Four U.S. senators — Tom Cotton, Ted Cruz, Josh Hawley, and Chuck Grassley — pushed for the suspension of employment-based immigration programs, including the EB-5 program, in a May 7 letter to former President Trump. This effort followed rumors spread by Politico, that former President Trump’s coronavirus relief bill would enact significant changes to the program. Politico alleged that Senator Lindsey Graham pushed for extensive changes to the EB-5 program in the coronavirus relief bill, while Graham vehemently denied that he did so.

In the letter, the four senators claim immigration programs such as H-1, H-2B, and OTP attract immigrants and take American jobs — jobs desperately needed in the wake of the COVID-19 pandemic. They specifically target EB-5 investors at the end of their letter and request that former President Trump removes these investors from the list of exemptions from the immigration restrictions that had been put in place in an April 27, 2021 proclamation.

The letter included entirely false claims about the EB-5 program. The senators claimed the program is a “pay-for-citizenship scheme.” They also wrote that the process is wrought with “scandal and fraud.” While these statements about the program are not factual, the bad press they create can generate misconceptions for potential investors looking to make an EB-5 investment.

U.S. Regulations Monitor Against Fraud in the Program

Every program must be cautious about people looking to game the system. The EB-5 investment program has seen fraudulent activity before it is exceedingly rare, with extensive measures in place to prevent fraud.

In order to prevent and address fraud, United States Citizenship and Immigration Services (USCIS) has increased training and cooperation with external agencies such as the Immigrant Investor Program Office. These efforts are meant to catch the minimal amount of fraud that has occurred in the past.

In November 2019, the Department of Homeland Security enacted the EB-5 Modernization Rule to prevent people from abusing the EB-5 program and ensure that funds are primarily being allocated to areas in need.

EB-5 Investors Can Not Purchase a Green Card

Critics of the EB-5 investment program, including the four senators who wrote the letter to former President Trump, perpetuate the idea that the EB-5 program is a pay-for-citizenship scheme. However, investors cannot simply put the required money into a project and expect a green card. In order for potential investors to obtain their green card, their investment capital must be at risk throughout the investment process. Additionally, they must prove that their investment will create or has created 10 new full-time jobs for U.S. workers. Investors must be willing to take this risk in order to receive a green card. EB-5 investors must also prove that their EB-5 capital has been lawfully sourced. USCIS will deny an investor’s petition if they do not meet these requirements.

The EB-5 investment program helps lift the economies where successful EB-5 investment projects are based. The program has funneled 37 billion dollars in foreign capital into the U.S. economy since 2008. In addition, each EB-5 investor must generate 10 new jobs from their investment, which helps lower the unemployment rate in the community where the project is based.

EB-5 Investors Are an Asset to the United States

The minimum investment requirement to join an EB-5 investment project means that successful foreign investors are wealthy and successful. Their success and wealth make them beneficial to the United States, meaning that EB-5 investors will continue to benefit the U.S. economy even after their EB-5 investment.

Senatorial Support Would Help the EB-5 Program Grow

EB-5 investments benefit the United States with job creation and additional funds being invested in U.S. communities. These economic benefits and an influx of foreign investors would help the U.S. economy recover from the COVID-19 pandemic. In order to attract these investments and investors, the United States must remain competitive against other countries that also have investment-based immigration programs. U.S. senators must support reform to the program that would make it more efficient to ensure that the United States continues attracting foreign investors.

Like most industries, the COVID-19 pandemic has affected many aspects of the EB-5 program. However, United States Citizenship and Immigration Services (USCIS) has continued to process EB-5 petition adjudications throughout the pandemic. Foreign investors looking to obtain an EB-5 visa are still able to prepare for and potentially initiate EB-5 investments.

In order to complete their projects, certain EB-5 investors may need pandemic restrictions pandemic to be lifted. Many U.S. embassies and consulates continue to have their doors shut because of the pandemic. However, these closures do not prevent prospective EB-5 investors from beginning their immigration journey.

Deciding Between Different Types of EB-5 Investments

It is important for any prospective EB-5 investor to evaluate the different types of EB-5 investment and determine which best fits their needs. The best way to begin this process is by talking to an immigration lawyer. Immigration attorneys are available via video chat during the pandemic. They can guide EB-5 investors through decisions like whether they should make a direct or regional center EB-5 investment or if they should invest in a targeted employment area (TEA).

The EB-5 Investment Program’s Requirements

EB-5 investors must be able to invest $900,000 if their project is located in a TEA or $1.8 million if their project is located outside of a TEA. This requirement may also be difficult to satisfy during the pandemic if a potential investor has trouble liquidizing funds.

Once a potential investor has provided the necessary funds, they are encouraged to contact an immigration lawyer. An attorney can help EB-5 investors determine the best types of funds to prove that their investment capital is lawfully sourced.

Decide Why You Are Making an EB-5 Investment

It is important for investors to establish what returns they are looking to make on their EB-5 investments before selecting a project. Most EB-5 investors are more concerned with obtaining a U.S. green card than receiving a high return. If this is the case for you, you may prefer to invest in a project sponsored by a regional center. Investing through a regional center often simplifies the investing process and facilitates the demonstrated job creation requirement, with limited managerial requirements for the investor.

