Each year the United States sets aside ten thousand visas for a unique type of immigrant: those people will to invest at least one million dollars into starting a United States business which will employ at least ten United States citizens who are not the immigrant's family members.
The rationale for this visa is obvious: the United States wants to encourage business investment and job creation in the United States and is willing to give priority in the granting of visas (and eventual green cards) to those who are able and willing to make the requisite investment.
This visa must be differentiated from the L-1 Application which is the visa given to executives who are transferred between one part of a company or joint venture to another. In the L-1 situation the executive must have worked at the over seas company for at least a year and is assigned to work in the United States at a branch or subsidiary of the overseas company.
In the investor visa, one is creating (or expanding) a new business in the United States, putting in assets of at least one million dollars and employing ten legal Americans to run the business. And therein lies the most important factor for the visa applicant to remember: for to make this visa work and to avoid the loss of the capital, it is vital not just to have the million dollars, but to use it correctly to create a viable, operating business that will not only last for at least three years, but should last permanently and make a good living and return for the visa applicant.
Thus the correct use of this visa requires not just a good grasp of immigration law, but an even better grasp of how to do business in the United States successfully.Business law, employment law, taxation, etc. are an integral part of the planning and business package that the immigrant must create to succeed with this particular visa and advance, careful planning is essential. To create a business that goes bankrupt in a year or two will both defeat the effort to obtain a green card and will cause economic damage to the family seeking to immigrate.
This article will briefly describe the immigration criteria for the investor 's visa but will then create a check list of the business and tax issues that the immigrant must consider before electing to use this visa as the method to obtain a green card in the United States.
THE BASIC CRITERIA FOR THE INVESTOR'S VISA
Green cards for investors are currently limited to ten thousand world wide a year of which three thousand are reserved for persons investing in rural areas or areas of high unemployment. Only the person who is to own the business is counted in the quota, not the family members who may/do accompany the applicants.
Currently, the quotas are not fully used up but it is expected that soon there may be waiting periods for qualified applicants. Nevertheless, due to the high monetary requirements for this visa, it is likely to remain the fastest business related way to enter the United States with a chance for a green card.
Green cards through investment are available to anyone who invests a minimum of one million dollars to create a new United States business (or investing same in an already existing United States business) so long as the business will employ at least ten full time United States legal workers NOT counting the investor, the spouse of the investor or their children. The investor must plan on also being active in running the business at least initially.
Assuming the business is located in specified rural areas or an urban area with an unemployment rate at least 1.5 times the national average in the United States, the investment may be lowered to five hundred thousand dollars. The various State governments notify the INS which areas conform to these requirements. California is one of the states which has so advised the INS.
Potentially, the INS can elect to raise the one million dollar investment level for areas of very low unemployment. As of August 2002, they have not done so.
It is vital to note that this does not necessarily require a cash investment of one million dollars. Loans and notes can count in the total, as well as the value of equipment and inventory. Borrowed funds may be used if the investor is personally liable for payment in the event of default on the loans AND if the loans are secured by assets other than the assets being invested in the business. (You cannot use your inventory or equipment as collateral to fund the borrowed loan and count that loan as investing the one million dollars.)
While numerous investors can use the same business to apply for the investor visa, EACH ONE must individually meet the monetary requirement above and be responsible for ten jobs. Thus, eight investors must invest eight million dollars and create eighty jobs.
And the investment must remain in the United States business for at least three years. You must reside in the United States, you must pay United States taxes, you cannot remain outside the United States for more than one year at a time, but can travel as much as you wish.
Best of all, you need not work in the company eventually so long as the investment stays intact for three years and you get a green card (conditional for the first two years). After five years you may apply to become an American citizen and if you qualify for a green card through investment, your spouse and unmarried children under the age of twenty one may also get green cards as "accompanying relatives."
PRACTICAL CONSIDERATIONS
The remarkable thing about this visa is that it almost guaranties a green card if done correctly.AND, if the business side is done correctly, does not "cost" anything since the hope is that the business to be set up will be profitable.
Too many potential immigrants see this as "spending" one million dollars rather than using that money to achieve not only citizenship but a vibrant and profitable company that will act as the springboard for a good existence in the United States.
The vital questions to be presented, then, are
- What business to create and where?
- What assets will that business need to be successful in light of the fact that ten Americans will need to be employed there in additional to the immigrant?
- How can those assets be invested effectively to maximize chances of success, minimize tax ramifications, and assure survival of the company for at least three years and hopefully much longer?
- Should the business be started from scratch or should one buy and expand an existing business?
- Is it worth while to invest less in a more questionable location (five hundred thousand dollars) or is the risk of success there so much greater that it makes sense to invest more in a better locale? This also involves the issue of where the immigrant want to live and work.
- What structures make sense for the creation of this business? In that respect, the reader should review the articles on this web site on The American System of Business: Limited Liability Entities as well as Commercial Transactions in the United States.
- It therefore becomes vital to obtain both tax and legal counsel with expertise not merely in immigration, but in business formation, contracts, employment law, commercial transactions and investment law.
Remember, the key is not merely to set up a business. The key is to set up a profitable business that will survive for years, both to allow obtaining the green card (and eventual citizenship) and to support the family. In that respect, this type of visa can be seen as the most generous allowed under American law, for the only real restriction imposed is that you are required to set up a successful business and must invest between five hundred thousand and a million dollars and employ ten people. Within those guidelines, you are free to make any successful company you can and the award will be permanent residency.
But more than any other type of visa, this application will require the careful advance planning of not only the visa approach, but of the business and tax approach. The alternative is to invest a million dollars, lose it with a failing business and lose the chance for a green card when you do not meet the two year review of success!
STEPS
Obviously one must have access to either one million dollars or ability to obtain access to equipment or inventory of that amount and one must develop a business plan that allows for the hiring of ten or more people. The business side, in this type of visa, precedes the visa planning.
This may require visits to the United States to scout out business opportunities and develop the business concept that has a good chance of success.
Next, one must retain tax and legal counselors to structure the business plan and structures to maximize the chance of success, be it buying and expanding an existing business or starting a new one.
Third, one then prepares the application to INS, demonstrating the ability to make the requisite investment and the business plan that is proposed. TheBasic Business Plan article on this web site is a good place to start to determine what the INS will be examining.
Fourth, once the visa is granted, one makes the leap and starts the business.
While quotas are not yet filled up for this category of visa, it is to be expected that they will in the near future. Now is the time to make the plunge if you are at all able. Yes, there is risk and yes, all change is stressful, but remember the old saying: A ship in harbor is safe, but that's not what ships are for.