Direct EB5 FAQ


  1. What is direct EB-5?
  2. Who uses direct EB-5, and how?
  3. What is the minimum investment for direct EB-5?
  4. Is direct EB-5 an entrepreneur visa? Need the investor manage the business?
  5. What are the job creation requirements for direct EB-5? What is a direct job?
  6. Can a direct EB-5 investment involve multiple layers or entities?
  7. Can one direct EB-5 investment fund more than one business?
  8. Can a direct EB-5 enterprise be funded by more than one investor?
  9. Can a direct EB-5 investment be changed to a regional center investment, or vice versa?
  10. Can direct EB-5 deals include elements of a loan model?
  11. Can direct EB-5 can be used to purchase, expand, or salvage an existing business?


1. What is direct EB-5?

EB-5 is a permanent investor visa program, established in 1990 with no sunset-date, that allows qualifying for an immigrant visa based on investment in an enterprise that creates jobs. The program was simply “EB-5” until 1992, when the Regional Center program added an alternate (and temporarily-authorized) EB-5 track that allows counting indirect job creation. Since then, “direct” or “stand-alone” refers to the permanent part of EB-5 that still happens outside of regional center sponsorship. Direct and regional center EB-5 share the same basic EB-5 requirements, but differ in the job creation requirement and regional center role.

Direct EB-5 Regional Center EB-5
Job Creation Direct investors are limited to counting direct jobs, i.e. specific payroll-verified employee positions in the single enterprise that received investment. Regional center investors can count indirect jobs, i.e. economic model-derived jobs calculated from total employment impact in the regional economy. Indirect job creation also allows greater flexibility in structuring investment.
Regional Center Affiliation Direct investments need no sponsorship, have no pre-approval process with USCIS, and face no program sunset dates. Regional center investments must be formally sponsored by a regional center designated by USCIS. They depend on the regional center sponsor remaining designated and the regional center program remaining authorized.
Common Features All other requirements are shared: same minimum investment amounts, same Targeted Employment Area options, same options for more and less active management role, same at-risk requirements, and same processing times (in principle).

Policy Manual reference: 6 USCIS-PM G Chapter 1 to 5

See also my post: The Basics: Direct and Regional Center EB-5 Comparison

2. Who uses direct EB-5, and how?

Department of State statistics show the number and origin of direct EB-5 visa users. Recall that most recent visas have been issued at least two years after the investment, and that visa numbers average two family members to one investor.

Typical uses of direct EB-5:

  • A foreign national in the US on a non-immigrant visa starts a new business, and applies for an EB-5 visa based on investment in the business. A wide variety of business types are possible; it just needs to be a viable commercial venture that credibly needs the EB-5 investment and can predictably create the required number and type of jobs. Retail and wholesale trade ventures are particularly common in this context, but one also sees service providers (such as repair service, IT consulting, tutoring, cleaning, travel agency, health care), small manufacturers (food packaging, printers, cabinet makers), agricultural businesses (dairy farm, greenhouse), and tech companies (software developer, device developer).
  • A US franchisor or management company with a pipeline of new locations to develop solicits investment from one or more foreign investors to help fund the development cost of each new location. The US company may locate direct investors through a professional intermediary or its own contacts, and may or may not offer them an active management role. The number of foreign investors is constrained by the employment potential of the business. Common business types in this context include restaurants, hotels, convenience stores, care centers, preschools, and salons.
  • Other scenarios can work for direct EB-5, but less common based on difficulty. The EB-5 investor might acquire or buy into a successful existing business and substantially expand or re-organize it. The EB-5 investor might salvage an existing “troubled business.” A US entrepreneur with a one-off business idea might partner with EB-5 investors to help fund the venture. A foreign entrepreneur living abroad might launch and operate a business in the US.

3. What is the minimum investment for direct EB-5?

Direct EB-5 investors invest $500,000 in a Targeted Employment Area or $1 million outside a TEA, just as regional center investors.

Some people confuse regional center designation with TEA designation and suppose that regional center investment is $500,000 and direct investment is $1 million. This is incorrect. Investment in a high-unemployment or rural area is $500,000 and investment outside such areas is $1 million, regardless of whether the investor is coming through the direct or regional center program.

If Congress or USCIS raises the minimum EB-5 investment amount or changes Targeted Employment Area standards, direct and regional center investors will probably be equally affected.

Policy Manual reference: 6 USCIS-PM G Chapter 2

4. Is direct EB-5 an entrepreneur visa?

Direct EB-5 investors need not be entrepreneurs and need not have day-to-day managerial responsibility.