However, if an investor hopes to see high return on their investment, they may choose to make a direct EB-5 investment. Direct investors have more control over their capital, although this often comes with increased managerial requirements.

Evaluate Investment Risk Levels

It is essential that potential EB-5 investors conduct thorough due diligence before selecting a project. EB5AN has produced an EB-5 Project Risk Assessment Questionnaire to help investors evaluate the financial and immigration risks associated with a project.

The questionnaire is not the only tool to determine whether an EB-5 investment project fits an investor’s needs. Investors should also look through the documentation of a project. This paperwork may seem tedious but will offer potential investors insight into whether the majority of a regional center’s I-526 and I-829 petitions were approved and if they have returned investors’ funds.

To say that people around the world dream of a life in the United States would be an understatement. With the world’s strongest economy, world-renowned higher education institutes, and state-of-the-art health care facilities, the United States offers a life that people in most countries can only dream of. Billions around the world have also fallen in love with the United States thanks to Hollywood, and as the world’s leading media exporter, the United States attracts awe-struck visitors to its borders each year.

Visiting or living in the United States short term is one thing, but for those looking to make the United States their permanent home, the process is trickier. Save for marrying a U.S. citizen or permanent resident, the only permanent path to immigration is usually employment-based, and attaining a work visa can be difficult, whether due to political reasons—such as the Trump administration’s immigration ban in 2020—or systemic reasons, with the H-1B visa putting applicants through a lottery system due to excessive demand.

That’s where the EB-5 Immigrant Investor Program comes in. For a one-time passive investment of $1.8 million or $900,000, depending on the targeted employment area (TEA) status of the project, foreign nationals can gain U.S. permanent resident status for themselves, their spouse, and their unmarried children below the age of 21. Largely seen as one of the fastest and easiest pathways to U.S. immigration, the EB-5 program welcomes thousands of investors and their families to the United States every year.

Overview of the EB-5 Program

The EB-5 program was formed in 1990, when Congress voted to pass an immigration bill that packaged a number of immigration programs together. One was the EB-5 program, or the employment-based fifth-preference program, whose purpose was to stimulate the U.S. economy and drive job growth in high-unemployment and rural areas.

For an EB-5 investment to procure its investor a U.S. green card, it must satisfy the various requirements of the program. If United States Citizenship and Immigration Services (USCIS) adjudicators believe an EB5 investment as presented in an I-526 petition is more likely than not to fulfill the program requirements, they grant the petitioner two-year conditional permanent resident status. Within the final 90 days of the conditional permanent residency period, the investor must file an I-829 petition outlining how the EB-5 investment indeed met the program requirements. Approval of the I-829 petition results in the removal of the conditions from the investor’s permanent resident status.

EB-5 Requirements

While EB-5 program requirements can be challenging to satisfy, they are generally not as restrictive as requirements for conventional immigration programs. In the EB-5 program, an investor’s language skills, educational background, and professional qualifications are irrelevant. To gain U.S. permanent residency rights through the EB-5 program, an investor must invest the required amount of lawfully obtained capital in a qualifying EB-5 project for the duration of the two-year conditional residency period and ensure that the EB5 investment results in job creation for U.S. workers.

Minimum Required Investment Amount

There is no maximum EB-5 investment amount, but investors must inject a minimum amount of capital to qualify for the immigration benefits. For regular EB-5 projects, the minimum amount is $1.8 million, but for TEA projects, it’s halved to $900,000. TEAs are characterized by unemployment rates 50% higher than the national average or a population of less than 20,000.

Lawful Source of Funds

The capital an investor infuses into an EB-5 project must have been legally obtained in order to confer the investor immigration status in the United States. EB5 investment capital can be sourced from virtually anywhere as long as the investor can prove its lawful origins. Investors are advised to work with EB-5 legal counsel to determine the best fund sources to document.

At-Risk Status

Investors must maintain their EB-5 investment capital at risk throughout the entire investment period, including the full two-year conditional permanent residency period. In other words, the capital must incur the possibility for both loss and gain at all times. Lengthy backlogs have led to the need for some investors to redeploy their capital to maintain the at-risk status.

Job Creation

Given that the EB-5 program’s fundamental goal is economic stimulation and job creation, an EB5 investment must fund the creation of at least 10 new, full-time jobs in the United States before the investor may qualify for immigration benefits. The precise conditions of the job creation requirement depend on whether the EB5 investment has been injected directly into an EB-5 project or through an EB-5 regional center, with regional center investments enjoying relaxed requirements.

Direct EB-5 Investment vs. Regional Center EB-5 Investment

The EB-5 program presents two pathways to a U.S. green card: direct investment in a qualifying project or indirect investment through a regional center. Both routes have their merits, and both end in the same outcome, should an EB-5 investment be successful. However, most EB-5 investors opt for the regional center due to the relative security and freedom it offers.

