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Can I direct EB-5 investment funds for the purchase of business assets or a share of a business?

By April 28, 2023EB-5 Visa

The EB-5 immigrant investor green card can be a great option for those who have thought about starting or purchasing a business and living permanently in the United States.

One of the requirement for an EB-5 green card is that the applicant must invest either $1,050,000 or $800,000 in an enterprise (the lower amount is an option if the investment is made in a rural area or an area of high unemployment, called a “targeted employment area” or “TEA”). The investment must lead to the creation of ten full-time jobs for U.S. workers. For more details on the EB-5 requirements, please see here.

EB-5 green card applicants will oftentimes attempt to meet the investment requirement by purchasing shares or assets of a separate business. This would be in contrast, for example, to starting a new enterprise that will serve as the entity that will directly employ the required ten employees.

Unfortunately, directing capital toward a separate business (for example, for the purchase of company stock or assets) oftentimes will not qualify for an EB-5 green card. In this blog post, we explore why this is the case, and shed light on how USCIS determines what funds must be available for job creation, as opposed to the purchase of assets or company stock.

The Investment Requirement and Its Challenges

There are a number of hurdles that must be navigated if the applicant plans to purchase shares or assets from a separate business.

One of the fundamental challenges is that USCIS requires that all funds invested by the EB-5 applicant must be available to the legal entity (the LLC or corporation, for example), that is actually creating the ten required jobs – in other words, the company that is actually employing the ten employees. The invested funds cannot be diverted from this purpose.

This was at issue in the case Matter of Izummi, which held that “[t]he full amount of the investment must be made available in the business most closely responsible for creating the jobs.” Matter of Izummi, 22 I&N Dec. 169, 179, 189 (AC 1998). USCIS has issued a number of policy memorandums that have echoed this point, including this one in 2013. The investment made by the EB-5 investor must therefore be in the legal entity that is creating the jobs, which employs the ten qualifying employees.

Similarly, USCIS will discount from the investment amount any funds that are diverted away from the job-creation purpose, including funds that are paid as professional or administrative fees. USCIS makes this point clearly in its Policy Manual as follows:

In cases with a separate job-creating entity or entities, the payment of administrative fees, management fees, attorneys’ fees, finders’ fees, syndication fees, and other types of expenses or costs by the new commercial enterprise that erode the amount of capital made available to the job-creating entity do not count toward the minimum required investment amount.  The payment of these fees​ and expenses must be in addition to the minimum required capital investment amount.

Based on this reasoning, USCIS will scrutinize any suggestion that the invested funds are not being made available to the entity that is actually creating jobs. For example, in Matter of W-Z-, (AAO Dec. 10, 2018), 2018 WL 6982216 (DHS), the Administrative Appeals Office held that the investor could not satisfy the required investment amount where part of the invested funds were diverted away from the job-creating entity.

But what if the EB-5 applicant has directed the invested funds not to administrative or legal fees, but instead toward the purchase of business assets or a share of a separate business? Even here, the same principle would apply. Specifically, again quoting the USCIS Policy Manual: “Purchasing a share of a business from an existing shareholder, without more, will not qualify as an investment since the payment goes to the former shareholder rather than to the [job-creating entity].”


Therefore, where the applicant is purchasing either company stock or assets, it is important that the applicant be able to show that the invested funds first went to the job-creating entity before they were utilized by the job-creating entity for a job-creating purpose – such as purchasing business assets or shares of a business. Otherwise, USCIS may argue that such funds were not directed to the job-creating entity, and therefore cannot count toward the required investment amount.

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