Question:

http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextchannel=facb83453d4a3210VgnVCM100000b92ca60aRCRD&vgnextoid=facb83453d4a3210VgnVCM100000b92ca60aRCRD

Job Creation Requirements

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) of the immigrant investor’s admission to the United States as a Conditional Permanent Resident.

Create or preserve either direct or indirect jobs:

Direct jobs are actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB-5 investor has directly invested his or her capital.

Indirect jobs are those jobs shown to have been created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor. A foreign investor may only use the indirect job calculation if affiliated with a regional center.

Note: Investors may only be credited with preserving jobs in a troubled business.

A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to the priority date on the immigrant investor’s Form I-526. The loss for this period must be at least 20 percent of the troubled business’ net worth prior to the loss. For purposes of determining whether the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

A troubled business is a new commercial enterprise that has been in business for at least two years and it has suffered a loss equal to 20% of its net worth or income in the previous two years. The advantage to investing in a troubled business is that the investor gets credit for saving/maintaining 10 jobs (the pre-investment employment level must be maintained during the period of conditional residency); no new jobs must be created. The potential disadvantage to investing in a troubled business is that it is a troubled business for a reason and it may be difficult to save it or maintain it for the required period of time.

8 CFR 204.6(e) says a troubled business must have been in existence for at least two years, have incurred a “net loss for accounting purposes” during the 12 or 24-month period before the EB-5 petition is filed, and the loss is at least equal to 20% of business net worth. Investor must also show that the number of existing employees will be maintained for at least 2 years.

It is worth noting that while a troubled business creates certain favorable conditions for the EB-5 project, the company in question will likely have a more difficult time persuading investors of the viability of the investment, For this reason, if one is pursuing a troubled business as a the basis of an EB-5, one should be prepared to emphasize how the troubled business presents an opportunity for additional upside or what amounts to a discounted investment opportunity (i.e. that the investor's dollars are buying more).

It is worth noting that while a troubled business creates certain favorable conditions for the EB-5 project, the company in question will likely have a more difficult time persuading investors of the viability of the investment. For this reason, if one is pursuing a troubled business as a the basis of an EB-5, one should be prepared to emphasize to investors how the troubled business presents an opportunity for additional upside or what amounts to a discounted investment opportunity (i.e. that the investor's dollars are buying more).

A troubled business must be a business that has existed for at least two years and incurred a net loss for accounting purposes during the preceding 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 per cent of the troubled business's net worth prior to such loss.

A troubled business is defined as a business that has incurred a net loss of at least 20% of net worth in the last 24-48 of months prior to the filing of the I-526 petition.