Direct investment is the best option for experienced business managers who want to make the most of their financial returns. In this pathway, the investor is generally involved in the day-to-day management of the new commercial enterprise (NCE), requiring them to live near the project. The minimum 10 jobs must be direct hires of the NCE or construction jobs that last at least two years.

Regional center investment, conversely, pools EB-5 investment capital from numerous investors together into an investment in a larger project. Reputable regional centers are run by business experts who conduct careful due diligence on projects before offering them, generally rooting out projects in TEAs to procure a lower required EB5 investment amount for investors. In most cases, simply signing on as a limited partner is enough for an investor to satisfy the involvement requirement, and job creation is significantly easier, with indirect and induced jobs estimated through a professional third-party economic calculation able to be counted.

Why Invest in the EB-5 Program?

The reasons for setting up a permanent home in the United States are plentiful. From the world-class educational opportunities—both at the university and public school level—to the cutting-edge technologies at U.S. medical facilities, to the high levels of peace and stability the country experiences, a life in the United States can be the best investment a foreign national can make in their family’s future. With the right to live, work, and study anywhere in the United States, permanent residents can live the American dream, taking pride in having fostered their new country’s economy through their EB-5 investment.

Whether a foreign national makes an EB-5 investment through a USCIS-approved regional center or directly in their chosen EB-5 project, the outcome of a successful investment is the same: U.S. permanent resident status for the investor and their immediate family members. Success is contingent on meeting the various requirements of the EB-5 program, including investing the minimum required investment amount, proving the lawful source of funds of the EB5 investment capital, and creating no fewer than 10 full-time jobs for U.S. workers.

EB-5 investment through a regional center and EB-5 investment directly in a qualifying project both have their merits. Direct investment is well suited to investors with substantial managerial experience who wish to work closely with the new commercial enterprise (NCE) to retain more control over their investment funds. For most EB-5 investors, however, the choice is clear: the advantages of investment through a regional center far outweigh those of direct EB5 investment.

What Are the Advantages of EB-5 Regional Center Investment?

Most EB-5 investors choose to work with a regional center—in fact, some years, all the investors from a given country opt for the regional center route. This choice isn’t without reason—EB5 investment via a regional center offers more security and freedom than direct EB-5 investment. Below are the key benefits of EB-5 regional center investment.

Higher Proportion of TEA Projects

Most regional centers focus on EB-5 projects that qualify for targeted employment area (TEA) status, which is designated to projects in particularly high-unemployment or rural areas that can especially benefit from the economic stimulation and job creation the EB-5 program cultivates. Congress has given foreign nationals a strong incentive to make an EB-5 investment in TEAs: the minimum required investment amount for TEA projects is halved from $1.8 million to $900,000. While direct investment projects can also qualify for TEA status, depending on their location, they are easier to find through EB-5 regional centers.

Lighter Managerial Responsibilities

Those who make an EB-5 investment directly in a project are generally required to heavily involve themselves in the day-to-day management of the NCE, which can be daunting for investors without sufficient managerial experience or who simply wish to devote their time to other affairs. Regional center investors are typically spared these responsibilities, instead satisfying the requirement of involvement in the NCE with a policy-advisor role as a limited partner. This allows investors to, for example, make an EB5 investment in a project in Florida yet move house to Hawaii.

Easier Job Creation Requirements

To be eligible for permanent resident status in the United States, a foreign national must prove their EB-5 investment has created at least 10 new jobs for U.S. workers. For direct investors, this can prove challenging, as the jobs must be direct (i.e., listed on the NCE’s payroll or construction jobs lasting more than 24 months). Regional center investors, on the other hand, can count not only direct jobs but also indirect and induced jobs. Thus, instead of showing the NCE’s payroll to prove job creation, regional center investors can supply a professionally drafted economic report estimated to have been created through the NCE’s provision of goods and services and the wages spent by NCE employees in the local community.

Guidance from EB-5 Professionals

EB5 investments are inherently complicated, and it can be challenging for an investor to navigate all the regulations on their own. Reputable regional centers are run by industry experts with extensive experience in the EB-5 sphere and investment projects, which means investors have access to professional advice and guidance to help them through the process. Most regional centers have in-house law experts to help make sure investors are complying with all the EB-5 regulations.

How Do You Choose the Right EB-5 Regional Center Program?

While making an EB-5 investment through a regional center generally offers more security than direct investment, meticulous due diligence on prospective regional centers is still imperative. Regional centers vary in their experience, professionalism, and track record, and anyone who aims to immigrate permanently to the United States should ensure they are entrusting their EB5 investment capital to a reputable organization. Here are three key aspects to consider when vetting potential regional centers.

Track Record

Consider how many EB-5 projects the regional center has previously worked with and how many of its EB-5 investors’ journeys have culminated in U.S. green cards. Look at the EB-5 regional center’s track record for both I-526 and I-829 petitions. To safeguard your financial interests, also ascertain how many previous investors have received their EB-5 investment capital back.

