Options for investing in an existing business

[Post updated 7/21/2021] By far the easiest and most common scenario for EB-5 involves investment in a start-up business or brand new project, but investment in an existing business can qualify under certain conditions. I’ve divided this post into three sections: rules, application, and examples.


To quote USCIS Policy Manual, 6 USCIS-PM G (November 30, 2016) : “The EB-5 Program requires three main elements: (1) an investment of capital, (2) in a new commercial enterprise, (3) which creates jobs.” Investment in an existing business can color compliance with each of these three basic requirements.

The investment of capital requirement

The requirement to invest capital has many facets, but two particularly may become issues in existing business scenarios:

  • The regulations state that investment is a contribution of capital, not simply a failure to remove money from the enterprise. (This means that a petitioner wanting to apply for EB-5 based on his own existing business still needs to show a contribution of new capital, not just demonstrate that he has reinvested $500,000 or $1 million worth of proceeds back into the business over the years.)
  • To count as “invested,” the full amount of EB-5 capital must be placed at risk (i.e. deployed in and by the new commercial enterprise for job creation). (This means that if a petitioner invests to acquire an existing business, she must be sure to channel the acquisition and capital through the NCE – arrangements directly between the petitioner and former owner do not count. And the NCE had better allocate some portion of the investment to its own start-up and capital costs, not only to acquisition costs, to emphasize that the investment is linked to job creation by the NCE.)

The new commercial enterprise requirement

Since 2002, EB-5 investors are not required to personally establish a new commercial enterprise. They can invest in an enterprise formed by someone else some time ago. But the enterprise they invest in has to be technically “new,” and EB-5 policy provides exactly three ways to satisfy this requirement (see 6 USCIS-PM G Chapter 2(C) “New Commercial Enterprise”).

  • The enterprise is “new” because its business was originally established after November 29, 1990; or
  • The enterprise is “new” because its business, though established before 11/29/1990, has been restructured or reorganized to such an extent that a new enterprise results (I have a post about what this means); or
  • The enterprise, though established before 11/29/1990, has been or will be “substantially expanded” (with new investment resulting in at least a 40% increase to the net worth or number of employees).

Which enterprise in the EB-5 deal needs to qualify as “new”? The EB-5 precedent decision Matter of Soffici clarifies that in a direct EB-5 case: “It is the job creating business that must be examined in determining whether a new commercial enterprise has been created.” For example, if the immigrant invests in Entity B which purchases Hotel C, then Hotel C needs to qualify as “new” since it’s the job-creating business.  The precedent decision Matter of Izummi clarifies that for a regional center case, only the entity in which a petitioner invested needs to qualify as a “new commercial enterprise,” not the job creating entity where the funds were ultimately to be deployed. So for a regional center case where EB-5-funded Entity A makes a loan to Entity B which purchases Hotel C, only Entity A would have to qualify as “new,” not Hotel C.

The job creation requirement

The options available within the EB-5 job creation requirement can be summarized as follows:

  1. Ten new qualifying jobs per EB-5 investor, in the case of a brand new business with no pre-investment employees; or
  2. Ten new qualifying jobs per EB-5 investor, over and above preservation of all pre-investment jobs, if expanding an existing business originally formed post-11/29/1990; or if investing in a pre-11/29/1990 business that has been restructured/reorganized; or
  3. Ten new qualifying jobs per EB-5 investor above pre-investment employment level, and simultaneous overall 40% increase in the total number of jobs, if seeking to qualify as substantial expansion of employment in a pre-11/29/1990 business; or
  4. Ten preserved jobs per EB-5 investor, while not allowing total employment to sink below pre-investment levels, if the enterprise qualifies as a “troubled business” as defined in the EB-5 regulations. (A business that “has incurred a net loss four accounting purposes … during the twelve or twenty-four month period prior to the priority date on the alien entrepreneur’s Form I-526, and the loss for such period is at least equal to twenty percent of the troubled business’s net worth prior to such loss….”)

