weeks later. They are now happily settled in America which they feel is living up to everything they dreamed about for all those years.
Another family who had significant agricultural holdings had been monitoring the progress of the EB-5 visa for several years. They had originally purchased property on the east coast and taken lengthy holidays to see how they would adjust to the American way of life. They then purchased other properties for rental, taking advantage of the bottoming of the property market and to build an earnings portfolio for eventual relocation.
They required a visa route that offered permanent residency and green cards for all the family, and wished to increase their property portfolio once they had resettled.
They decided the EB5 pilot program was the most appropriate option and looked into the various programs in more detail. They required a program which had not suffered from long delays and were also concerned that the program had been operating for several years, complied with job requirements and had a clear and specific exit strategy.
After investigating the alternatives and narrowing them down to two options they opted for an infrastructure loan project which to date has a 100% track record of approval. Following clarification on a number of issues they invested $500,000 – there were additional administration and attorney fees.
The family decided to sell their business and property assets which provided them with total net worth well in excess of the required (by the US government) million dollar figure.
After a start to finish period of about six months they are now living the American lifestyle.
Certainly for those who chose an appropriate regional center program the EB-5 visa can be one of the more straightforward routes to life in the USA.
Has anyone got their money back from the EB-5 visa?
Two questions frequently asked by people considering the EB-5 visa are, has anyone who has invested had their money back and will I get my money back?
The US Government requirements for the visa categorize the investment must be at risk. It has been reported that there have been occasions when salesman and agents may have said otherwise or offered guarantees however, any such guarantees could make your application void.
Simply because the investment has to be at risk does not mean it has to be needlessly risky. There are, among the 130 programs, some that might seem higher risk than others.
The EB-5 pilot program has been operating under its present guidelines for approximately six years. When it began there were very few centers offering the program so there has been very limited time for centers to have reached the return of funds stage.
To date the author is aware of two regional center programs that have repaid their earliest investors. One program has repaid in full the $500,000 investment, the other program has repaid less than the $500,000 although there are specific reasons for this. There is now evidence of repayment in full in a specific case with two others centers preparing to repay investors in the next year.
There has also been a couple of cases where applicants lost their investment to alleged fraud although this was not with a regional center but concerned alleged payments made to a third party representing themselves as an agent who did not pass funds through to the center.
The exit strategy for the return of funds is a fundamental consideration to many looking into this visa and many have reported frustrations that a number of regional center sales agents are, to say the least, unclear on this point or give a answer filled with ifs, buts and maybes!
Clearly it is a fine line between providing guarantees that cannot be given under USCIS requirements but at the same time minimizing the risk of loss as far as possible.
The range of programs available is certainly very mixed and there are a few programs available which have a fixed term period and at least specify the period of funds return in writing, rather than simply suggest it. It is possible to identify programs offering fixed term loan programs as well as programs that enable ownership of a specific property asset in a specific time period which enables a sale dependant on market circumstances.
A lot has been learnt from analyzing the statistics and then talking to the people who have been through the process and now live happily in America. If you would like to talk to experts about these findings contact Which EB5