The Developers They Work With

Take a look at the developers and projects the EB-5 regional center works with. Who are the developers and how trustworthy are they? Find out who the construction lenders and general contractors are. Determine the developers’ commitment to their own projects by considering how much of their own money they have invested in their projects.

The People on Their Team

Learn who operates the EB-5 regional center and what their backgrounds are. Look into their credentials and experience in relevant areas, including EB-5 investments and project development. Ask questions and get to know the team—after all, if you choose to invest through the regional center, you will be working closely with them.

The EB-5 Immigrant Investor Program is a successful U.S. green-card-by-investment program that, since its inception in 1990, has contributed billions in foreign capital to the U.S. economy and funded the creation of hundreds of thousands of new jobs. The foreign nationals who provide the EB-5 investment capital are issued green cards, assuming their investment satisfies the various requirements of the EB-5 program. Requirements include the creation of at least 10 full-time jobs for U.S. workers, proof of the legal sources of one’s EB5 investment funds, the maintenance of the capital in an at-risk status for the duration of the EB-5 investment, and, of course, funds that meet the minimum required investment amount.

All of the above-mentioned requirements can pose problems to EB-5 investors, with the minimum required investment amount constituting the most absolute obstacle. Clocking in at $1.8 million, the minimum required investment amount can nullify an EB5 investment journey before it even begins, since many foreign nationals don’t have $1.8 million handy to infuse into a U.S. new commercial enterprise (NCE). That’s where targeted employment area (TEA) projects come in. With a minimum required investment amount of $900,000, TEA investment allows an EB-5 investor to obtain the same U.S. permanent residency benefits as with non-TEA projects at half the cost.

Complexities of TEA Eligibility Calculation

While the definition of a TEA is clear cut, in practice, calculating whether a project qualifies for TEA designation can be tricky. TEAs come in two different flavors—high-unemployment TEAs and rural TEAs, with high-unemployment TEAs accounting for the majority. Rural TEAs are relatively easy to calculate—using the latest 10-year U.S. census data, an investor must show the area has fewer than 20,000 inhabitants and is not located in a metropolitan statistical area (MSA) or on the outskirts of an area with more than 20,000 inhabitants.

The calculation of TEA eligibility for high-unemployment TEAs is more complicated. To qualify, an area must have an unemployment rate 50% higher than the national average, using reliable and current census-tract-level unemployment data. Those pursuing an EB-5 investment essentially only have two datasets to cull figures from: American Community Survey (ACS) five-year census-tract data and Bureau of Labor Statistics (BLS) annual county-level data. In most cases, EB-5 investors target a census-tract-level TEA, leaving them with two calculation options: using the imprecise five-year estimates from ACS or combining the five-year ACS data with the annual county-level data from BLS to extract a more precise estimate. The latter is known as the census-share method.

Poor Timing Can Lead to Projects Losing TEA Eligibility

United States Citizenship and Immigration Services (USCIS) requires investors to use the most recent available unemployment data when demonstrating TEA eligibility in their I-526 petition. If the unemployment rate decreases and the area no longer encompasses a rate 50% higher than the national average after the investor has submitted their I-526 petition, they can proceed with their lower investment amount, as long as the area qualified as a TEA at the time of submission. However, fluctuating unemployment data throughout the project planning stage can put investors in danger of needing to make a $1.8 million EB5 investment.

Rolling Monthly Calculations of Census Tract Unemployment Data

While ACS figures are only released yearly, consolidated in a five-year chunk of data, BLS releases unemployment data monthly with a two- to three-month lag. Typically, investors use BLS’s annual releases, published in April of the following year, to obtain a more precise estimate of unemployment levels. However, if an investor compiled BLS’s monthly data releases over the most recent 12 months, the calculation would yield the most accurate possible estimate of current unemployment data.

This calculation method is known as the “rolling average” because it provides insight into a 12-month period covering periods in two different calendar years. In the era of COVID-19, such a calculation could be particularly valuable, as it would highlight the debilitating economic effects of the pandemic more quickly than the annual BLS data, expected to be published in April 2021. As of January 2021, the most recent yearly BLS data available covers 2019, thus missing any effects from the COVID-19 pandemic.

If an EB-5 investor opts for the rolling average calculation method—which, it should be noted, is an atypical calculation method that could throw a USCIS adjudicator for a loop—it’s imperative to compare the data to the national unemployment data for the same period. Presenting data from different time periods, even if they overlap, would constitute an invalid TEA calculation. The investor should also ensure they are filing their I-526 petition with the most recent BLS monthly data available. If the next month’s data is released during the I-526 preparation period, the rolling average calculation should be revised to encompass it.

Can You Calculate a TEA with Data Covering Less Than a Year?

An EB-5 investment participant may wonder whether they can calculate TEA eligibility with data covering nine months, six months, three months, or even one month. USCIS has not provided any specific guidance against such a calculation method, but prospective investors should be aware that this constitutes unexplored territory in the EB-5 realm. In a data release in March 2020, the immigration body did indirectly consider a one-month TEA eligibility calculation, with the example calculation in the question only spanning a one-month period and USCIS ignoring the calculation period in its answer to the main point of inquiry. However, this should not be automatically construed as acceptance of such a method.