In this list, #1 is the simple option, and that’s why the majority of EB-5 investment goes into brand new enterprises and projects – into businesses that didn’t have any job creation prior to EB-5 investment. If EB-5 investors enter an enterprise mid-stream, then it’s generally necessary to look backward as well as forward, and to document and discount the jobs in place prior to EB-5 investment before counting those resulting from/following after EB-5 investment. EB-5 investors may be able claim credit for jobs created before the enterprise received EB-5 funds if there is a good nexus argument — for example, if a bridge financing agreement shows that EB-5 investment was contemplated, even though not actually received, before job creation occurred. Or EB-5 investors may claim credit for preserving existing jobs, rather than creating new jobs, if they can show that the enterprise meets the narrow regulatory definition of a “troubled business.” But be aware that the EB-5 “troubled business” definition is very narrow and precise (see 6 USCIS-PM G Chapter 2(D) subsection 4 “Measuring Job Creation/Troubled Business”) and doesn’t cover all types of business that may be failing or losing money prior to EB-5 investment. (In the above list, note that options #1 and #4 apply to a regional center job-creating enterprise but #2 and #3 do not, since the regional center JCE is not required to be new itself, only to create new jobs.)

It’s important to keep in mind that “invest in a new commercial enterprise” and “create jobs” are two separate requirements, and both have to be satisfied. Showing that a business has been “substantially expanded” takes care of the NCE requirement but is not an exemption to the job creation requirement. Showing that a business qualifies as “troubled” affects the job creation requirement but is not an exemption to the NCE requirement.


Direct EB-5: If you’re considering using direct EB-5 investment to acquire/expand/rescue a business that’s been around for a while and already has employees, then consider the following questions:

  • Can I document when this business was first established? (If the business history is undocumented, or if the business was definitely around before 11/29/1990, even if under another name and other ownership, then USCIS will not accept it as a “new” business absent fundamental changes in the form of restructuring/reorganization or substantial expansion – both of which options can be tough to accomplish.)
  • Can this business support creating 10 new jobs/investor plus preserving all existing jobs? If not, is it possible to show that the business meets USCIS’s narrow and troublesome definition of a “troubled business”?
  • Do I have access to detailed payroll records that document employment prior to EB-5 investment, including evidence showing which positions were full time?
  • Do I have access to financial records that give the detail needed to support a “substantial expansion” or “troubled business” case, if required?
  • If I’m acquiring and expanding a business, will my qualifying investment cover significant costs associated with the job-creating expansion?
  • Can I bypass the above complications by showing that I’m merely acquiring some assets from a defunct business, not taking over an existing business, or that my investment commitment preceded job creation? (See Question 4 in the 2/26/2014 Stakeholder Engagement notes for discussion. The key sentence: “The nature, timing, and extent of the asset purchase will be evaluated to determine if this is simply an asset purchase in the course of operating and growing the new commercial enterprise, or if the asset purchase is more likely the acquisition of an existing business.”)

Regional Center EB-5: If you’re considering using regional center EB-5 investment to acquire/expand/rescue a business that’s been around for a while and already has employees, then consider the following issues:

  • It doesn’t matter when the job-creating business was first established, so long as EB-5 investors first put their money into a new entity that then makes an investment in the existing business. In a regional center deal, only the NCE has to qualify as “new,” not the JCE.
  • It does matter that the job-creating business had jobs prior to EB-5 investment. Consider how it’s possible to count and document pre-EB-5 investment jobs (this will be required), and whether the business can (1) support creating 10 new jobs per investor plus preserving all existing jobs, or (2) meet USCIS’s narrow definition of a “troubled business,” or (3) argue that investment just purchased assets, not an existing job-creating business.


The following are examples of decisions on EB-5 cases that involved an existing business.

