EB-5 Visa Program for India’s Investors (2 of 3)

Hello EB-5 investors. This is Floyd Mitchell with the EB-5 Investor Portal; the leading resource for information regarding the EB-5 visa. I publish articles based upon my interviews with leading US immigration attorneys and other EB-5 professionals which are produced as podcasts to educate EB-5 investors. Our podcasts are syndicated around the world on search engines, social media, YouTube, Google Podcasts and our own Apple News Channel – “EB5 Investor Portal”.

So, this is not a forum, or a blog post based upon personal opinions or experiences. It is information taken from my many, many hours of interviews with licensed immigration and securities attorneys, securities professionals and others.

I have had the pleasure of interviewing immigration attorney, Swee Shankar of Shankar Ninan & Co LLP. Swee brings a wealth of experience in Immigration and Nationality laws and is an active member of the American Immigration Lawyers Association, New York City Bar Association and the American Bar Association. Swee assists corporations seeking to hire foreign professionals or skilled workers and also assists corporate clients with transferring personnel to company branches within the United States. She also advises clients in U.S. EB-5 investor visa applications.

We covered a range of topics — Are there issues applying for EB-5 for investors from India?, What is the EB-5 process? What is the EB-5 timeline? What is legal source of funds? Do I need an attorney for source of funds? Are there capital restrictions from India? How do I pick a good regional center? What is a direct investment? What is removal of conditions? How do students apply for the EB-5 visa? How do I pick a good regional center project? What are red flags when looking at regional center projects?

This is the second of three articles in which we will cover some of these topics.

Here is a huge topic of discussion and very large decision for EB-5 investors. Should I do a direct investment or regional center investment? I asked Swee to describe the major differences between regional center and direct investments and which scenarios would she would recommend to investor clients from India?

“I always tell people that, if you are willing to open up your own company and spend your time doing that, spend your time in the company, managing your company – that’s your full-time job, okay? If you’re willing to do that, then you can invest your money into your own company. That’s a direct investment. Okay, basically saying I am going to invest five hundred thousand dollars into my company for the purpose of creating ten jobs. America is not so much concerned with the money that you’re giving them, but the fact that you’re creating jobs for the American people.

So that being said, when you do a direct investment, and after you get your I-526 approved and your temporary two-year green card, you must show that you have created ten jobs, full time jobs, prevailing wage salaries, for two years. If you do not show that, you will never get your conditions removed on your temporary green card. And you will never get a permanent green card.

Now, the difference really is between the direct and the regional center, is that in the regional center, all of this has to take place as well. However, it’s not your responsibility to do so. The regional center will create jobs for you. So, your responsibility at the end of the day, is to invest the money and get your green card. Once you invest the money, you don’t really have much else of a responsibility to that company other than being … other than the investment that you make. So those are the two big differences. And I think it really depends on the person who comes to me and wants to know, whether to do direct or regional center.

It really depends on what their goals and ambitions are. If they just want a green card, and they don’t really want to have to worry about doing anything else, I always say, go the regional center route. Now if they actually want to start their own company, and they have experience with this company. And they have experience in this industry. And they think it will be successful. They think that they’re able to employ the ten people, then I say, okay, go ahead and do a direct investment.

I think the reason a lot of attention isn’t given to the direct investments, is because people are scared that they’re not going to be able to create the ten jobs. And what happens if they’re short one job. Or what happens if their business isn’t exactly what they thought it would be when they created the business plan, you know. And if USCIS sees a material change in your business plan, versus what you’re doing, then that can be an issue too. So, you really have to stick to the business that you say you’re going to create, and you have to really be able to show the ten jobs, full time, prevailing wage employment”

I wanted to get some further clarity on direct vs. regional center. So I wanted to be clear the direct investment can be $500,000 if it’s in a Targeted Employment Area but if it’s not, it’s a $1M. So, I asked if a great candidate for the direct investment coming from India may be a small software company that already has a great product, great recurring revenue maybe they just want to relocate to Silicon Valley to hire top engineers and have this international pool of developer that they can hire. That might be a great opportunity for them, is that a good scenario?

“Oh yeah. Absolutely. I mean, that’s a really good idea for many Indians, because many Indian people do have experience with the IT, engineer and computer science world. So absolutely, that’s a great option. But we see direct investments with all types of businesses. I’ve done it for Dunkin’ Donuts. I’ve done it for gas stations. We’ve done it, you name it. It’s been done. So, at the end of the day, as long as you can prove those things, it’s a great idea”

But I was thinking, is it as simple as that? Just the $500,00 investment or are there other factors to take into consideration when weighing direct vs. regional center?

“I’ve noticed a lot of Indian people want to go this route, but they don’t realize how much money that they actually have to put in. Because you’re not only putting in the five hundred-thousand-dollar investment, remember? You’re also paying ten people. Payroll for two years at prevailing wages is much more than five hundred thousand. So, I think that’s where people don’t really realize the difference. So, you really have to be willing to want to own a company. Start a company and have that be the rest of your life, essentially. But it is definitely a great option for people that want to do that, and are willing to do that with their time”.

It sounded to me that the regional center would say it’s almost half the risk. Because with direct investment, you’re banking on yourself as a business person on top of navigating this process with your immigration firm helping you get EB-5. You’re kind of doubling your risk, almost. Is that a safe assumption?

“It’s absolutely half the risk. I mean, like I said, you invest your money and then you kind of sit back. And a lot of these Regional Centers are already approved immigration projects, right? So as long as you can prove that you can source your funds, and your money came in a legitimate fashion, then most everything else is already taken care of. You don’t really have to do much else”.

I change topic to ask about another one of the other top questions in the EB-5 space. When does the investor get their money back?
“It really depends on the Regional Center. But most Regional Centers will give you your money back in five years. And, a lot of them will do anywhere between a half of a percent and one percent interest”.