Since month-to-month unemployment data can fluctuate greatly, a USCIS adjudicator may be reluctant to accept a rolling average calculation of less than one year, as it could be deemed to inaccurately represent the region’s unemployment situation. This danger is magnified during the COVID-19 crisis, since a rolling average calculation over a short period of time could dramatically accentuate unemployment that may not continue long into the post-COVID recovery. Considering that most I-526 petitions are not adjudicated until about two years following submission, it’s unlikely that such a calculation would be effective. The government may wish to exercise more leniency in light of the damage the pandemic has bestowed on the U.S. economy, but foreign nationals hoping to immigrate to the United States are strongly advised to avoid such gambles on their EB-5 investment.

Since 1990, foreign nationals from various countries have taken advantage of the EB-5 Immigrant Investor Program to start a new life in the United States with their spouse and unmarried children younger than 21. Investors must part with $1.8 million—$900,000 for targeted employment area (TEA) projects—but an EB-5 investment in a bright, promising future in the United States is more than worth it, and if they select their EB-5 project carefully, investors may also earn a handsome return on their initial EB5 investment amount.

While the EB-5 program is known as one of the quickest and simplest methods to long-term U.S. immigration, an EB-5 investment still has to fulfill several requirements to qualify its investor for a U.S. green card. One such requirement is to provide documentation that proves the EB-5 investment capital originated from lawful sources. Although it makes sense for United States Citizenship and Immigration Services (USCIS) to require proof that its green-card-by-investment program is not promoting crime, either in the United States or abroad, the source-of-funds requirement can be time-consuming and challenging for investors to complete, depending on the type of funds comprising their EB5 investment.

To quote USCIS verbatim, an investor must “demonstrate by a preponderance of the evidence that the capital invested, or actively in the process of being invested, in the new commercial enterprise was obtained through lawful means.” Put more simply, an investor must provide evidence that shows their EB-5 investment capital is more likely than not lawful.

Different Investors Require Different Documentation

The difficulty behind offering general advice regarding the source-of-funds requirement is that each EB5 investment is different and thus requires different documentation. Procedures can also vary by country, with some documents more accessible in certain countries than others. Then, there’s the translation requirement—if an investor’s source-of-funds documents are not in English, they will also have to supply certified translations in English.

As USCIS allows EB-5 investment capital to come from any number of sources so long as it can be proven to derive from lawful sources, a wide array of documents could constitute source-of-funds documents for an EB5 investment. Below is a non-exhaustive list of potential source documents:

• Tax returns
• Bank statements
• Loan documentation
• Investment records
• Employment records
• Sale of asset records
• Accounting records from the investor’s own business
• Records of private transactions, such as gifts

How Long Does It Take to Gather Lawful Documentation?

The length of time any given EB-5 investor will require to gather the documents necessary to prove the lawful sources of their EB5 investment capital varies based on their country and the sources of their funds. Investors should speak with their EB-5 immigration lawyer to determine the most suitable sources of funds to use. EB-5 investment participants should also start considering the lawful sources of their capital in the investment planning stages, as their attorney will likely request the documents long before I-526 petition submission.

Additionally, the sooner an investor gathers source-of-funds documents, the sooner they can begin their new life in the United States. Delays in the document-gathering process will inevitably lead to delays in filing the I-526 petition, which will push the date of immigration to the United States further back.

Maximize Data Collection for Maximum Chances of I-526 Success

If you’re not sure whether to include a particular document—then you should probably provide it! Investors aren’t penalized for providing too many documents to prove the lawful sources of their EB-5 investment funds, and any document that can sway the adjudicator’s opinion in favor of the investor is a good thing.

In some cases, certain documents or records may not be available to the investor. If, for example, an EB-5 investor’s bank deletes bank account statements from its archives after a certain period of time, the investor may not be able to access necessary records to prove the sources of their funds. Fortunately, there are workarounds in such situations—an investor may ask their accountant to provide a sworn affidavit that details the same information that the bank statement would have, alongside a justification of why the original document is unavailable. Using such solutions to source-of-funds obstacles, most investors can secure their bright future in the United States.

Since 1990, foreign investors interested in obtaining U.S. permanent resident status for themselves and their immediate family members have had a lucrative option available to do so: the EB-5 Immigrant Investor Program. For years, the program has granted U.S. green cards to foreign nationals who make successful EB-5 investments, meeting the various program requirements and creating 10 full-time jobs filled by U.S. workers. The program funnels foreign capital into in-need regions by promoting targeted employment area (TEA) investment with the incentive of a lower required investment amount.

Though the EB-5 program has been continuing its mission to stimulate the U.S. economy for decades, in November 2019, making a viable EB5 investment suddenly became more difficult for countless prospective investors. When the Modernization Rule came into effect, it increased the minimum required investment amount for non-TEA projects from $1 million to $1.8 million and the amount for TEA projects from $500,000 to $900,000. Suddenly, countless prospective investors were no longer eligible to participate, and countless others found themselves restricted to TEA EB-5 investment.