Examples from Precedent Decisions

  • Matter of Soffici: In 1997 the direct EB-5 petitioner invested in Ames Management Inc., a company incorporated in 1997. That same year, Ames Management purchased a Howard Johnson’s Motor Lodge that had been in operation about 24 years and was an on-going business at the time of purchase. The petition was denied in part because “A few cosmetic changes to the decor and a new marketing strategy for success do not constitute the kind of restructuring contemplated by the regulations, nor does a simple change in ownership. Therefore, it cannot be concluded that the petitioner has created a new commercial enterprise.” Furthermore: “A petitioner who acquires a pre-existing business must show that the investment has created, or at least has a reasonable prospect of creating, 10 full-time positions, in addition to those existing before acquisition. The petitioner must, therefore, present evidence concerning the pre-acquisition level of employment. Simply maintaining the pre-acquisition level of employment is not sufficient, unless the petitioner shows that the pre-existing business qualifies as a ‘troubled business.’”
  • Matter of Izummi: The regional center EB-5 petitioner invested in AELP credit company (an enterprise established in 1996) that made loans to a variety of small export companies (job-creating enterprises).  When applying the “new commercial enterprise” requirement in this case, USCIS looked at AELP only, not at the job creating entities where the funds were ultimately deployed. (As an aside, also Izummi concluded that the petitioner should have been personally involved in establishing the business but this requirement was later removed.)

