Under the Immigration Act of 1990, the U.S. Congress set aside 10,000 annual visas for foreign investors looking for opportunities in America. Those carrots are coming in handy during what remains a debilitating credit crunch for U.S. entrepreneurs.
Rather than wait a year or longer for other immigrant visas, foreign investors--through the so-called EB-5 program--can snag a slice of equity and a quick-and-dirty U.S. visa in just three-to-six months; plus, unlike other immigrant visas that might expire in a few years, the EB-5 flavor offers permanent residency. EB-5 minimum requirements: a $1 million investment from a lawful source in a new or existing commercial enterprise that directly creates at least 10 U.S. jobs. Investors can put up as little as $500,000 if the company is in a rural area or in a county sporting 150% of the average national unemployment rate. (Canada has a similar program, called the Canadian Business Immigrant Investment Program, though it doesn't impose any job-creation requirements.)
EB-5 is catching fire in the latest downturn. In 2007, the U.S. Citizen and Immigration Services (USCIS) approved 473 petitions--called I-526 forms--for foreign investors. That figure rose to 640 in 2008, and jumped to 1,256 in 2009. Since October 2006, U.S. companies have raised more than $1 billion and have created over 20,000 jobs (directly and indirectly) through EB-5, estimates the USCIS.
"What businesses in America need more than anything is capital," says Bill Stenger, president of Jay Peak Resort, a ski destination in Orleans County, Vermont, and an EB-5 participant. Since 2005, Stenger has raised $80 million from 160 investors in 20 countries (from South Africa to Thailand) through EB-5, and says he has another $40 million in the pipeline. Stenger typically let go 600 of his 700 employees during off-peak season; with help from EB-5, Jay Peak now retains 90% of its employees year-round, and all hail from the nearby community. In December Stenger opened a $20 million, 57-suite hotel, and construction also is underway for an indoor ice rink a $70 million hotel, indoor waterpark, spa and conference center. "For the first time in memory, Orleans County doesn't have the highest unemployment in Vermont," crows Stenger. "Everyone attributes this to our projects."
Henry Liebman, co-founder of American Life, a Seattle-based real estate developer specializing in the renovation of industrial facilities, swears by EB-5. Liebman used to practice law and only dabbled in development. But from 1996 to 1998 he raised $40 million through EB-5 and invested it several properties. Today he presides over a $100 million (revenue) company.
American Life is one of the oldest EB-5 "regional centers." Unlike ordinary EB-5 participants, regional-center visa holders are allowed to create 10 jobs directly or indirectly, lowering the hurdle for approval. Say, for example, a Starbucks ( SBUX - news - people ) opens next to an EB-5 funded hotel: Those baristas count toward the 10-person job-creation requirement. Of the 10,000 annual visas available through EB-5, 3,000 are reserved for regional centers, the ranks of which have tripled, to 73, in the last year.
American Life has raised a total of $450 million through EB-5. "The countries always change," says Liebman. "U.K. and Korea were the biggest. Now it's India, Iran, China--they come from everywhere!" As for jobs created, he adds: "I've never sat down and added up every economist report, but we'd have a city. Nearly 10,000."
What about all those newly minted residents? "We stay in touch with our investors who live all over the U.S," says Jay Peak's Stenger. "Many are retired and live in Florida, the Carolinas or the Southwest. Many are young families who have careers in the U.S. Some are doctors, some are engineers. One is a retired surgeon from South Africa who is doing graduate work at Harvard starting a new career at 60. Many investors are in college or grad school and this investment will allow them to live and work in the U.S. after graduation."
Of course, like any government-run effort, EB-5 has its shortcomings. The dollar threshold to participate is quite high, and foreigners looking for visas often prefer the cheaper $500,000 option. Says one EB-5 entrepreneur in Florida, who requested anonymity: "A great majority of EB-5 participants are willing to do the $500,000, but can't do the $1 million."
Other entrepreneurs complain that EB-5 runs about as efficiently as the DMV. Investors can wait up to a year for approval; some get denied and have to reapply. Quality control isn't exactly great, either: If you want to file a complaint, there's no centralized authority to process it. Liebman's charitable assessment: "You get inconsistent adjudication."
Then again, when it comes to raising capital these days, suffering a little hassle is better than being grounded altogether.