The complicated aspect of TEA investment is that United States Citizenship and Immigration Services (USCIS) does not itself demarcate TEAs, meaning the investor must present evidence in their I-526 petition demonstrating why their project qualifies for TEA designation. While this certainly complicates matters, it packs both advantages and disadvantages: it demands additional effort from the investor and adds an extra element of uncertainty into the EB-5 investment journey, but at the same time, it allows for flexibility in demarcating TEAs.

TEAs come in two varieties: high-unemployment TEAs and rural TEAs. High-unemployment TEAs are classified as areas with an unemployment rate 150% of the national average, while rural TEAs are defined as having fewer than 20,000 inhabitants. The methods for calculating TEA eligibility differs for the two types, and this article focuses on calculation methods for high-unemployment TEAs.

Two Main Data Sources for TEA Justification

While USCIS does not outline one specific calculation method for determining TEA eligibility, the immigration body does provide particular data sources that EB-5 investors must base their calculation on. The first is American Community Survey (ACS) data, which is calculated at the census-tract level and released every five years. As of January 2021, the most recent release of ACS census-tract employment data is ACS 15–19, covering the five-year period between 2015 and 2019.

The second data source for determining high-unemployment TEA designation is Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics (LAUS). BLS data is calculated at the county level and may be used independently to procure TEA status for qualifying counties or metropolitan statistical areas (MSAs). However, most TEA designation is granted at the census tract level, where BLS must be used in conjunction with ACS data to obtain a more precise estimate of current unemployment levels. While BLS data is released monthly, the yearly estimates are typically used in TEA status calculation because the calculations must be based on the most recent data available at the time of adjudication. In other words, using annual data is more practical, as the data remains valid for longer. Annual BLS data is usually published in April of the following year, so the annual BLS data for 2020 can be expected in April 2021.

Time Lags Mean Long Delays Before COVID-19 Impacts Are Visible

The COVID-19 pandemic has wreaked havoc on the entire world, including the United States and its economy. While the EB-5 program represents a lucrative means to help stimulate the U.S. economy in its time of need, the time lag in ACS and BLS unemployment data minimize the potential benefits the EB-5 program could offer as the United States rebuilds its economy. Those participating in an active EB-5 investment, as well as those considering making an EB5 investment, may predict future unemployment levels by considering which areas of the United States have suffered greater economic consequences as a result of the pandemic, but the nature of EB-5 TEA calculation may prevent the effects from permeating the data for several years. BLS data for 2020 will be available in April 2021, but in most cases, TEA calculation with just BLS data is unviable, and even when the ACS five-year data for 2016 to 2020 is released in December 2021, the impacts of COVID-19 will be drowned out by the data of the previous five years.

TEA Calculation Methods: ACS-Only vs. Census-Share

One of the key advantages of having to individually prove TEA eligibility for each EB-5 investment is that the two census-tract unemployment rate calculation methods can garner different results, and even if the EB5 investment does not qualify for the lowered investment amount in one calculation method, it may in the other. Ineligibility in one method does not disqualify an EB5 investment for TEA status as long as the other one indicates TEA eligibility, giving investors some control over their TEA designation.

Since the five-year ACS unemployment dataset focuses on census tracts, EB-5 investors can opt to use only ACS data in their TEA calculation. If they choose this route, they must similarly use ACS data to determine the national unemployment average to which they are comparing the census-tract unemployment rate.

If, however, the ACS-only method does not yield TEA eligibility, an investor can instead apply the census-share method, which combines the five-year ACS data with BLS data for a more precise estimate of current unemployment levels. The method compares the percentage of unemployment in the census tract as measured by the ACS data to the more recent county-based rate of the BLS data and, under the assumption that the percentage will remain stable, estimates a more current unemployment rate for the census tract.

Given the wide-ranging changes that are expected to permeate the unemployment rate data due to the COVID-19 pandemic’s debilitating impacts, differentiating between these two calculation methods could become more important than ever. EB-5 investment participants concerned their current TEA will lose its eligibility should opt for the more stable ACS-only method, while investors hoping their project region will become eligible for TEA designation should use the more volatile census-tract method, which will reflect the impacts of the pandemic sooner. By carefully choosing their TEA calculation method, EB-5 investors can better procure a bright future in the United States for themselves and their immediate family members.

Try as United States Citizenship and Immigration Services (USCIS) might to infuse the EB-5 Immigrant Investor Program with obstacles and hardships, the residency-by-investment program remains one of the fastest and simplest pathways to permanent U.S. immigration. Since 1990, the program has been issuing U.S. green cards to foreign nationals who make a qualifying EB-5 investment in a U.S. new commercial enterprise (NCE) and create at least 10 new jobs for citizens or permanent residents of the United States. Thanks to the EB-5 program, hundreds of thousands of U.S. workers have found new, gainful employment, and countless foreign investors have escaped political and economic turmoil in their home countries, forging a new, peaceful, stable life in the United States.