Examples from Non-Precedent Decisions on Direct EB-5 Cases

  • Mar312006_01B7203: In 1999 the petitioner invested in FME, incorporated in 1999. However, prior to incorporation, FME was a division established in 1989 within a larger company. USCIS was “unable to determine whether, by incorporating FME, the petitioner expanded, reorganized or restructured the FME division.”
  • Mar302007_01B7203: The petitioner purchased a property to start a horse breeding business. In reviewing the evidence, USCIS concluded that the petitioner had purchased an existing farm and would need to provide evidence of employment at the farm prior to the sale in addition to the creation of 10 new jobs above those already working at the farm at the time of sale. The petitioner responded by providing a letter from the previous owner of the farm, who stated that she only sold the property to the petitioner, and moved her own business to a different location. The sales contract included the property only, no equipment or horses and did not reference any good will, any assumptions of liabilities of the previous business, or employees. The AAO accepted that the record was consistent with the petitioner’s claims, and the AAO withdrew USCIS’s finding that the petitioner purchased an existing business (though still denied the case for other reasons).
  • Jan162009_01B7203: In 1997 the petitioner invested in Finatex International, incorporated in 1996. The original business now operated by Finatex was established in 1987, but the petitioner failed to submit any evidence that Finatex’s net worth or employment has expanded by 40 percent, or that anyone reorganized the business.
  • Jan282009_01B7203: In 1993, the petitioner’s company purchased an operational hotel out of foreclosure. USCIS found evidence that the hotel had been in operation since at least 1981, declined to credit that bringing a hotel back from foreclosure must automatically qualify as restructuring or substantial increase to net worth, and insisted on specific documentary evidence to support eligibility.
  • Mar272009_02B7203: The petitioner’s company purchased an operational hotel and renovated it, including adding a miniature golf course, fitness center, business center, and free breakfast. The petitioner claimed that he had “reorganized” the hotel, but USCIS found that “While these renovations may have expanded the services the hotel offered its guests, it is not clear that these renovations reorganized the business such that a new commercial enterprise resulted; the hotel remained a hotel.”
  • Mar302009_01B7203: The petitioner invested in a company that purchased an operational motel, and is converting the motel into condominiums. USCIS agreed that this conversion sufficiently reorganizes the business such that a new enterprise results, but found that the petitioner failed to show how the business would generate new employment or even maintain current employment.
  • Jul282009_01B7203: The petitioner invested in Kuiper Dairy, a newly-formed entity that purchased assets from Cross Timbers, an existing dairy. Looking at the asset purchase agreement, which included operating data as well as supplies and equipment from Cross Timbers, and which revealed that Cross Timbers was an on-going business at the time of purchase, USCIS questioned whether Kuiper was really an original business (even though Kuiper did not assume all the rights, duties, and obligations of Cross Timbers). Changes such as switching to higher-producing cows, changing distributors, and adding feed production were not judged to constitute significant restructuring or reorganization of the dairy. And even if the record had shown a new commercial enterprise, it failed to show employment creation. “Nothing in the regulations suggests that the creation of a new commercial enterprise through the restructuring, reorganization or expansion of an existing business allows the petitioner to count the preexisting jobs as ‘new’ even if the employees themselves are replaced. The petitioner may only rely on employment maintenance if reconstructing, reorganizing or expanding a troubled business.”
  • Mar152010_01B7203: The petitioner invested in an enterprise incorporated in 1995 that acquired an hotel built in the 1950s. “The record does not establish whether or not it was an operational hotel at the time of purchase by the commercial enterprise at issue in this matter. Without further documentation, we cannot conclude that the petitioner has invested in a ‘new’ commercial enterprise…”
  • APR162013_02B7203: The petitioner purchased a bank-owned hotel. However, USCIS did not accept this as a “troubled business” because the petitioner had limited access to the previous owner’s financial records and couldn’t document the specific net loss and net worth figures required to satisfy the regulatory definition of a troubled business. “The mere fact that the hotel was operating at a loss is insufficient to establish that it constituted a troubled business under the regulation.” Furthermore, even if the hotel had qualified as a troubled business, it was constructed between 1963 and 1981 and therefore does not constitute a “new” commercial enterprise, absent restructuring/reorganization or substantial expansion. And even if the hotel had constituted a troubled business, the petitioner “failed to show that he meets the statutory employment creation requirement, because he has failed to provide evidence that the number of existing employees is being or will be maintained at no less than the preinvestment level for a period of at least two years.”
  • MAY122014_01B7203: In 2012, the petitioner invested in an existing auto parts business (founded in 2011?) that had seven employees at the time of his investment, and anticipated five or six more jobs following investment. He did not claim the NCE as a troubled business. USCIS/AAO agreed that the petitioner did not meet the employment creation requirement because (1) he did not anticipating creating at least 10 jobs in addition to pre-investment employment and (2) the petition was missing “required initial evidence” of Form I-9 for pre-investment employees.
  • MAY032016_01B7203: The petitioner purchased two gas stations through bankruptcy court following the previous owner’s Chapter 11 bankruptcy liquidation, reopened them under his new company, and claimed this as creation of a new business with new job creation. USCIS/AAO declined to credit the business or jobs involved as “new” despite purchase from bankruptcy, because the purchase documents did not unambiguously show that the business was non-operational prior to sale, and that the petitioner merely purchased assets, not a business.
  • AUG162016_01B7203: In 2012, the petitioner organized a new limited liability company and purchased an existing truck stop for which the establishment date was unknown. However, the petitioner was able to document that the truck stop had at least not existed as recently as 1996, and therefore the enterprise was accepted as “new” i.e. post-dating 11/29/1990.  However, the petitioner failed the job creation requirement. “Although the Petitioner states on appeal that the property was vacant at the time of purchase, she did not provide sufficient documentary evidence to support that contention. The record does not resolve whether the gas station was operational at the time of sale. Even with a break for renovations, any jobs at the renovated station would not necessarily be new. …As the record does not resolve how many employees the prior station had, the Petitioner has not demonstrated the creation of 10 new jobs.” Furthermore, AAO questioned whether funds were really made available to the NCE. “Petitioner has not shown that the purchase of someone’s business interest from that individual necessarily involves making the investment available to the job creating entity” and “The Petitioner has not documented that the NCE ever received the Petitioner’s investment and used those funds for start-up or other capital costs.”
  • FEB012017_01B7203: In 2013, the Petitioner invested in a holding company that had started doing business in 2003. The company operated several retail stores prior to her investment, and opened another store following her investment. The Petitioner claimed the jobs associated with the new store. USCIS denied the I-526 petition, because the record wasn’t clear about which jobs were really new. “For the purposes of calculating job creation, that particular __ store is not legally distinct from the other stores that were already owned and in operations by the NCE … Although the record contains payroll documentation for the NCE which show that it employed a number of individuals in 2013, the Petitioner has not documented which positions were pre-existing prior to the Petitioner’s transfer of funds to the NCE.” USCIS also noted that while the new store may have created new employment, the NCE’s total payroll across all stores fell between 2013 and 2014, and thus “it appears that the number of individuals employed by the NCe decreased, not increased, after the Petitioner’s transfer of funds to the NCE.” When the Petitioner offered a plan for the NCE to open yet another store to reach the required employment, USCIS responded that this would be an impermissible material change.
  • FEB282018_01B7203: The Petitioner invested in an enterprise that purchased a golf course. USCIS looked at the golf course website, which indicated that the course was originally built in 1989 — thus not apparently a “new” in the sense of having been formed since 1991. The Petitioner submitted the sales contract, which specified that the golf course was in receivership and “currently not in operation” at the time of sale. The former owner affirmed that it employed only two or three maintenance workers at the time of sale. “While the purchase of property from a defunct business does not preclude a finding that the ultimate commercial enterprise is “new:’ the Petitioner has not met his burden on this issue. At the outset, the record does not resolve when the course closed and the sales agreement indicates that the NCE will assume the seller’s tangible property, including food, goods and inventory, licenses, and name. Thus, the Petitioner has not created an original business. 8 C .F.R. § 204.6(h)(l ). In addition. the Petitioner has not claimed and the record does not establish that the NCE restructured or reorganized the golf course such that a new commercial enterprise resulted. 8 C.F.R. § 204.6(h)(2). Rather, the job-creating business remains a golf course. See Soffici, 22 I&N Dec. at 166 (holding that making cosmetic improvements and changing ownership was insufficient restructuring or reorganization to establish a new commercial enterprise). Finally, for the reasons discussed below with respect to job creation, the Petitioner has not sufficiently documented that he has expanded the net worth or number of employees by the necessary amount. 8 C.F.R. § 204.6(h)(3). …Given that two or three employees were already working at the golf course, the NCE would need to employ at least 22 full-time employees total. The record does not document more than 19 full-time employees at any one time, and that number decreased to two in the most recent payroll records.”
  • AUG142018_02B7203: The Petitioner incorporated a new entity in November 2014, and filed I-526 based on his investment in that entity as a “new commercial enterprise.” The I-526 filing did not disclose that the initial investment was used to purchase a preexisting business, but USCIS figured it out and denied the I-526. Upon further investigation, AAO decided that the purchased business did at least qualify as “new” (referencing Articles of Incorporation from 1995), and that the “invest” requirement was met because the petitioners funds were being used in the business. However, the petition was still denied, because “the record lacks payroll, taxes, and other data to establish how many individuals [previous business owner] employed at the time of the NCE’s purchase. The Petitioner, therefore, has not demonstrated how many full-time positions he must maintain in addition to the ten he must create.”

