A report in the Hong Kong media led to the downfall of the world’s most popular investor-based visa program in Canada, leaving thousands of foreign investors out in the cold. According to an article published in Forbes magazine on February 13, 2014, the Canadian government announced the immediate cancellation of the popular investor visa program after the highly publicized report stated that “the country’s investor visa program had become an express lane for wealthy Chinese hoping to secure overseas residency”. The cancellation of the program meant that 65,000 pending applications, including 45,500 of which were submitted by individuals from Mainland China, were immediately eliminated.
In a statement made on the evening of February 11, 2014, the Canadian government announced the termination of both the Federal Immigrant Investor Program (IIP) and Federal Entrepreneur (EN) program. In 2011, approximately 10,000 immigrants entered Canada through the IIP, while almost 1,000 entered through the EN program.
While the Canadian government did not expressly state that the publication of the report led to the cancellation of the highly politicized and controversial program, it had clearly become unpopular with politicians and many Canadian citizens. An excerpt from the 2014 budget stated that “for decades, [the investor scheme] has significantly undervalued Canadian permanent residence, providing a pathway to Canadian citizenship in exchange for a guaranteed loan that is significantly less than our peer countries require.” Furthermore, according to Canadian government officials, those who utilized the program paid less in taxes and spent less time living in the country than immigrants utilizing other programs.
The Canadian program, which granted permanent resident status to foreign investors who made an interest-free, CAD $800,000 loan to the Canadian government, demanded less than what is required in other countries, which have set investment thresholds as high as AUD $1.5 million for Australia; £1 million in the UK; and NZ $10 million for the Investor Plus Visa in New Zealand.
Despite the Canadian government’s decision to dismantle the national program, the province of Quebec has announced that it will reopen its Immigrant Investor Program (QIIP) for a very limited period. The program, which will be reopened for a period of 11 days beginning September 8, 2014, will only accept a maximum of 1,750 visas. Given the high demand that continues to exist for investor-based visas, it is likely that the cap will be met very quickly. There has been no indication from the government of Quebec as to whether it will offer additional visas.
Canada’s loss may be the United States’ gain in terms of opportunities to harness international talent and investment. The United States has typically trailed just behind Canada as a popular destination for investment-based immigration. Now, it may be the first choice for investment in North America.
Solution: The U.S. EB-5 Visa May be an Excellent Option for Foreign Investors
Foreign nationals can obtain Permanent Resident status in the United States for themselves and their families using the EB-5 Immigrant Investor Program. Under this program, there are three options that an investor many use to invest legally-obtained funds in exchange for a Green Card: (1) invest $1 million in a new or existing enterprise in the United States; (2) invest $500,000 in an area designated by the US government as an area of “economic hardship”; or (3) invest $500,000 in a designated “Regional Center”. Typically, the process takes about one to 1½ years for an EB-5 applicant to obtain a conditional Green Card.
A “conditional” Green Card is a temporary Green Card that is valid for two years from the date of issuance. After the two year period elapses and an investor successfully applies for a removal of conditions, the investor and his or her family members are given a permanent Green Card.
- $1 Million Investment in a New or Existing Enterprise
Experienced investors wishing to immigrate to the United States and establish a business can invest US $1 million dollars in a new or existing enterprise. To meet the requirements of the EB-5 status, the investor must also create or preserve at least 10 full-time jobs for qualifying U.S. workers within two years of the immigrant investor’s admission to the United States as a Conditional Permanent Resident. This route is recommended for investors who want control of their investment, and have the necessary knowledge to run a business in the United States.
Another option for purchasing an existing business is to buy a franchise of a currently operating business.
- $500,000 Investment in An Area Of Economic Hardship for New, Currently operating, or Under-Performing Businesses
Investors with smaller budget, but who are willing to take a higher degree of risk have the option of investing a reduced amount of US $500,000 in a designated Targeted Employment Area (High Unemployment or Rural Area). These areas have been targeted by the US government for revitalization. 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 according to the decennial census.
This investment option is suggested only for investors who have experience in revitalization and working in areas currently deemed to be under-performing.
- Regional Center Investment
Regional Centers are private investment companies that have been granted permission by the US government to accept investment from foreign investors. In return for a minimum US $500,000 investment, the foreign investor is awarded Permanent Resident status in the United States. Regional Centers use the invested money for the purposes of establishing commercial investments, such as shopping centers, technology parks, and business centers. Most Regional Centers have positive investment records and will provide a return on the investment.
Unlike the first two investment options, however, utilizing the Regional Center option will not allow the investor to have any direct control of the investment. Therefore, this option is suggested for foreign investors whose main goal is to obtain Permanent Resident status, and who do not have prior investment and business knowledge.
THE NEXT STEP
With the changing investment-based immigration landscape, now is a good time to explore the multiple options available for foreign nationals who wish to invest in the United States. To explore the various options for residency based on foreign investment, schedule a complimentary 15-minute consultation with The Grady Firm attorneys by filling out a Contact Request Form, or calling +1 (323) 450-9010.
About the Authors
Jennifer A. Grady, Esq. founded The Grady Firm, P.C. with a passion for helping entrepreneurs and their families achieve the American Dream of freedom, opportunity, self-sufficiency, and success. She specializes in business and immigration law, and is fluent in Spanish. Anthony Mance, Esq. focuses primarily on assisting individuals and businesses with the complexities of the immigration process. As a certified mediator with a focus on cross-cultural alternative dispute resolution, Mr. Mance approaches every case from an international and multicultural perspective.
The Grady Firm, P.C. attorneys handle all aspects of the EB-5 process though its immigration, business, employment, contracts, estate planning/asset protection, intellectual property, tax advising, and litigation departments. To best serve its international clients, The Grady Firm attorneys are fluent in Spanish, Chinese, French, Hindi, Punjabi, Armenian, Swedish, Hungarian, Korean, and Russian.
The firm is headquartered in Los Angeles, with offices in San Francisco and California. Its attorneys communicate with clients around the world via telephone, Skype, and web-based conference calls.