After several stopgaps, Congress passed the omnibus spending package on March 11, 2022. This spending package included an EB-5 reform bill, known as the EB-5 Reform and Integrity Act of 2022. The Integrity Act marks the most significant change to the EB-5 investment program since its beginning more than 30 years ago. On March 15, 2022, President Biden signed the spending package, known as the Consolidated Appropriations Act, which put all new measures into immediate effect.

What’s Included in the EB-5 Reform Bill

• After the longest suspension in its history, the EB-5 Regional Center Program received reauthorization through September 30, 2027. This is the longest reauthorization the program has received since 2015.
• Pending I-526 petitions from regional center investors will be allowed to continue in the EB-5 visa process, and any petitions made on or before September 30, 2026 will be adjudicated without dependence on the program’s reauthorization. This will avoid having investors in “processing limbo” should the program experience another lengthy suspension.
• Minimum investment thresholds have increased once again from $500,000 for projects in targeted employment areas (TEAs) to $800,000. Projects not located within TEAs now have an investment threshold of $1,050,000, up from $1,000,000. To account for inflation, these thresholds will be adjusted every five years.
• United States Citizenship and Immigration Services (USCIS) will now be in charge of designating high-unemployment TEAs.
• Regional center EB-5 investment projects will still be allowed to count indirect employment to meet the job creation requirement, but only for 90% of the jobs. This means that these projects will now have to create at least one direct employment position.
• Form I-526 and Form I-485 can now be filed simultaneously.
• New integrity measures have been put into place to ensure transparency in the EB-5 process. For example, a new integrity fund has been created, requiring regional centers to contribute $10,000–$20,000 each year.
• 20% of the EB-5 visa pool will be reserved for projects in rural TEAs.

The Impact of These Changes on Current and Potential Investors

The most pressing issue in the EB-5 investment industry has been the reauthorization of the regional center program. The program had been defunct since June 2021, leaving investors with pending I-526 petitions without any guarantees regarding what would happen to their investments and their dreams of U.S. permanent residency. The Integrity Act renews the trust in the program as a safe investment with the “grandfathering” clause, which ensures that each I-526 petition will be adjudicated regardless of the reauthorization of the program. This will also avoid further litigation against the EB-5 program.

With the lapse in the regional center program, direct EB5 investment projects have taken center stage in the industry, and all direct investors have had “current” processing status for months. This may change in the near future, with the reauthorization of the regional center program potentially creating backlogs for countries with high demand, such as China. These countries may experience cutoff dates, which will create challenges in the traditionally slow adjudication process. Faster processing times for I-526 petitions are now more important than ever. Investors from high demand countries may be more interested in rural TEA projects, as those will be the priority and may receive approval prior to cutoff dates being imposed.

Advantages for Holders of Different Visas

Investors who currently reside in the United States under an H-1B or E-2 visa benefit tremendously from the ability to file Form I-526 and I-485 concurrently. Submitting both forms at the same time allows them to receive more immediate work authorization and avoid consular visa processing. In addition, when submitting Form I-485, they will not be held liable for any status violations less than 180 days.

Indian nationals, who made up 75% of the H-1B visas granted in fiscal year 2020, may be particularly interested in filing Form I-485 simultaneously with Form I-526. However, there is an exception to the simultaneous filing, in that investors from high-demand countries that are subject to cutoff dates may not file both forms at the same time. Since India is at risk of cutoff dates being imposed in the near future, Indian nationals with H1-B visas who are planning on investing in an EB-5 project should not delay in contacting an immigration attorney to begin the process.

Expedited EB-5 projects are also a good option for H1-B and E-2 visa holders. These projects allow investors the benefit from decreased processing times for I-526 petitions. These typically offer the most benefit to investors who are currently residing outside of the United States, as they would be able to relocate within a matter of months, rather than waiting years for their conditional permanent resident status. It would be wise for investors to consider projects with the possibility of being granted expedited status.