Of course, just because the EB-5 program is relatively quick and easy doesn’t mean it is quick or easy. The program ran smoothly until about 2014, when explosive demand, particularly from China, resulted in massive backlogs for Chinese EB-5 investors. Six years later, the backlogs remain, having seemingly become a permanent aspect of the EB-5 program. Long backlogs mean long processing times, with investors and their EB5 investments left in limbo for years. These delays don’t just postpone the invaluable opportunities that investors and their family members can benefit from in the United States—in some cases, they also conflict with EB-5 program requirements, such as the need to maintain EB-5 investment capital at risk until the end of the investor’s two-year conditional permanent residency period.

EB-5 Investment Capital Redeployment

Increasingly lengthy processing times in the EB-5 program led to the necessity to redeploy EB-5 investment capital to satisfy the EB-5 “at risk” requirement. If an investor who had not yet met all the EB-5 requirements withdrew their capital following a successful EB5 investment that created the required 10 jobs, they would disqualify themselves for a U.S. green card by failing to meet the requirement to keep their capital until their two-year conditional residency period is up. Thus, investors were forced to reinvest their capital with little guidance from USCIS, as such a situation had not been foreseen upon the creation of the program.

USCIS eventually published guidance on the redeployment of EB5 investment capital in June 2017, which EB-5 stakeholders welcomed with open arms. Much to the relief of investors, USCIS confirmed in its revision that the “at risk” requirement applies only until an investor files their I-829 petition, not until their I-829 petition is adjudicated. But the agency also provided an unclear provision that served as the source of confusion for countless EB-5 investors: the capital must be reinvested in commercial activity “consistent with the scope of the new commercial enterprise’s ongoing business.” It was unclear whether the redeployment needed to be through the same EB-5 regional center or in a targeted employment area (TEA) and whether the commercial activity needed to be similar to the activity of the initial JCE.

USCIS’s Clarification Constitutes Retroactive Policy Changes

In July 2020, three years after the publication of its unclear guidelines, USCIS finally released a clarification of EB-5 redeployment regulations—and to the dismay of the entire EB-5 world, it introduced policy changes that USCIS has stated will be applied retroactively. According to USCIS, retroactive application is justified because the clarification does not introduce any substantive changes and potential impacts on EB-5 investors will be minimal. If precedent is any indication, however, courts are likely to side with petitioners who made viable EB-5 investment redeployments based on the published guidelines at the time if they file suit against USCIS for wrongful denial of their EB-5 petition.

The July 2020 EB-5 redeployment policy clarification comprised six key updates, some of which could serve as substantial obstacles to applicants who have already redeployed their EB5 investment funds. The six key updates are as follows:

• Capital must be redeployed through the same NCE.
• If enough jobs have already been created, the redeployment does not need to be in a TEA.
• Capital must be redeployed within 12 months (if more than 12 months is needed, USCIS will consider evidence justifying the necessity of the delay).
• Capital can be deployed in any commercial activity consistent with the NCE’s goal to engage in the “ongoing conduct of lawful business.”
• The redeployment activity must not involve the purchase of financial instruments on the secondary market, as USCIS considers this a “financial” activity rather than a “commercial” activity.
• Capital must be redeployed in the approved jurisdiction of the regional center as of the date of redeployment.

It is clear that these policy updates will land some EB-5 petitions in the rejection pile through no fault of the investor or their immigration counsel. Undeserved denials are most likely with the requirement that redeployment not be in what USCIS considers “financial” activity, especially since the 2017 guidelines seemingly approved redeployment in “new issue municipal bonds” as long as they fell under the scope of the NCE’s ongoing business activities.

Another clear problem in the updated policies is the requirement for the EB5 investment capital to be redeployed in the EB-5 regional center’s approved jurisdiction. This seemingly random restriction could see honest EB-5 investors’ petitions needlessly rejected and NCEs’ business freedom unnecessarily stifled, and USCIS can cite no basis in law or regulation for such a requirement.

The clarification didn’t just pack sweeping policy updates—it also begs even more questions. The requirement to redeploy EB-5 capital through the same NCE, for example, automatically disqualifies EB-5 investors unfortunate enough to work with NCEs that have closed, whether due to fraud or bankruptcy, bringing their dream of a life in the United States to a screeching halt.

USCIS’s disingenuous policy updates may be challenged in court, however. Already in 2018, a court ruled USCIS’s policy updates disguised as a clarification were unlawful and could not be applied to EB-5 petitions retroactively. Thus, EB-5 investors unfairly rejected on the grounds of the redeployment policy updates may similarly follow suit and overturn the unreasonable aspects of the update.

As the EB-5 Regional Center Program sunset date of June 30, 2021, hurtles closer and closer, the EB-5 investment world finds itself in a bind. Without the omnibus government funding bill the program’s reauthorization has traditionally been tied to, the possibility of regional center program termination has become a very real possibility. With three months left to save the ever-popular regional center program—which accounts for the majority of EB5 investments—the EB-5 industry has rallied behind the EB-5 Reform and Integrity Act, a bill proposed by bipartisan senatorial duo Chuck Grassley and Patrick Leahy. But what exactly would the bill do for EB-5 investment stakeholders?

