EB-5 Investor Visa Program Offers Tribes Opportunity To Raise Capital For Development Programs

A consistent problem in Tribal economic development programs is a lack of available funding. Credit, loans, equity investments – all of the traditional vehicles for financing economic development projects are typically far less available to Tribes than other non-Tribal entities – if they are available at all. The adage “it takes money to make money” has proven frustratingly true in Tribal communities that have been consistently overlooked by business funding sources.

One “non-traditional” finding source that is attracting interest in Tribal communities is the federal Immigrant Investor Program, also known as “EB-5”. The EB-5 program was created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. The basic concept is simple: foreign nationals who are interested in becoming permanent residents of the United States can obtain that status by investing cash to create new jobs in America. In exchange for making an investment in a qualified American business enterprise, the foreign investor obtains a “green card” or equivalent legal status to live in the U.S..

The specific requirements for EB-5 investments include:

  • All EB-5 investors must invest in a new commercial enterprise, or expand an existing enterprise by 40%.
  • The investment must create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years (or under certain circumstances, within a reasonable time after the two-year period).
  • The required minimum investments are $1 million for standard investment areas, and $500,000 for a Targeted Employment Area.

A Targeted Employment Area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate. A rural area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more.

Tribal business opportunities can potentially fit well with the EB-5 investment concept. The amount of required investment is less for projects in rural areas with below-average employment – which would include many Tribal communities throughout the country. Since one of the primary motivations of certain investors is obtaining the “green card” rather than obtaining a specific rate of return, they may be more willing to invest in overlooked communities such a reservations located far from major population centers. The nature of the investment program is jobs-centric, meaning that Tribes can exert management control over the enterprise without federal interference so long as the requisite jobs are maintained. If used in conjunction with other resources such as tax-advantaged manufacturing programs and Foreign Trade Zone or HUBZone status, the EB-5 program offers Tribes a flexible means of obtaining capital for establishing a sustainable on-reservation business enterprise.
 

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