For those interested in the EB-5 Immigrant Investor Program, a common question is whether you can purchase an existing business and count that purchase towards the required EB-5 investment. The answer is yes, you can buy a business, but there are specific stipulations regarding the investment amount.
Understanding the EB-5 Investment Requirements
The EB-5 program is designed to stimulate the U.S. economy through job creation and capital investment by foreign investors. To qualify, an investor must make a minimum investment of $800,000 in a Targeted Employment Area (TEA) or $1,050,000 in a non-TEA. Importantly, this investment must directly lead to the creation of at least ten full-time jobs for U.S. workers.
Investment Exclusions
When you purchase an existing business, the money used to buy that business typically cannot be included in the EB-5 investment amount. The rationale behind this is straightforward: the primary goal of the EB-5 program is job creation. Simply buying a business does not necessarily create new jobs; it often only changes the ownership. Therefore, after purchasing the business, you must invest an additional $800,000 or $1,050,000 into the business to qualify for the EB-5 visa. This additional investment must contribute to creating at least ten new full-time positions. If the funds are invested in the business (for example, put in the business bank account and then spent), then the funds can be included in the required investment. Also, while you cannot include the amounts as investment in the first scenario, an applicant could invest another $800,000 or $1,050,000 in the business and use that to create jobs.
Why Existing Jobs Don't Count
The EB-5 visa’s focus on job creation means that purchasing a business with existing jobs does not fulfill the program’s requirements. The funds used to buy the business are seen as a transfer of ownership rather than an infusion of new capital that would result in job creation. The U.S. government mandates that the investment directly results in the creation of new employment opportunities to stimulate economic growth. As such, if you buy a business and the business had 10 employees for example, you would have to invest the required funds and create 10 more jobs.
Conclusion
In summary, while buying an existing business can be a part of your strategy to obtain an EB-5 visa, it is crucial to understand that the purchase price itself will not count towards the investment amount required for the visa. You must invest additional funds that lead to the creation of new jobs to meet the EB-5 criteria.
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