Each year, approximately ten thousand visas are allocated for immigrant investors in new commercial enterprises in the United States. Of this total number, three thousand visas are set aside for targeted employment areas, which are defined as rural locations and areas experiencing high unemployment rates. Under current USCIS regulations, an immigrant investor is required to make a capital investment of at least five hundred thousand dollars in targeted employment areas and at least one million dollars in other high employment areas. 8 C.F.R. § 204.6(f). But what constitutes a commercial enterprise?
USCIS defines the term “commercial enterprise” broadly as any lawful for-profit business. This definition includes sole proprietorships, limited or general partnerships, joint ventures, corporations, business trusts, or any other publicly- or privately-owned businesses. A “commercial enterprise” can also consist of a holding company and its wholly-owned subsidiaries. However, each subsidiary must be involved in a for-profit activity. Additionally, a mutual investment fund also constitutes a commercial enterprise under certain conditions; however, to qualify, the immigrant investor in the fund must partake in the management of the new commercial enterprise – acting as a silent investor is therefore insufficient. Moreover, specifically excluded from the definition of commercial enterprise are noncommercial activities, such as owning and operating a personal residence. 8 C.F.R. § 204.6(e).
To establish the new commercial enterprise, the immigrant investor must make a capital investment in an amount specified by the USCIS, and the investment must benefit the U.S. economy and create full-time employment for at least ten qualified employees. A debt financing arrangement between the immigrant investor and the new commercial enterprise does not constitute a contribution of capital. In other words, the immigrant investor cannot establish the required investment of capital if the investment is made in the form of a loan to the company.
Pursuant to the Code of Federal Regulations, the establishment of a new commercial enterprise may be created through either: “(1) The creation of an original business; (2) The purchase of an existing business and simultaneous or subsequent restructuring or reorganization such that a new commercial enterprise results; or (3) The expansion of an existing business through the investment of the required amount, so that a substantial change in the net worth or number of employees results from the investment of capital. Substantial change means a 40 percent increase either in the net worth, or in the number of employees, so that the new net worth, or number of employees amounts to at least 140 percent of the pre-expansion net worth or number of employees. Establishment of a new commercial enterprise in this manner does not exempt the petitioner from the requirements of 8 C.F.R 204.6(j) (2) and (3) relating to the required amount of capital investment and the creation of full-time employment for ten qualifying employees. In the case of a capital investment in a troubled business, employment creation may meet the criteria set forth in 8 C.F.R 204.6(j)(4)(ii).”
The key consideration when establishing this new commercial enterprise is the requirement that the enterprise is “new.” If the subject investment is an original business, this “new” requirement is activated, thereby requiring that the “original business” was “established after November 29, 1990.” 8 C.F.R. § 204.6(e)&(h). Moreover, in determining that a business is “original,” the USCIS must find that the immigrant investor had a hand in its actual creation and was present at its inception. In re Izumii, 22 I&N Dec. 169 (BIA 1998).
However, this “new” requirement will not preclude the immigrant investor from investing in a business that was established prior to 1990. If the subject business is an “ongoing business” that was established prior to 1990, the immigrant investor can still establish a new commercial enterprise through the purchase of an existing “troubled business” with subsequent restructuring or reorganization, or by substantially expanding an ongoing business through investment. This investment must produce a “substantial change” in the business, i.e. “a 40 percent increase either in the net worth, or in the number of employees, so that the new net worth, or number of employees amounts to at least 140 percent of the pre-expansion net worth or number of employees. When assessing whether a new commercial enterprise has been created, the USCIS is stringent in its interpretation of the “substantial change” and “troubled business” requirements for investments into ongoing businesses. “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.” In re Soffici, 22 I&N Dec. 158 (BIA 1998).
With this return to basics, the complexity of establishing a commercial enterprise for an immigrant investor visa becomes abundantly clear. Thus, a Business Plan can be critical to the success of the visa. A Business Plan provides supporting evidence necessary for USCIS or the Consular Officer to determine if the commercial enterprise is viable, has a likely chance of success, will contribute to the U.S. economy in a meaningful way, and if the beneficiary(ies), employer(s) and/or the business itself satisfy the specific requirements of the applicable visa.
To find out more about professional, well-researched, articulate, expository narrative Business Plans and a wide range of ancillary services, designed specifically to address USCIS’s concerns, contact e-Council Inc.com at info@ecouncilinc.com.
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