It’s a common misconception that regional center investors can be passive while direct EB-5 investors must operate the business they invest in. The truth is that EB-5 has a single set of generally-applicable requirements for EB-5 investor participation in the new commercial enterprise. Any investor, whether direct or regional center, can satisfy the management requirement by (1) exercising day-to-day managerial responsibility, or (2) participating in policy formation. The second option can mean as little having the rights, powers, and duties normally granted to limited partners. A policy-formation role is significant and yet light enough that the EB-5 investor need not live near the business – fortunately, since the lengthy immigration process means that it may be years before the foreign investor could live near the business, even if she wants to be actively involved on a daily basis.

There is one practical difference related to management: regional center deals can be structured to put investors in a special-purpose entity with nothing but a loan to manage, while direct EB-5 deals cannot.  Direct EB-5 investors must have their management or policy-making role in the job-creating business. This can be a boon for the investor, but may complicate matters for the business owner. Foreign investors who are just members of a regional center lender need not concern the investment project’s US partners, bank lender, franchisor, or license board.  Foreign investors may be a concern when directly involved in project ownership. This, however, is the extent of the difference between direct and regional center EB-5 when it comes to investor management.

Direct EB-5 investors are no more required than regional center investors to exercise day-to-day managerial responsibility. Direct EB-5 investors can be entrepreneurs, but often they are investors supporting American entrepreneurs. A great strength of direct and regional center EB-5 is that they do not restrict immigrant investment to majority-immigrant-owned businesses.

Policy Manual reference: 6 USCIS-PM G Chapter 2 (C) 5

5. What are the job creation requirements for direct EB-5? What is a direct job?

Each EB-5 investment must result in the creation of at least 10 qualifying jobs. In order to count for direct EB-5, job creation must have these characteristics:

  • The job must be “direct” – in other words, it must be an employee position in the enterprise that received a personal equity contribution from the EB-5 investor. Employees of affiliates, contractors, suppliers, borrowers, managers, and so on do not count, even if they work at the job site.
  • The job must offer permanent and continuous employment. Temporary positions (lasting less than two years) or intermittent positions do not count, though the job need not always be filled by the same employee. So long as it remains a filled or open position, the job counts as permanent and continuous.
  • The job must offer full-time employment of at least 35 hours per week. “Full-time Equivalent” positions do not count; part-time positions or hours cannot be added together to count as full-time. Once again, however, the full-time requirement applies to the position and not to individual employees filling the position. A defined full-time position can be shared by more than one employee based on a formal job-share agreement.
  • The job must be filled by legal US workers who are not the investor or the investor’s immediate family.
  • If the EB-5 investor relies on the reduced investment amount, the job must be filled by someone working at the business location that received Targeted Employment Area designation.
  • The job should be a new job or (in a troubled business) a preserved job that owes its existence to the EB-5 investment. Investment-jobs nexus is most easily demonstrated by showing that the position was created at some point after EB-5 investment by a business that’s either a completely new enterprise (not a preexisting business under new ownership) or a troubled business.
  • The business should have a plan to create the job within at least 2.5 years of the investor receiving I-526 approval.
  • The job should be plausibly connected with the needs of the business and offer appropriate compensation. This is  necessary for the business plan to be judged credible.

An EB-5 petitioner shows that direct jobs are likely to be created by submitting a credible business plan. The petitioner demonstrates that jobs were in fact created by submitting payroll records (W-2, I-9, Everify). An economic impact report is not relevant or required for direct EB-5.

Policy Manual reference: 6 USCIS-PM G Chapter 2 (D) and Chapter 5(B) (job creation) and Chapter 2(A)5 (job creation in a TEA)

Examples from denied cases: In MAR272013_02B7203, USCIS questioned whether construction workers could be considered permanent and continuous employment. In MAY072013_06B7203 and NOV122014_01B7203, the petitioners failed to show that employees working part-time hours were job-sharing full-time positions. In MAY072013_01B7203, USCIS considers credible job creation evidence and the question of whether the investor can be credited with hiring that predated his investment.

6. Can a direct EB-5 investment involve multiple separate layers or entities?

Direct EB-5 deals may not spread investment and job creation across multiple separate entities.

Because it can only count direct jobs, direct EB-5 does not allow for a structure with a “job-creating enterprise” (JCE) separate from the “new commercial enterprise” (NCE). A single enterprise must receive the direct EB-5 investor’s personal equity contribution and hire qualifying employees. Direct EB-5 investment may not flow through more than one entity, unless all entities are effectively united by a wholly-owned subsidiary relationship.

