The EB-5 Immigrant Investor Visa Program is one of the most popular business-based immigration paths to permanent residency in the United States. This program is a way for eligible foreign investors to obtain a green card if they invest $900,000 or $1.8 million – depending on location – into a new American business that will create a minimum of 10 jobs for U.S. citizens.

One of the requirements for the EB-5 is that the investment must be “at-risk”, but there is no clear and concise definition of “at-risk” in this context. However, there is certain language in federal regulations and requirements as well as some precedent that helps to clarify this issue.

According to statute 8 C.F.R. § 204.6(j)(2), “The petition [for EB-5 visa consideration] must be accompanied by evidence that the petitioner has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk.” In the federal regulations relating to EB-5, these are the only two times that the term “at-risk” is mentioned.

Although “at-risk” is not directly defined, the term “capital” is, and this helps to shed some light on the “at-risk” requirement: “Capital means cash, equipment, inventory, other tangible property, cash equivalents, and the indebtedness secured by assets owned by the alien investor, provided that the alien investor is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness.”

Furthermore, the types of evidence that can be used to prove applicable investment help shed some light on what types of investments meet the definition:

• Personal funds deposited into a U.S. business account for the specified business
• Assets purchased for use in the U.S. business
• Property transferred from abroad for use in the U.S. business
• Purchase (or commitment to purchase) shares of stock that cannot be redeemed at the holder’s request
• Loans or other borrowing secured by assets of the applicant for which they are personally and primarily liable

Beyond what can be gleaned from the federal regulations regarding EB-5, there has been some precedent set relating to specific petitions.

Matter of Izummi – This matter helped in defining “at-risk” more by clarifying what is not considered at risk, rather than expanding on what is. This matter also helped shape the requirements for an EB-5 Visa as listed under the United States Citizenship & Immigration Services (USCIS). Among other things, this matter established that for any capital where there is a guarantee of return, whether in part or whole or a guaranteed rate of return, it is not considered at risk and therefore does not count towards the total at-risk investment amount requirement.

Matter of Ho – This is another matter that has helped to shape the definition. This matter established that there must be “evidence of the actual undertaking of business activity.” This is meant to act as an assurance that the invested capital will be used to conduct the business of the new enterprise.

As explored above, the “at-risk” requirement is rather nuanced. However, in an attempt to define it, a basic definition of an “at-risk” investment for an EB-5 would be as follows: capital that is wholly and irrevocably invested where there is a real risk of material loss as well as a chance for gain.

Certain types of investment will still fall within gray areas and be disputable. It is always advisable to work with immigration professionals, such as immigration lawyers when pursuing any type of immigration case. It is especially true when pursuing a business path and if your investments are outside of the types specifically mentioned in the regulations and requirements. However, the bottom line is to have real “skin in the game” and to invest in a business that will help move the United States economy forward through successful business and the creation of employment opportunities for U.S. citizens.