Examples from Non-Precedent Decisions on Regional Center EB-5 Cases

  • MAR252016_02B7203: The petitioner invested in a limited partnership formed in 2013 that deployed capital in a hospital established in the 1960s. In its denial, USCIS cited Matter of Soffici and indicated that the NCE requirement wouldn’t be met unless the hospital were restructured or substantially expanded. (Soffici deals with a new enterprise’s purchase of an old hotel and says “It is the job creating business that must be examined in determining whether a new commercial enterprise has been created”.) AAO countered that: “We disagree with the Chief’s analysis. Soffici, unlike this case, did not involve a regional center project.” AAO argues that the relevant precedent is rather Matter of Izummi, which did deal with a regional center case, and “In Izummi, when determining what constituted a ‘new commercial enterprise’, we reviewed the date of creation of the entity in which a petitioner had invested or intended to invest, not the job creating entity where the funds were ultimately to be deployed.”

Portfolio investments, existing business

Noticing traffic to old articles about EB-5 investments that involve diversification and existing business, I’ve re-written the following posts with reference to more recent official and unofficial guidance from USCIS.

Listening Session (EB-5 regs), EB-5 as securities (Hui Feng), RC Audits, RC List Changes

EB-5 Immigrant Investor Program Engagement July 13

At the EB-5 listening session on July 13, the USCIS participants stuck to their resolve to listen only, and did not provide input or feedback. The call solicited stakeholder comments on the questions raised by the Advance Notice of Proposed Rule-Making, which addressed regional center designation and participation and exemplar project approval. The ANPRM inspired few written comments to its preliminary questions, and this call also got tepid response. What did USCIS want to know from us, beyond what those of us who care said already in our written comments? USCIS would not specify, and we weren’t sure what to say. The Wolfsdorf Rosenthal blog has diligently summarized stakeholder comments, and my recording is available for anyone who’s really interested. I hope USCIS learned something from the call, but I did not. People with more to say on the designated topics of RC life-cycle (designation, participation, termination), RC exemplar process, RC compliance audits, or indirect job creation methodologies may email ipostakaeholderengagement@uscis.dhs.gov.

