What’s an Accredited Investor?
In the United States, an individual is an accredited investor if that person, including the person’s spouse, has a net worth of at least $1 million and earned an income of at least $200,000 ($300,000 including spouse) per year for the last three years.
It is important to understand the distinction between an accredited and non accredited financier because new companies in the U.S., while allowed to accept investments from an unlimited number of accredited investors, may only accept investment capital from a maximum of 35 non accredited investors.
The Importance of Investor Status
A foreign financier looking to invest in the U.S. economy should know whether or not he or she is an accredited financier before making any investments. If the investor is accredited, it should not have that much of an impact because U.S. enterprises can receive investments from an unlimited number of accredited investors. However, if the investor is nonaccredited, he or she may only be one of 35 non accredited investors to provide funding for a U.S. enterprise. An investor will want to know whether or not he or she is accredited so that the investor and primary holders of the enterprise don’t break Securities and Exchange Commission (SEC) rules. Breaking these rules could cause a person’s investment to become invalid and/or the person may be forced to start the investment process all over again. This would be detrimental to the foreign investor because without an investment, there can be no EB-5 visa.
Getting the Money
Since investing under the status of an accredited investor opens more doors for the EB-5 financier than non accredited status, an investor may first want to raise the necessary capital to become accredited before making an investment.
While it is allowed for friends and family of the investor to gift the financier the necessary funds to become accredited, the investor will still have to meet income requirements and be able to prove that the source of the funds is legal. This proof can be shown by tax documents and other financial statements.
Best Advice for EB-5 Investors
Perhaps the best thing an EB-5 financier can do before making any investments is speak with an immigration attorney to ensure the investment and subsequent immigration process go as quickly and smoothly as possible. Based on the attorney’s experience, he or she will be able to guide the financier through the process of investing and applying for citizenship under the EB-5 visa program to reduce the likelihood that the investor’s application is rejected.
In addition to helping applicants find out if they meet EB-5 financier requirements, an immigration attorney can also help the financier gather the necessary proof to show that the requirements have been met. The government will want to make sure that the applicant actually has the funds that he or she claims to have, which is why proof of a legitimate financial history will have to be shown. An experienced attorney will know exactly where the investor should look for these documents and, in many cases, can even help the financier acquire copies of the necessary documents.