Is Canada Taking Our Capital?

How Red Tape Surrounding the EB-5 Program May Be Driving Funds into Canada, Away from the U.S.

The continued economic instability of the United States has left elected officials in all major cities scrambling for vital funds to pay teacher salaries, repair infrastructure, and keep the city clean and safe. As they rearrange funds at the expense of vital programs, Executive Director of Chicagoland Foreign Investment Group, Taher Kameli, says that the answer to our economic woes really lay overseas by utilizing the generally unfamiliar EB-5 program. With a number of conditions and requirements, though, the U.S. EB-5 program can be overlooked by investors for the more convenient Canada Immigrant Investor Program. Kameli weighs in on how raising EB-5 awareness among government officials in the U.S. can help reduce red tape surrounding the program and drive much needed money into our infrastructure and economy.

The EB-5 program in the United States was created in 1990 to entice foreign investors into opening businesses in America to boost the economy in exchange for a green card, allowing for conditional residency for individuals investing between $500,000 and $1 million in a new commercial enterprise. Said enterprise must directly employ 10 US citizens or authorized immigrants full-time and the investor must engage in the business in some form, either directly through day-to-day managerial tasks or indirectly through policy formation. The minimum investment amount varies based on the geographical area, also termed “Regional Center,” and whether or not said area is a “Targeted Employment Area” (TEA) as designated by the state, meaning that said area has an unemployment rate at least 150% of the national average. Similarly, Canada features both the Canada Immigrant Investor Program and the Quebec Immigrant Investor Program, offering business-minded individuals the opportunity to immigrate to Canada with their families by making a five-year passive investment with the government with the option to finance. The return of funds is government-backed and permanent residency status given to investors. The Canada IIP is so popular, in fact, that it’s currently closed until July 1, 2012 due to an influx of applications. Where as the EB-5 program provides temporary, conditional U.S. residency based on the ability of the investment to create jobs, the Canada and Quebec IIPs provide unconditional residency to the investor and their family.

Though the EB-5 program was established over 21 years ago, the vast majority of U.S. lawmakers and government officials are undereducated on or unaware of the program and it’s tremendous potential for revitalizing the United States. Canada, on the other hand, is active in its Immigrant Investor Programs, using it to boost the economy and fund projects throughout the country.

“When taken advantage of, the EB-5 program has the ability to have a significant positive impact on the infrastructure of the United States. The problem lays in the fact that most U.S. law makers and government officials have not been properly educated on EB-5 and thus don’t give it the attention it deserves,” says Kameli. “Foreign investors are drawn to government-backed and supported programs, which is what makes the Canada and Quebec IIPs so attractive. They want to know that their money has the support of the United States government. If more U.S. government officials could come out in public support of the program and make it more attractive to investors, EB-5 could have a tremendous impact on our country.”

EB-5 101

Launched in 1990, the EB-5 immigrant investor program was designed to stimulate the U.S. economy by attracting foreign investors able to create jobs. Often incorrectly labeled an immigration program, Chicagoland Foreign Investment Group recognizes the importance of properly explaining EB-5’s origin, mission, and terminology in order to elucidate the many economic benefits.

 At Chicagoland Foreign Investment Group, we recognize that the EB-5 visa category has been instrumental for both foreign nationals interested in investing in the U.S. and for job creation. The name of the program comes from the fact that this visa is the 5th category of employment based (EB) visas. Ten thousand visas are set aside annually for investors and their immediate family members under the program. Each investment must create at least 10 new jobs.

What Are the Basic Criteria Required for an EB-5 Visa? In order to qualify for an EB-5 Visa, an investor must invest at least $1,000,000, or $500,000 for a project in a “targeted employment area” (as discussed below), in an enterprise that will create at least 10 new full-time jobs for U.S. citizens and legal residents. If the project is an existing business, the 10 new jobs have to be in addition to the existing jobs in the business. Chicagoland Foreign Investment Group can help further demystify the visa application process.

What is a Targeted Employment Area? A targeted employment area is any city, county, census tract or other geographical area accepted by the USCIS that has an unemployment rate over 150% of the national average rate, or a “rural area.” A rural area is an area outside a metropolitan statistical area or outer boundary of any city or town having a population of 20,000 or more.

What is an EB-5 Regional Center? A Regional Center is an entity created by either a public or private group to sponsor projects for EB-5 investors. There are currently about 150 approved Regional Centers, but many more applications are pending with the USCIS and are expected to be approved if their business plans are considered feasible and meet the job creation criteria. According to the trade association IIUSA, Regional Centers have invested over $2.0 billion of foreign capital, creating over 50,000 jobs in the U.S. Chicagoland Foreign Investment Group has the only regional center that allows investors to invest on themselves and play a vital role in their own projects

Who are the EB-5 Investors? EB-5 investors can come from any country outside the U.S., and can even include people who are in the U.S. legally under a temporary visa. In the first three quarters of fiscal 2011, over 70% of all EB-5 investors have come from mainland China and Dubai, where Chicagoland Foreign Investment Group has very strong contacts.

What issue has caused the most problem when applying for an EB-5 visa? The most common problem area has been insufficient documentation of the source of funds. Many people try to disclose the least possible information only to have the file returned with a request for further information.

With the continued economic instability in the United States, the EB-5 program offers a tremendous opportunity to build infrastructure and promote job growth. Chicagoland Foreign Investment group remains committed to both educating and promoting this powerful stimulus program.