Practical implications:

  • Business models that separate property ownership from operations do not work for direct EB-5. For example, the direct investor can’t fund a hotel property owner to build a hotel and then count employees who work at the property but are on the payroll of a management company. Hotels, care facilities, and schools can be good direct EB-5 investments, but they have to structure the business in such a way that the jobs do not get separated from the investment.
  • Businesses that need to separate EB-5 investors from the operating business do not work for direct EB-5. The direct EB-5 investor must have an equity stake in the entity that creates jobs and at least a policy-making role in that entity.
  • Loan models do not work for direct EB-5, because a loan depends on the possibility of a separate lender and borrower. The regional center NCE can lend to a separate JCE, but direct EB-5 cannot have a separate NCE and JCE. (If multiple entities are involved, they must be united by a wholly-owned subsidiary relationship.)
  • Projects that mainly create jobs for contractors do not work for direct EB-5. Real estate projects dominate regional center EB-5 because regional centers can count indirect jobs. Real estate development does not work for direct EB-5 because construction contractors are not permanent direct employees of the property owner that receives investment.
  • Direct EB-5 can only diversify the investment among several job-creating businesses if one business wholly owns the other, or both are wholly owned by a common parent.

Policy Manual reference: 6 USCIS-PM G Chapter 2(C) and Chapter 2(D)

Examples from denied cases: In APR232014_01B7203, the initial plan involved the new commercial enterprise making a loan to a job-creating enterprise. In Jan072011_01B7203, investment was divided between affiliated entities each majority owned by the petitioner. In Apr172012_04B7203, the petitioner relied on job creation in a subsidiary that only became wholly-owned after the I-526 filing.

7. Can a direct EB-5 investment fund more than one business?

Under certain conditions, direct EB-5 can fund a portfolio of wholly-owned businesses.

A direct EB-5 new commercial enterprise may divide a $500,000 investment among Store A, Store B, and Store C provided that each of the following conditions is met:

  • Store A, Store B, and Store C are each wholly owned by the EB-5 enterprise.
  • There is a specific plan and schedule to deploy the EB-5 investment and create jobs at each store. If the petition depends on A, B, and C to meet the investment and job creation requirements, than neither A nor B nor C can be speculative or indefinite.
  • Store A, Store B, and Store C must each contribute to job creation, if each is to receive EB-5 investment.
  • Store A, Store B, and Store C must all be located within a designated Targeted Employment Area, if they are all receiving part of a $500,000 investment.

If one files an investor petition to fund three future locations, can one be specific about the first and vague about the last? No.  This is true for both direct and regional center investors, but especially for direct EB-5 since USCIS pays more attention to the business activity and at-risk requirements in direct EB-5 cases.

Policy Manual reference: 6 USCIS-PM G Chapter 2(C) and Chapter 2(D)

Examples from denied cases: In JAN132017_03B7203, the petitioner owned three salons, only two of which were in a TEA. It was decided that only the two TEA locations could count toward the EB-5 investment and job creation requirements. In JUN252013_01B7203, the petitioner invested in an enterprise that planned to open three stores. USCIS questioned job creation at the first two stores because they opened prior to the petitioner’s investment and questioned job creation at the third location because it lacked a solid and specific plan.

8. Can a direct EB-5 enterprise be funded by more than one investor?

Yes. The direct EB-5 enterprise can have a mix of foreign and domestic investment and/or pool funds from multiple EB-5 investors.

Each EB-5 investor must invest the required amount of capital and each investment must result in the creation of 10 or more jobs. The only practical limit to the number of EB-5 investors is the extent of the enterprise’s capital and staffing needs. EB-5 investment may account for any proportion of the enterprise’s total capital requirements. A business that plans to pool investment from multiple EB-5 investors should have a strategy for allocating job creation, and consider the timing of investment and hiring.

A direct EB-5 enterprise can have owners and investors unrelated to EB-5. None of the EB-5-qualifying job creation need be allocated to the domestic owners/investors. Be aware, however, that EB-5 policy allows USCIS to demand source-of-funds paperwork for domestic investors in the enterprise. (USCIS doesn’t necessarily make a point of this unreasonable and impracticable provision unless already denying a case for other reasons, but be aware that the provision exists.)

Policy Manual reference: 6 USCIS-PM G Chapter 2(C)2

Examples from denied cases: In APR262017_01B7203, AAO/USCIS chose to make an issue of lawful source of funds for non-EB-5 owners.