The new changes to the EB-5 investment industry have the potential to increase the transparency and efficiency of the EB-5 visa process for all stakeholders. While investors stand to gain the most benefits, this extensive reform holds the promise of improving the industry as a whole. EB5AN is always available to provide guidance on the process.

For foreign nationals with plans to make the United States their new home, the EB-5 investment program has been a historically safe option. Contrary to other, riskier options, the EB-5 investment program has proven to be a reliable and transparent means of achieving U.S. permanent resident status, not only for investors, but for their immediate family members as well.

One aspect of the EB5 investment program that has caused inconveniences is the lengthy processing times. United States Citizenship and Immigration Services (USCIS) has been known to take more than two years to process Form I-526 petitions. In contrast to other immigration pathways, two years may not seem like a long time. But for an investor who is eager to begin their life in the United States, or whose children are approaching the age limit to qualify under their parents’ EB-5 visa, the more efficiently their petition can be adjudicated, the better. In addition, investors’ projects are also at risk of having to make significant changes to their project should they run into unforeseen challenges. This is far more likely to occur with longer processing times.

Thankfully, project developers have the option to significantly decrease processing times. USCIS offers expedited status for projects that meet certain criteria.

Projects of Interest to the U.S. Government

An EB-5 investment project that is granted expedited status can decrease its processing times from years to mere months. The general time period is anywhere from four to ten months, which is significantly better for the investors, and also for the project itself. Developers have faster access to the investment capital. In addition, the sooner the project can get underway, the sooner the economy can see the benefits of the project, including job creation.

How Does a Project Gain Expedited Status?

Expedited EB-5 investment projects are rare. To qualify for expedited status, the project must meet at least one of several specific criteria. The most prominent criterion is that the project must be one that is of urgent interest to the U.S. government. Examples of such projects include a new housing development for displaced families or an addiction treatment center to combat the opioid crisis.

Why Should Investors Consider Expedited EB-5 Projects?

Very few projects are granted expedited status. Foreign nationals who are presented with the opportunity to invest in one should certainly consider it—expedited processing could allow investors and their families to be granted U.S. permanent resident status far sooner.

Expedited EB-5 investment projects are a great opportunity, but also carry a greater financial and immigration risk for investors. Foreign nationals who plan to invest in an expedited project should begin the process as soon as possible, contact an immigration attorney and do their due diligence to find the best direct investment project for them.

The regional center program, formerly the most common EB-5 investment model, has been defunct since June 2021. As a result, many investors have been unable to continue the EB-5 visa process, with no guarantees regarding if or when the program will be reauthorized. In an effort to force the program’s reauthorization, Behring Companies filed a lawsuit against United States Citizenship and Immigration Services (USCIS), the Department of State (DOS), and the Department of Homeland Security (DHS). If successful, these government agencies will be forced to process I-526 petitions from regional center investors, which have been paused since the summer of 2021 and to reauthorize the regional center model.

Behring has a track record of success in taking legal action against government agencies related to the EB-5 industry. In June 2021, the company won a court case that repealed the EB-5 Modernization Rule, which lowered the minimum EB5 investment thresholds back to $500,000. As of February 2022, the court’s decision in that case still stands.

The Urgency Behind Reauthorizing the Regional Center Program

The regional center EB-5 investment model has many stakeholders, from investors and their families to business owners, immigration attorneys and more. As a result of the program’s suspension, which as of February 2022 has gone on for eight months, all of these stakeholders have faced serious inconveniences. The regional center program is subject to frequent reauthorization and has experienced a very brief lapse before, which led all stakeholders to believe that this suspension would be resolved quickly. However, since reauthorization is still pending, investors haven’t been able to continue in their EB-5 investment visa process, regional center projects have been put completely on hold, and billions of dollars may be at risk.

Behring’s lawsuit is representative of the feelings of the thousands of investors and other stakeholders who simply want to have their I-526 petitions adjudicated and be able to move on from this challenging time.

