In the first case ($1,000,000) the investor has to invest in a new business or an existing one.
New commercial enterprises are lawful for-profit entities that can take one of many different business structures.
Such business structures include corporations, limited or general partnerships, sole proprietorships, business trusts, or other privately or publicly owned business structures.
All new commercial enterprises must have been established after November 29, 1990.
However, older commercial enterprises may qualify if the investment leads to a 40% increase in the number of employees or net worth, or if an older business is restructured to such a degree that a new commercial enterprise results.
The firm has to create employment for at least 10 full-time workers.
These workers cannot be related to the investor, spouse and children are excluded.
Only persons legally authorized to work in the U.S. can be hired, undocumented illegal aliens cannot be counted.
Foreign investors may also choose to invest funds 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 a 12 or 24-month period.
The loss for this period must be at least 20% of the troubled business’ net worth prior to the loss.
In such case, foreign investors have the obligation of preserving the existing ten full-time jobs instead of being responsible for direct creation of them.
This case is unusual as investors will hardly want to invest in a troubled business.
The firm has to be managed exclusively by the investor, if in a partnership, the investor must show that he/she has the controlling share.
It is not mandatory that the $1,000,000 be cash: it can also be inventory, equipment, loans where the collateral is a property owned by the investor, tangible property, or cash equivalents valuated on a U.S. dollar fair market value.
The investor has to document that funds for the capital investment were obtained legally, and produce a business plan showing how the U.S. economy will benefit from the investment and how job creation will be maintained over time.
In the next section we will deal with the second case.