9. Can a direct EB-5 investment be changed to a regional center investment, or vice versa?

For certain types of projects, the direct and regional center paths are both available as options. Hotels and restaurants, for example, can work well either way. But it’s necessary to choose one track and stick to it, because the set-up and content of the deal will be significantly different depending on whether it qualifies as a direct or regional center investment. Once a petition has been filed with USCIS, it cannot be materially changed. The differences between direct and regional center EB-5 are material, especially when it comes to structure.

Policy Manual reference: 6 USCIS-PM G Chapter 4(C)

Examples from denied cases: In APR232014_01B7203, AAO found that changing a regional center-like structure to make it qualify for direct EB-5 would be a material change. In AUG032016_01B7203, AAO explains why a petition filed as a regional center investment cannot qualify as a direct investment without material change.

10. Can direct EB-5 deals include elements of a loan model?

Direct EB-5 has one significant step in the flow of capital – the transaction between the investor and the job-creating new commercial enterprise (which is one entity, or a parent entity plus wholly-owned subsidiaries). That step must involve an at-risk equity investment, and cannot be debt or a debt-like arrangement. Direct EB-5 cannot allow the EB-5 enterprise to make a loan to a separate job-creating entity, because direct EB-5 does not allow for separate entities that make job creation indirect with respect to the qualifying investment. (A “loan” between a parent and its wholly-owned subsidiary has not been explicitly prohibited. But question the meaningfulness of a proffered “loan model” between two entities that are essentially a single entity, with the same ownership and assets.)

Policy Manual reference: 6 USCIS-PM G Chapter 2(A)

Examples from denied cases: In APR232014_01B7203, the initial plan involved the new commercial enterprise making a loan to a job-creating enterprise, based on a non-compliant structure. In MAY272014_01B7203, investor limited partners were offered an exit strategy that USCIS judged too debt-like. In APR182017_01B7203, the petitioner’s preferred equity investment was judged too debt-like.

11. Can direct EB-5 can be used to purchase, expand, or salvage an existing business?

EB-5 policy allows investment to acquire, expand, or salvage an existing business under certain conditions, but it’s complicated. EB-5 generally requires investment to be in a new enterprise that creates new jobs. Something does not qualify as “new” just because it’s new to the investor.  For example, if the investor forms a new entity that purchases and rebrands a hotel, then hires new employees, he might not be able to count the hotel as a new enterprise or the new employees as job creation. It depends on a variety of factors, including when the hotel building was first built by the original owner, whether the acquired assets constitute an entire business, and the previous owner’s employment and financial condition. The mere fact of ownership change, or even ownership change combined with renovations and new flag and management, are not sufficient. .

Options for meeting EB-5 requirements for investment in a preexisting business:

  • Requirement 1: New Commercial Enterprise

If the investor buys into or purchases a preexisting business, then the investor must show that it qualifies as “new” in one of three ways:

  • By showing that the business was originally launched by its first owner sometime after November 29, 1990; or
  • By restructuring or reorganizing the business to such an extent that a new enterprise results (I have a post about what this means); or
  • By showing a plan to “substantially expand” the business (with new investment resulting in at least a 40% increase to the net worth or number of employees).
  • Requirement 2: Job Creation or Preservation

If the investor acquires an existing business, or starts a new business that has some continuity with a preexisting business, then the investor has the following options to meet the job creation requirement:

  • Document that the preexisting business was defunct at the time of acquisition/investment, and that the acquisition involves only physical assets (such as buildings, equipment) and not operation-related assets such as customer lists, contracts, or branding. If this can be done, then the investor can count all new employment as job creation and need not deduct employment by the previous owner.
  • Document the pre-acquisition or pre-investment level of employment and lay out a plan to create 10 new qualifying positions in addition to preserving all previous employment.
  • Document that the existing business meets the EB-5 definition of “troubled.” Only this scenario allows counting preexisting jobs toward the total required EB-5 job creation.
  • Document a bridge financing agreement or similar arrangement that pre-dates the employment for which the petitioner wants credit. This may allow the investor to count job creation by the enterprise that pre-dated the investment.

Policy Manual reference: 6 USCIS-PM G Chapter 2(C) and Chapter 2(D)

Examples from denied cases: Examples illustrating the challenges of acquiring a preexisting business or its assets include Jul282009_01B7203 (addresses whether the acquisition of a farm constituted the acquisition of assets or a business), AUG162016_01B7203 (shows how a preexisting business can count as new, but not its jobs), Jan282009_01B7203 and MAY032016_01B7203 (on purchasing a business out of bankruptcy). Examples illustrating the challenges of buying into an existing business include MAR222016_01B7203 (an expansion case), MAR182013_01B7203 (a troubled business case), MAY072013_01B7203 (on the question of pre-investment employment).