There is hope that the regional center program will be reauthorized as early as March 11, 2022. What the program really needs is permanent reauthorization, but it is certainly in the best interest of everyone in the industry for the program to receive at least temporary reauthorization as quickly as possible.

The EB-5 Investment Program is a great option for foreign nationals who are planning to relocate to the United States. In the decades since its creation, the program has helped thousands of investors and their families gain U.S. permanent residency.

With its unique advantages and business opportunities, the EB-5 program offers a gateway to permanent residency for qualified investors and their families. It also allows them to invest in the thriving U.S. economy.

If you’re Canadian and wondering whether the EB-5 program is right for you, this article can help you understand what it’s all about. In it, we discuss why the EB-5 visa is such an excellent immigration opportunity, and everything you need to know to apply successfully.

Why Are Canadians Moving to the United States?

Although Canada has historically been a country with a very high quality of life, many of its most attractive characteristics have faced challenges in recent years. This has led to a rise in the number of Canadians looking to move to the U.S. to secure a brighter future for their families.

Many students also move to the U.S. and account for more than one million of the international learners currently enrolled in schools. To add to this, the U.S. is a popular choice among foreign workers who can obtain temporary employment through H-1B visas.

Data from the Migration Policy Institute shows that many Canadians have moved to the U.S. for a better quality of life. Over 95% of Canadian immigrants have access to healthcare in America, and around 65% of those who move to the U.S. are able to find full-time employment.

Canadians may also consider moving to the U.S. because of its lower taxation rate. Data shows that, in 2021, as much as $14,493 per capita was collected for tax in Canada, whereas only $11,365 per capita was collected in the U.S.

There are currently more than 800,000 Canadians living and working in the United States, making up around 60% of immigrants in this country. Of those, around 30% have settled in California and Florida, two states known for their excellent living conditions and work opportunities.

Why Is the EB-5 Program a Great Option for Canadians?

The EB-5 Immigrant Investor Program is an appealing investment opportunity for Canadians looking to immigrate to the United States. With the potential to obtain citizenship, the program offers long-term residency stability and access to various benefits in a strong economic environment.

Unlike many other immigration pathways, the EB-5 program allows participants to bypass many of the complexities foreign nationals face when they want to secure permanent residency. With the EB-5 program, investors won’t have to worry about securing employer sponsorship or adhering to strict travel regulations to maintain their residency status.

The program allows foreign nationals to become business owners by investing in EB-5-approved projects. Not only do these projects promote economic growth, but they also give investors a great opportunity to expand their investment portfolios. Investors can also live and work anywhere in the country, including in any of the nine states that don’t require income taxes.

Brief overview EB-5 program

The EB-5 Immigrant Investor Program is run by the United States Citizenship and Immigration Services (USCIS) and provides an opportunity for foreign investors to obtain permanent residency in the country.

The program requires applicants to make a qualifying investment of at least $800,000 into a new commercial enterprise (NCE) if the NCE is located in a targeted employment area (TEA), or $1,050,000 if it’s not. An NCE is an entity designed to create and maintain at least 10 jobs for full-time U.S. workers.

Investors can also choose to invest money through the EB-5 regional center program—largely because of new project regulations that were approved in 2022—which offers different job creation opportunities within the project.

Certain EB-5 program requirements are a bit more flexible when you make an investment via a regional center. For example, investing in a regional center allows both indirect and direct jobs to be counted towards the required total of 10. If you invest directly in an NCE, you can only count direct jobs.