USCIS let slip one bit of info. Lori MacKenzie said that “the agency is working to finalize that rule” — referring to the regulation that people care about, the NPRM dealing with investment amounts and TEAs. No indication of timeline, however, or whether the listening session call reflects intention to combine NPRM and ANPRM topics in one new rule. (On July 3, Senators Dean Heller, John Cornyn, Rand Paul, and Thom Tillis had sent DHS a letter asking that the agency not move forward with the proposed EB-5 regulations. The listening session indicates that DHS is indeed moving forward, however slowly.)

Here is my favorite listening session caller comment, from a Mr. Fuentes in minute 45: “We have a bottleneck of processing in an environment where resources are not the limit.” Yes – that’s exactly what’s wrong and fixable in EB-5. So many problems for EB-5 projects and investors result from the fact of long processing times, and long processing times are traceable to constraints that need not exist in a program of multi-million-dollar projects and high-net-worth immigrants. I’ll write more on this soon.

The call also reminded me that we need to talk more about direct EB-5, and the kinds of business and investment that are and are not workable in that environment. Purchasing an operational existing business rarely works for direct EB-5. The history of AAO denial decisions is thick with business acquisition cases that foundered on the “new commercial enterprise” requirement and/or the requirement to create new jobs. EB-5 rules specify that mere ownership change does not make an enterprise or jobs in that enterprise new. I have a couple related posts (one on the difference between direct and regional center EB-5, and one on options for investing in an existing business), but see the need for a simpler article addressed to entrepreneurs contemplating direct EB-5.

EB-5 and Securities Law

Immigration lawyers happen to be well-placed to match EB-5 investors to EB-5 projects, and are pressured by the market and tempted with commissions to play a match-making role. This role is perilous, however, considering securities laws. In 2015 and 2016, the SEC made examples of several immigration lawyers who had received transaction-based compensation for facilitating investments, and of one of the regional centers that paid such compensation. The message: it’s illegal to be on the giving or receiving end of payments to someone acting as a broker without appropriate license.

One of the law firms targeted by the SEC fought back. Hui Feng (subject of a complaint published in December 2015 by the SEC against himself and his firm Law Offices of Feng & Associates, P.C.) argued that the SEC’s claims fail because EB-5 investments are not securities and the immigration lawyer does not act as a “broker” when receiving finder fees. He pointed out that EB-5 investments are primarily motivated by the visa, without expectation of profit, that his commissions were contingent on visa approval rather than in connection with securities sale, and that the attorney role has its own fiduciary duties and that broker requirements are inapplicable – i.e. the EB-5 process and investment and lawyer’s role are fundamentally immigration matters, not securities matters and not the SEC’s business. (My layman’s paraphrase; see the court filings for the actual legal arguments.) The US District Court, Central District of California, however, has come down on the SEC’s side in its Motions for Summary Judgment (June 29, 2017). The decision has the longest discussion I’ve seen yet in support of the point that yes, EB-5 investments are securities. It also enumerates the activities supporting the conclusion that yes, this immigration lawyer acted as a broker, and explains why the fee arrangement details were material and should have been disclosed to investors and regional centers. If you pay or receive EB-5 finders fees, pay attention to this decision. You may also want to review IIUSA’s Best Practices for Engaging with Sales Intermediaries.

Regional Center Compliance Audits
The Regional Center Business Journal has a helpful article by Mariza McKee, Kimberly Hare, and Clete Samson “USCIS Compliance Audits – Preparing Regional Centers for the First Wave”

RC List Changes
USCIS continues to cull the list of approved regional centers, with 50 terminations so far this year. 2017 termination letters haven’t been published yet, but I’ll guess that most of these terminations are for lack of recent activity.

Additions to the USCIS Regional Center List, 6/26/2017 to 7/17/2017:

  • No new regional centers.