How about risk? Is there any chance that they will receive a green card, but they won’t get their money back? How certain are you, as their attorney, handling their case, that they will get their money back? How confident are you in saying, “Everything should be great? You should expect this money back within X amount of years, somewhere in that range…

“What I always tell people is, “Your money is at risk. That is the law. I cannot guarantee anything.” However, that being said, if you sign up for a Regional Center, okay, and it is your fault that the I-526 didn’t get approved because you couldn’t source your funds, for whatever reason, then you’re still going to get your money back. I have no doubt that you’ll get your money back. You just might not be the first person that the Regional Center is going to give their money back to. However, if it has anything to do with the Regional Center. For whatever reason, the Regional Center wasn’t able to create the ten jobs, or any other reason to do with the Regional Center. You are going to be the top person on their list to get your money back. And I have never seen a case where they have not gotten their money back. And if that ever happens, there’s lawsuits, after lawsuits, after lawsuits. So, you will get your money back at some point”

I know that when investors have an opportunity to invest in these projects, the projects have gone through some type of vetting system with USCIS. That is, to get the i526 approval there’s a tremendous amount of paperwork and information that has to get submitted to USCIS before they can even start accepting investors. I asked Swee about this.

“Absolutely. So like I said, when you’re investing in these projects, in order for a Regional Center to be approved, they have to go through a very rigorous set of standards. So, the investor really has a high chance of getting his money back”

However, there may be times when the petition is denied, and it has nothing to do with the regional center. I wanted to know the most common disqualifying things that happen throughout the course of the EB-5 process. Is there anything that’s an immediate disqualifier? I understood from our other conversations that source of funds can be challenging but what are the big ones? Swee broke down the process and where issues might arise.

“So, there’s different steps to getting your green card. Any route you take to get your green card. For EB-5 purposes, there’s three different steps. The first one is I-526. The I-526 gets approved as long as you can show source of funds. That’s the main thing, as long as you can show that, it will get approved. The second thing to actually get your green card, there’s two ways you get it. If you’re in the country, what you do is something called an I-485 application, to adjust your status. Now when you apply for I-485, this is when they check, have you maintained your status while you were in this country? And your medical background. Those are the two big things.

Now if you have been out of status for more than six months, you will never get an I-485 approval. Meaning you’ll never get your green card. Same for health. There’s certain tests that immigration does that you have to get. And if you have a certain background, certain negative results, then the same thing applies as a disqualifier. If you’re not in the country, if you’re outside of the country, then you have to go through the consulate. You have to do consular processing and get your visa stamped in order to come into the country and get your green card. Now this works in a very similar fashion. Most consulates, and especially the ones in India, will do the exact same thing. You have to get your medical done. And, well of course, there’s no maintenance of status here, because you’re not in the country. But for this purpose, they’re really just going to look at your medical. And they’ll look at your background. Have you ever had any criminal convictions? Have you ever had any trouble with the law? Have you ever been in the country and overstayed? If so, how long did you overstay for? Are you barred from the country because you overstayed for a year, or two years, or what have you? But either way, they are going to look into your background in order to give you that temporary two-year green card. And after you get the temporary green card, remember that’s when you have to look to the creation of jobs, and that the investment was fully made. That the five hundred-thousand-dollar investment was fully made. Okay? And at that point you will remove the conditions on your two-year green card, and you’ll get a ten-year green card. So, that’s what they’re going to look to at that point”.

I wanted more information the length of the green card. I thought it was like a permanent green card. Is it only ten years, but it’s permanent?
“That’s exactly how it works. So green cards are only given for a ten-year period. So, after the ten-year period, you have to renew it, or you can apply for citizenship. Once you have your green card for five years, you’re eligible to apply for citizenship. So, either you renew your green card every ten years, or you apply for citizenship. You become a citizen. And then, at that point, there is nothing else for you to do”

What does the term “removal of conditions” mean?

“So, the reason they call it removal of conditions is, it’s not a particular condition that’s being removed, per se. But the two-year green card is called a conditional green card. So hence, you’re removing the conditions from the green card to now get your ten-year permanent green card.
Out of curiosity, I wanted to know how many clients that go through all three steps actually get permanent citizenship after that five years? Was it all of them? Swee said “Every single one”.

“And as long as they pass the same test that anyone else is taking for citizenship, they are eligible for, and they will get their citizenship”
I know one common problem is overstaying a visa. So, what about the people who have overstayed their visa? Do they have no shot at ever getting citizenship through EB-5? Or could Swee work with them to help them do the right thing and reapply?

“Well, what happens is, if you overstay for more than six months, you’re barred from the United States for three years. If you overstay for more than one year, you’re barred for ten years. So, if you keep staying in this country, there’s nothing I can do to help you. However, through the EB-5 route, that is. Okay, however, if you leave the country and say, okay, I understand that I’m barred for three years or I’m barred for ten years, but after that I’ll come back in. So, let’s say you get your I-526 approved, and then you’re in the country. You leave the country, you’ve overstayed for one year, or you’ve overstayed for eight months, let’s say. Okay, and then you’re like, all right, I’m going to go back. You go back to your country. You stay there for three years. And then you go through consular processing. You use that approved I-526 and you come in and get your green card. It’s just a matter of time, at that point”

Well, we thoroughly covered a range of topics! I am happy I was able to share to share what I think is great advice, guidance and strategies for EB-5 investors. You can hear the full podcast by clicking on the following link which features the podcast series on the EB-5 Investor Portal https://www.eb5eb5.com/eb-5-podcast/.
Please remember that the information in this article and the podcast series is for informational purposes only and should not be used as a substitute for individualized advice from qualified immigration counsel.