The advantages of the EB-5 Investment Program for Canadians

Applying for U.S. citizenship through the EB-5 program has various advantages for Canadian investors:

• Faster pathway to obtaining a Green Card: The EB-5 program is generally considered as one of the fastest ways to gain permanent residence in the U.S., because it’s not restricted to visa limitations. Some immigration categories only allow for a certain number of visas to be issued per year, often causing thousands of applicants to be rejected. Of the 700 EB-5 visas available annually for Canadians, only around 35 are claimed, making it a non-competitive environment.
• No required visa sponsors: An EB-5 investor and their dependent family members are automatically eligible for a Green Card and won’t have to secure employment or educational sponsorship first.
• Lucrative investment opportunities: NCEs in the U.S. can be highly profitable. U.S. economic development is one of the largest and most diverse in the world, making it a great option for investors.
• Access to American education: EB-5 investors’ children can attend public school in the U.S. for free. As permanent residents, they will also have a chance to be accepted into various top-rated colleges and universities at a lower tuition rate.
• Potential for U.S. citizenship: Obtaining citizenship through the EB-5 program is one of the easiest ways to secure your future in the United States. With this program, you can apply for citizenship after five years of receiving your permanent resident status.

Requirements for the EB-5 Investor Visa Program

There are a number of requirements that EB-5 applicants must meet for their applications to be successful. These include:

• Making the required capital investment into an approved entity in the United States
• Demonstrating that this investment will create and maintain at least 10 full-time jobs
• Provide evidence that the invested capital was obtained lawfully. This evidence can include financial or bank statements
• File the correct forms and supporting documentation

It’s important to note that this isn’t an exhaustive list, and each requirement has many steps that you need to fulfill. These can be tricky to navigate, so it’s recommended to make use of an immigration lawyer to help you.

What Is the Application Process for the EB-5 Program?

The application process for the EB-5 program involves several key steps that you must follow to have your documents approved. This process is outlined below.:

1. Determine your eligibility: Potential applicants must ensure that they meet certain eligibility criteria, which include making the necessary investments and fulfilling other program requirements.
2. Select a sustainable EB-5 project: Investors typically choose a project that aligns with their business investment goals and risk tolerance.
3. Make the qualifying investment: The minimum investment amount varies depending on whether you put money into a TEA or non-TEA project. For non-TEA projects, the minimum amount is $1,050,000, and for TEA projects, it’s $800,000.
4. File Form I-526, Immigrant Petition by Regional Center Investor: Applicants must file this form to demonstrate their eligibility and provide details of their investment to USCIS.
5. Obtain conditional permanent resident status: If your Form I-526 petition is approved, you and your family members can apply for conditional permanent residency in the United States. This status is valid for two years.
6. File Form I-829, Petition by Entrepreneur to Remove Conditions: Before the end of your two-year residency period, you must file Form I-829 to request that any conditions placed on your status be removed.
7. Obtain permanent resident status: If your Form I-829 petition is approved, you and your family can obtain permanent residency. After five years, you can apply for citizenship.

How long does it take to get an EB-5 visa?

The processing times for an EB-5 visa can vary depending on the complexity of your application, changes in immigration policies, and the current workload of the USCIS offices.

Recent investors in rural TEA projects have obtained I-526 approval in as little as 11 months through priority processing.

Once you have filed your application, you’ll be issued with a case number that you can use to track its progress. USCIS will also upload any updates or requests for evidence (RFE) under this case number, so it’s important to check their website regularly to ensure you don’t miss anything important.

Choose the Right Investment Project with EB5AN

It is essential for foreign nationals to seek the help of an immigration attorney to guide them throughout the EB-5 investment process and ensure they follow the strict regulations set out by USCIS. This gives them the best chance to have their application approved.

There may also be significant changes in the future for Canada, which makes this the right time to consider immigrating. The EB-5 investment visa is a good opportunity for Canadian citizens to relocate and start fresh in the United States.

To learn more about finding a qualifying investment project and other information about the EB-5 program, reach out to EB5AN.

Don’t Delay Your Future in the U.S.

The EB-5 visa program and application process can be challenging for individuals to navigate while ensuring they meet all its specific requirements. That’s why EB5AN is here to help. EB5AN has over a decade of EB-5 experience, successfully guiding more than 2000 families from over 40 countries through the project development and investment program.

With a nationwide network of USCIS-approved regional centers that covers more than 30 states and territories and a 100% petition approval rate, EB5AN is well-equipped to streamline your EB-5 visa investment process.