New Terminations:

  • North Country EB-5 Regional Center, LLC (New York) Terminated 7/7/2017
  • Guam Strategic Development LLC RC (Guam) Terminated 7/7/2017
  • Good Life EB5 Georgia Regional Center, LLC (Georgia) Terminated 6/30/2017
  • Tri-Cities Investment District, LLC (California) Terminated 6/30/2017
  • Prosperity Regional Center (former name U.S. Prosperity Regional Center) (Florida) Terminated 6/23/2017

What does “restructure and reorganize” mean?

[Post updated 4/18/2017] “The purchase of an existing business and simultaneous or subsequent restructuring or reorganization such that a new commercial enterprise results” is one of the ways to satisfy the EB-5 requirement to invest in a “new” commercial enterprise. (See my post on Options for investing in an existing business to see the whole range of options. The “restructuring/reorganization”option is relevant when the purchased business was originally established before November 29, 1990.)

The USCIS Policy Manual Volume 6 Part G Chapter 2 (C) (1) explains,

A new commercial enterprise also includes a commercial enterprise established on or before November 29, 1990, if the enterprise will be restructured or expanded through the immigrant’s investment of capital.

Purchase of an Existing Business that is Restructured or Reorganized

The immigrant investor can invest in a business that existed on or before November 29, 1990, provided that the existing business is simultaneously or subsequently restructured or reorganized such that a new commercial enterprise results. [50] Cosmetic changes to the décor, a new marketing strategy, or a simple change in ownership do not qualify as restructuring.

However, a business plan that modifies an existing business, such as converting a restaurant into a nightclub or adding substantial crop production to an existing livestock farm, could qualify as a restructuring or reorganization.

As explained (unofficially) in training materials for USCIS adjudicators,

This part of the regulations allows for the alien to purchase a business that was already in operation as long as it was changed to such a degree that one could consider the resulting business as completely new and different from the one that existed previously. For example, if an alien purchases a budget hotel and continues to operate it under a different business name, we would require more evidence of reorganization and restructuring. Look for real changes in modes of operation, products and services offered, business structure, organization of personnel, and other aspects which would indicate that a new business has resulted. Note that it is not enough that an entity merely be reorganized or restructured. It must be reorganized or restructured to such an extent that a new business has resulted.  (quoted from p. 752-753 of IIUSA DOC0042012 USCIS EB5 Training Materials – Oct 2012)

Each NCE is different and will require different evidence and analysis. If an investor has purchased an existing business, he or she must provide evidence of when that original business was created. Evidence of a business that has been in operation for many years and has only recently changed names or reopened after being closed for a short time may also be relevant. (quoted from p. 348 of USCIS EB5 Training Materials – April 2015)

The following cases have been mentioned as examples that do or do not qualify as the kind of restructuring and reorganization contemplated by the regulations (with sources – all unofficial/non-precedent except the Policy Manual and Matter of Soffici — in parentheses)

Examples that may meet the standard

Examples judged not sufficient to meet the standard

  • Putting a Howard Johnson’s Motor Lodge under new ownership, making some changes to the hotel décor, and implementing a new marketing strategy (Matter of Soffici)
  • Incorporating what used to be a division within a larger company (Mar312006_01B7203)
  • Bringing a hotel back from foreclosure (Jan282009_01B7203)
  • Renovating a hotel facility (adding miniature golf, fitness center, business center) and adding new services (free breakfast) (Mar272009_02B7203)
  • Purchasing a dairy farm and switching to higher-producing cows, changing distributors, and adding feed production (Jul282009_01B7203)
  • Reorganizing a dairy from a corporation to a partnership, but keeping the same employees, equipment, and cows. (EB-5 Training Materials)
  • Changing the name of a taxi service changes and adding a new limousine to its fleet (EB-5 Training Materials)

Note that the “restructure/reorganize”option is particularly relevant to direct EB-5 investors, who must invest in a “new” commercial enterprise that is also the job-creating business owner. Regional Center investors have the option to invest in an entity that’s separate from the job-creating enterprise, and that separate JCE is not required to qualify as “new.” The non-precedent decision MAR252016_02B7203 on a regional center case clarifies that “In Izummi, when determining what constituted a ‘new commercial enterprise,’ we reviewed the date of creation of the entity in which a petitioner had invested or intended to invest, not the job creating entity where the funds were ultimately to be deployed.”