Investing in a troubled business lets you count jobs you preserve instead of jobs you create, and that is the only concession EB-5 makes. Nothing else moves. The minimum is still $800,000 inside a Targeted Employment Area and $1,050,000 outside one. You still have to account for ten full time positions, and conditional residence still runs two years. What changes is the arithmetic: keeping ten people employed can substitute for hiring ten new ones.
Whether that is a bargain depends entirely on the company you are buying.
The 20 percent test, read precisely
The regulation at 8 CFR 204.6 defines the term, and the definition is narrower than most summaries suggest. A troubled business has existed for at least two years. It has posted a net loss for accounting purposes, determined under generally accepted accounting principles, during the twelve or twenty-four month period before the priority date on the EB-5 petition. That loss must be at least equal to twenty percent of the business's net worth before the loss.
Three details get misreported constantly.
The comparison runs against net worth. Revenue and total assets play no part in it. A thinly capitalized company clears the bar after a modest bad year, while a well capitalized one can lose serious money and still fail the test. Second, the measuring window is anchored to your priority date, so when you file changes which fiscal periods are eligible. Third, successors in interest inherit the predecessor's time in existence, which matters when the target has been reorganized recently.
One more trap worth naming. The dollar figures printed in 8 CFR 204.6(f) are stale, still showing $1,800,000 from the 2019 Modernization Rule that a federal court vacated in June 2021. Rely on the statutory amounts set by the EB-5 Reform and Integrity Act of 2022 instead, and remember they face their first inflation adjustment on 1 January 2027.
Job preservation is harder than it sounds
The evidence rule at 8 CFR 204.6(j)(4)(ii) asks for proof that the number of existing employees is being or will be maintained at no less than the pre-investment level for at least two years. Tax records, Forms I-9 and a comprehensive business plan back it up.
Read that as a floor you must hold, month after month, in a company that was losing money when you found it.
The definitions underneath are unforgiving. Full time means a position requiring a minimum of 35 working hours per week. A job-sharing arrangement, where two or more qualifying employees split one full time position, does count. Combinations of part time positions do not count, even when the hours add up neatly on a spreadsheet, and independent contractors are excluded from the definition of a qualifying employee altogether. EB-5 Job Creation Requirement: How 10 Jobs Per Investor Are Counted sets out how the counting works in ordinary cases.
Establish the baseline before the money moves. Fix a date and pull payroll registers and I-9s as of that day. Then make the seller certify the headcount in the purchase agreement. Skip that step and you will be arguing about the denominator two years later with no contemporaneous record.
How a failing company becomes a new commercial enterprise
You cannot simply buy shares in a struggling business and call it EB-5. Under 8 CFR 204.6(h), a new commercial enterprise can be established by purchasing an existing business and restructuring or reorganizing it so that a new commercial enterprise results, or by expanding an existing business so that net worth or headcount rises by 40 percent, reaching at least 140 percent of the pre-expansion figure.
The expansion route confuses people. Passing the 40 percent test establishes that you have a qualifying new commercial enterprise. It does not retire the ten job requirement, which stands on its own.
Most troubled business deals are structured as direct investments rather than through a regional center, which drags a further requirement along with it: you must be engaged in the enterprise through day-to-day managerial control or through policy formulation. Direct EB-5 Investment: Start Your Own US Business for a Green Card explains what that engagement looks like when USCIS examines it, and Direct EB-5 Nightmares: Common Pitfalls That Kill Entrepreneur Plans covers where entrepreneur investors typically come unstuck.
Proving it twice: the petition file and the I-829 file
Your petition needs historical financial statements that establish the loss, plus a business plan explaining how the turnaround preserves employment. Documentation of the pre-investment workforce goes in alongside them. The business plan carries unusual weight here, because there are no new hires to point at. EB-5 Business Plan Requirements: Matter of Ho Compliance and Cost covers the standard USCIS applies.
Then, roughly two years later, Form I-829, the petition to remove conditions on residence asks you to prove you did it. Capital sustained. Headcount held. Evidence assembled from payroll filings rather than from assertion.
Approval removes the conditions as of the second anniversary of the date you obtained conditional residence, not retroactively to the start of the case. Your spouse and children are included on your I-829 rather than filing separate petitions of their own. I-829 Evidence: Proving EB-5 Job Creation and Capital at Risk goes through the evidence package in detail.
Where these deals go wrong
- Inherited liabilities. Unpaid payroll taxes and pending litigation travel with the business, and so does environmental exposure. A distressed seller has every reason not to volunteer any of it.
- Messy employment records. Companies in trouble stop maintaining I-9 files properly, which leaves your baseline undocumented at exactly the moment you need it documented.
- Capital that funds the seller. If your $800,000 is used to buy out the previous owner rather than to fund operations, the at-risk requirement is in serious jeopardy. EB-5 Capital At Risk: What It Means for Your $800,000 Investment explains why that structure fails.
- Accounting that will not survive review. A net worth figure prepared to please a buyer is not the same as one prepared under GAAP, and USCIS reads the statements closely.
- A turnaround that does not turn. Preservation is measured over two years, and one restructuring round of layoffs can put the I-829 out of reach. EB-5 Project Failure: Bankruptcy, I-829 Risk, and What Investors Can Still Save covers what remains possible after that.
Who this route genuinely suits
It suits an operator. Someone who would buy this company anyway and has run something similar. Treating the green card as the second reason rather than the first is the mindset that survives the process.
It suits people willing to take management risk in exchange for avoiding hiring risk. A restaurant group with 14 employees and a bad two years is a very different proposition from a startup that has to find and hire ten people from scratch inside a fixed window.
It does not suit anyone shopping for an easier green card. The troubled business rule looks like a shortcut on paper, and in practice it swaps one difficulty for another. Before going further, compare the paths in Regional Center vs Direct EB-5: Which Path Is Safer and Faster for You? and read the USCIS overview of the EB-5 Immigrant Investor Program.