For more information on how our experienced team can help you obtain permanent residency through the EB-5 program, contact EB5AN today.

In February 2022, the U.S. federal government was in danger of a shutdown, as government spending was set to expire on the 18th. However, President Joe Biden signed a temporary spending bill, and a long-term spending package is now due on March 11, 2022.

The long-term spending bill had a previous deadline of December 2021, but it was pushed back, as the government has not been able to reach a bipartisan agreement on the federal budget. While these delays are likely to negatively affect the U.S. economy overall, the outcome of the omnibus spending package could affect the EB-5 investment industry in a significant way.

Potential EB-5 Investment Industry Reform

Many industry stakeholders predict that an EB-5 reform bill will be included in the omnibus spending package. A draft of the bill was leaked on February 3, 2022, and it included significant changes to the EB5 investment industry, including an increase in the minimum investment threshold. Currently, the minimum investment for an EB-5 project is $500,000. According to the leaked bill, that amount could increase to $700,000. It’s important to note that this threshold affects projects in targeted employment areas (TEAs).

However, not all of the proposed EB-5 reforms will hinder investors. In fact, the majority of the changes would lead to improvements in the EB-5 industry. These include measures to prevent fraud and the long-awaited reauthorization of the regional center program. This program, which was once the most common EB-5 investment, has been defunct since June 2021, causing many investors and their families to be left in processing limbo. United States Citizenship and Immigration Service (USCIS) has paused adjudication on all I-526 petitions from regional center investors, with no signs of if or when their processing will be able to continue. For many investors, this could mean the loss of their family’s life savings and a halt to their plans of obtaining U.S. permanent resident status.

While industry stakeholders hope that the EB-5 investment reform will be included in the upcoming omnibus spending package, there is no guarantee that this will be the case. In addition, the March 11 deadline may be pushed back once again, causing even further delays. Regardless of the decision made on the spending bill, it is important that foreign nationals who have already invested in regional center projects be allowed to continue their process and have their EB-5 visas adjudicated. This will help the EB-5 investment industry maintain its reputation as a safe route to U.S. citizenship and experience increased participation from foreign investors in the future.

The EB-5 investment process is generally a long one. Historically, United States Citizenship and Immigration Services (USCIS) has been known for slow turnaround times on EB-5 visa adjudication. To begin the EB5 investment process, foreign nationals must submit Form I-526, which is usually prepared by an immigration attorney. The form must demonstrate that the investor has made the minimum investment in a qualifying EB-5 project and that said project will create the required amount of jobs. Because Form I-526 petitions require accompanying documentation and each investor’s circumstances are different, there is no set processing time that investors can expect. Understandably, this can cause investors to become frustrated, and it also leads to major inconveniences.

Lengthy Processing Times Can Thwart Investor’s Plans

More often than not, the EB-5 investment threshold can encompass a family’s entire life savings. As of February 2022, the amount is $500,000 for targeted employment area (TEA) projects, but it has been higher in the past and is expected to increase once again in March 2022. In addition to the minimum investment, investors also need to have the funds to pay for USCIS filing fees, their attorneys, and the cost of relocating to the United States. With so much at stake, investors understandably expect USCIS to process their petitions swiftly.

More than a business investment, the EB-5 process is a pathway to permanent residency and even citizenship for foreign investors and their families. Upon completion of the EB-5 process, the investor and their immediate family—including children younger than 21—are granted permanent resident status. It is important to note that once an investor’s children turn 21, they are considered to have “aged out” of the process and are no longer eligible for permanent resident status. Thus, the sooner I-526 petitions are adjudicated, the better for investors who have children. Faster adjudication is also preferable as businesses can face challenges that cause them to make unexpected changes, which lower their chances of approval. USCIS does not allow major changes to be made to a business during processing, so approval chances are much greater if the petition is adjudicated efficiently.

Not every I-526 petition is automatically approved. Denials can happen for a number of reasons, including failure to provide required documentation or investing capital in a non-qualifying project. In the case of a denial, EB-5 investors have the option to try to recover their funds or appeal the USCIS decision. The sooner they receive their denial, the greater the chances that whichever action they take next will be successful.

There is certainly room for improvement in the EB-5 investment industry, including the processing time for I-526 petitions. In February 2022, the draft of an EB-5 reform bill was leaked, which is expected to be brought to Congress on March 11, 2022. The draft proposes significant changes, including an increase in investment thresholds and the reauthorization of the regional center program.

The direct EB-5 investment model has grown in popularity in recent months. Prior to its expiration in June 2021, the regional center model was the most common for EB5 investment projects. Historically, the regional center model had always been reauthorized and been able to continue, with the exception of a brief suspension in 2018. As of February 2022, however, the regional center program has been defunct for seven months, leaving thousands of EB-5 investors in processing limbo. Still, in the first two months of 2022, the direct EB5 investment model has raised millions of dollars and given much-needed hope to foreign nationals who dream of U.S. citizenship for themselves and their families.

The current investment threshold for direct EB-5 investments is $500,000. However, a leaked draft of an EB-5 reform bill mentioned the possibility of the investment threshold being raised to $700,000. This means that any foreign nationals who intend to pursue an EB-5 visa through a direct investment project should begin the process as soon as possible. This EB-5 reform is expected to be included in the upcoming March 11 appropriations bill, giving potential EB-5 investors only a few weeks to invest at $500,000.

When selecting an EB-5 investment project, potential investors need to keep in mind the requirements set out by United States Citizenship and Immigration Services (USCIS). In order to receive the EB-5 visa, investors must choose projects that adhere to the agency’s regulations.

Meeting USCIS Requirements

The EB-5 investment program was created in 1990 as a way for foreign nationals to pursue residency, and even U.S. citizenship, by investing in a project that creates jobs for U.S. workers. As such, the main USCIS requirement is for each EB-5 investment project to create a minimum of 10 jobs. In the direct investment model, these jobs must be continuous, full-time positions created directly by the new commercial enterprise (NCE) that last for a minimum of two years. It is important to note that there is no requirement for the jobs to be filled by the same employee during that time period, but they must be active for a full two years. In addition, job sharing agreements can be put into place to allow multiple employees to share a full-time role.

Another aspect for potential EB-5 investors to consider is the viability of the business in which they aim to invest. The business must be financially stable, with a solid business plan and proven financial viability, meaning that the business won’t be entirely dependent upon the foreign investors’ funds. Any business with previously denied I-526 petitions or with unreliable finances would not be a safe option.

Low Financial Risk

For many foreign nationals, the investment they make in an EB-5 project comprises the entirety of their family’s life savings. It is imperative, then, to invest in a project with a low financial risk. The safest investments are those that are made in businesses whose finances are not overly dependent on the EB5 investment funds. In the event of an I-526 denial, investors should also be able to quickly recover their initial investment.

The EB-5 industry has shifted to direct investment projects and has seen great success. As a result, this type of investment is now in high demand. Given the high likelihood of changes to the investment requirement after March 2022, foreign nationals who plan to begin the EB-5 investment process should secure legal representation and get started as soon as possible.

Foreign investors are navigating a challenging situation with the suspension of the EB-5 Regional Center Program, which, as of February 2022, has now gone on for over seven months. The regional center program had been the most commonly used EB-5 investment model since the financial crisis of 2008. Despite its popularity and the multitude of benefits that it has offered foreign investors and U.S. business owners alike, the program has depended on periodic reauthorization since its introduction in 1992—that is, Congress must renew the program periodically. This is what led to its brief expiration in 2018 and its longer suspension in June 2021.

In addition to putting billions of investment dollars at risk, the suspension of the regional center program has caused another, more significant challenge for EB-5 investors. Thousands of investors and their families are unable to move forward with the EB-5 visa process, as United States Citizenship and Immigration Services (USCIS) has put a pause on pending I-526 petitions from investors with regional center projects. In addition, USCIS requires EB-5 investment funds to be committed at the time of Form I-526 adjudication, so many EB-5 investors worry that their petitions and all of the work they put into them will be wasted. In support of the regional center program and its investors, EB5AN has reached out to Congress to request the program’s quick reauthorization and that investors whose applications were pending to be “grandfathered” in.

It is truly in the best interest of the EB-5 investment industry to reauthorize the program. While a decision is being made, however, investors are still left wondering if there is anything they can do.

Are Investors Able to Take Legal Action?

Regional center investors may wonder if they are able to take legal action against the U.S. government. However, this type of litigation has a very low chance of success.

EB-5 investors may also feel inclined to take legal action again their regional centers, but that would almost certainly be counterproductive. There would need to be proof that regional operators engaged in fraud or provided misleading information to investors. Moreover, if a regional center is grappling with a lawsuit and faces hardships as a result, it may be forced to shut down its projects, thus ending the EB-5 process for all investors involved. A much more effective course of action would be to continue to ask Congress to reauthorize the regional center program or to implement a grandfathering clause for investors whose EB-5 applications are still pending. The Foreign Investor Fairness Protection Act (FIFPA) is a clause that could potentially protect investors who find themselves in a situation like this, both now and in the future.

The EB5 investment industry has rallied in support of investors and other stakeholders. As of February 18, 2022, the Senate has approved a short-term funding bill to extend the U.S. government’s budget until early March 2022. Hopefully, the upcoming appropriations bill will include EB-5 reform; the industry could clearly benefit from a decision in favor of the reauthorization of the program or a grandfathering clause.

Government programs often undergo significant changes throughout the years as they adapt to the needs of stakeholders. The EB-5 visa program is no exception. Since it was created in 1990, it had changed and evolved significantly, but never as much as it has since June 2021, when the regional center program expired. Since then, industry stakeholders have had to adjust to significant changes to EB-5 regulations. Current EB-5 investment industry members and foreign nationals who aspire to apply for an EB-5 visa should review the recent industry developments. This will help them understand the state of the program, as well as anticipate future trends in 2022 and beyond.

Significant Changes to the EB-5 Program

One of the most significant changes to the EB-5 industry was the expiration of the regional center program in June 2021. Since it was created in 1992, the program has been dependent upon regular reauthorizations from Congress. That is, Congress must decide to revalidate the program before each expiration date. There was a brief expiration in 2018, but beyond that, the program has continued without any issues. Now, not only has the program been allowed to expire, but as of February 2022, it has yet to be reauthorized. As a result, approximately $15 billion investment dollars have been put at risk. Additionally, regional center investors whose I-526 petitions were pending are in processing limbo.

United States Citizenship and Immigration Services (USCIS) has suspended processing pending I-526 applications. With the regional center program’s future at stake, USCIS is dependent on action from Congress before it can move these applications forward. For many foreign nationals, their family’s life savings are tied up in these investments. The lapse in the regional center program means that they are not able to continue the EB-5 visa process. In the long run, this lapse in the program, and the lack of swift action by Congress, could severely damage the program’s reputation as a safe pathway to citizenship, discouraging others from participating in the process in the future. This is significant, as U.S. businesses also benefit tremendously from EB-5 investment projects.

Just before the expiration of the regional center program – days before, in fact – industry stakeholders had been welcoming a different kind of change with open arms. On June 22, 2021, the EB-5 Modernization Rule was found to have been improperly implemented. This was an unpopular EB-5 investment reform, as it increased the minimum investment thresholds. The U.S. court ruling on June 22 invalidated the rule immediately, bringing minimum EB5 investment thresholds back down to $500,000.

Will The Regional Center Program Be Reauthorized in 2022?

There has been some speculation among industry stakeholders that EB-5 program reform is forthcoming. This speculation was heightened on February 3, 2022, when a draft of a potential EB-5 bill was leaked. The draft proposes many changes, including the reauthorization of the regional center program, changes to investment amounts, and a redefinition of targeted employment areas (TEAs).

The most urgent issue in the EB5 investment industry is the reauthorization of the regional center program. Many suspect that if the program is not reauthorized, Congress will at least implement a grandfathering clause for current investors, allowing them to continue in the EB-5 process. If they fail to do either of those things, there could be consequences as severe as the loss of billions of investment dollars and widespread litigation.

It is important to note that, although the industry is facing turbulent times, it has continued to see success through the use of the direct EB-5 investment model. This model offers distinct advantages that allow investment projects to continue, though it may not be as attractive to foreign nationals as the regional center program. Given that it is a historically secure path to U.S. citizenship, the EB-5 investment program will likely continue to thrive and attract investments from foreign nationals in the future.

Since the expiration of the regional center investment model in June 2021, stakeholders in the EB-5 investment industry have had to make major adjustments. With the exception of a brief expiration in 2018, the regional center program had been in place without disruption since 1992. Given the many benefits it offers to foreign investors, business owners and immigration attorneys alike, the vast majority of EB-5 investments used this model. Now, the direct EB5 investment option has become the focus of the industry. The reauthorization of the regional center program is urgent, but the industry has continued to thrive without it thanks to direct projects.

Since June 2021, millions of dollars in direct EB-5 investment capital have been raised, leaving some industry stakeholders questioning whether the reauthorization of the regional center program is actually a necessity. It is clear that the industry has been able to adapt successfully and shift to the direct investment model. However, the regional center model offers advantages that are both convenient and unique.

1. Investors Should Be Able to Choose the Investment Model They Prefer

Investors should be able to choose the EB5 investment model that suits them best. For investors who are looking to make a significant profit while also obtaining permanent resident status, direct EB-5 investment could be a better option. This model has a potential for higher returns. These projects also offer EB-5 investors greater managerial responsibilities, which are perfect for anyone who wants to have more control over the course of their project.

For investors who want less to do with the business side of EB-5 investments and are more focused on a pathway to US citizenship, the regional center investment model would be a better fit.

U.S. businesses also stand to benefit from EB-5 projects, and the type of investment model has an effect on them as well. Small businesses generally take on fewer investors and need quick access to capital. For them, the direct EB-5 investment model would be preferrable, as its approach is more streamlined. Large businesses may prefer the regional center EB-5 investment model, as it typically offers a greater amount of capital. Giving foreign investors the ability to choose between the two investment models may encourage greater participation in the program, thus benefiting the investors themselves and the U.S. businesses owners they partner with.

2. The Regional Center Model Simplifies the Job Creation Criteria

One of the key criteria for the EB-5 investment program is that the new commercial enterprise (NCE) must create at least ten jobs. The direct EB-5 investment program can only count jobs in which employees are hired directly by the NCE. On the other hand, regional center-sponsored projects can count the jobs that are created as a result of the project’s overall positive economic impact on the community. These jobs—referred to as induced and indirect employment – are the ones that the NCE creates indirectly. For example, if the EB5 investment project uses local companies to obtain goods and services and those local companies experience growth, investors can count those jobs.

3. Regional Center Investment Incentivizes Greater Participation in the EB-5 Program

The financial crisis of 2008 actually led to growth in the EB-5 investment program, with the regional center investment model being the most commonly used. The billions of investment dollars that flooded into the country were due in large part to this model. With the expiration of the regional center program, billions of investment dollars are at risk—about $15 billion, in fact.

The regional center EB-5 investment model can be more attractive to foreign investors, given its flexibility in terms of job creation and minimal managerial responsibilities. As mentioned previously, the industry is able to continue to see success through the direct EB5 investment model. However, as of February 18, 2022, industry stakeholders still have hope that the regional center program will be reauthorized. There is an opportunity for reauthorization in an upcoming spending bill due on March 11, 2022. If reauthorization is granted, the benefits to the EB-5 investment program will be tremendous.