The bill is primarily concerned with tightening security and integrity measures to more effectively root out fraud and ensure EB5 investment capital is used as Congress intended. The changes are generally beneficial for investors, as the bill includes special protections for those with EB-5 investments. It also introduces more stringent integrity measures for regional centers, which would make it easier for a prospective EB-5 investor to locate a trustworthy EB-5 regional center to invest through.

The key changes of the proposed bill for EB-5 investors are as follows:

Long-term EB-5 Regional Center Program Reauthorization

The most pressing issue for the EB5 investment industry is the looming termination of the regional center program, whose termination would be disastrous for the EB-5 industry. If the EB-5 Reform and Integrity Act comes to pass, it will automatically reauthorize the regional center program through 2026, giving applicants who make an EB-5 investment through a regional center peace of mind for the next five years.

More Accountability from Regional Centers to Investors

Regional center EB5 investment offers a myriad of advantages over the less popular direct investment route. For example, regional center investors do not have to engage in the day-to-day management of the new commercial enterprise (NCE), giving them more time and the freedom to live far away from their EB-5 project. Regional center investors are also able to include indirect and induced jobs in their job creation calculation, making the requirement of 10 newly created full-time jobs for U.S. workers easier to achieve. Finally, if a foreign national makes an EB5 investment through a USCIS-approved regional center, they can leverage the knowledge and experience of the EB-5 experts on staff.

Nonetheless, the risk of fraud in a regional center remains, however slim. Some EB-5 investors also have concerns about not directly supervising their EB-5 investment project. The proposed reform bill could help to alleviate investors’ concerns regarding such issues, as it would compel regional centers to provide, on an annual basis, statements to the Department of Homeland Security and to all participating EB-5 investors that account for all EB-5 investment capital and demonstrate EB-5 program requirement compliance. Regional centers would additionally need to hire a fund administrator or commission an independent annual audit to ensure EB5 investment capital is being used as intended.

Stronger Protections for EB-5 Investors

If an investor does, despite good faith on their part, find themselves mired in a fraudulent regional center, the EB-5 Reform and Integrity Act can also salvage their immigration eligibility. Fraud is rare, but it can destroy the hopes and dreams of unsuspecting, honest EB-5 investors, which is why the proposed act is written to offer such victims a second chance at a brighter future in the United States. As long as the investor was not involved with the fraud themselves, they “associate with EB-5 entities in good standing,” and they meet the rest of the EB-5 program requirements, they may continue with their participation in the residency-by-investment program. The investor would be given 180 days to find a new regional center and make whatever additional investment is necessary to create the remaining jobs needed to fulfill the EB-5 requirements.

Another protection the bill would offer applies to EB-5 investors with older children. Under U.S. immigration law, a child must be unmarried and younger than 21 to be considered a child for immigration purposes. Given the long wait times associated with an EB-5 investment, particularly for Chinese nationals, children aging out of EB-5 visa eligibility is a serious concern for many investors, but the proposed bill would protect the children of certain EB-5 investors from aging out if their petition were terminated or their application to remove the conditions on their conditional permanent residency were denied.

Mandate for USCIS to Work Toward Faster Processing Times

The issue of long processing times has been detrimental not only to the EB-5 program but to U.S. immigration as a whole. As of March 2021, some EB-5 investors—mostly Chinese nationals—have been waiting more than six years for their EB-5 visa, and the backlogs for some other immigration programs are even longer. The EB-5 Reform and Integrity Act would address the slow processing times in the EB-5 program by laying out reasonable processing times and forcing USCIS to conduct a fee study within a year of enactment. Then, USCIS would be required to adjust program fees as necessary to process EB-5 petitions at the stipulated efficiency.

What’s in Store for the EB-5 Program?

If the EB-5 Reform and Integrity Act passes, the landscape of the EB-5 program will change significantly, with the modifications adding new protections for EB-5 investors, accelerating processing times, and improving the program’s public image by cracking down on the few fraudulent cases that exist. If complemented by the passage of the Biden administration’s proposed U.S. Citizenship Act of 2021, which would enact significant reform to cut down on backlogs, the EB-5 program could soon be in a much better position than it has been in years. The reform would inspire more trust among both investors and the U.S. public, allowing the program to continue stimulating the U.S. economy and offering a chance at a better life for countless foreign investors.

The EB-5 Immigrant Investor Program, established in 1990, has long been a top choice among foreign investors looking to migrate permanently to the United States. The program was forged by Congress to introduce foreign capital to in-need regions in the United States, fostering economic growth and spurring new job creation. Foreign investors are more than willing to inject their hard-earned capital into qualifying EB-5 projects due to the promise of U.S. green cards for themselves and their immediate family members as long as their EB-5 investment satisfies the program requirements. With the United States gaining billions in foreign capital and hundreds of thousands of new jobs and foreign investors attaining a better, brighter future for their families, the EB-5 program represents a lucrative win-win situation.

But all is not rosy in the EB-5 world—in fact, EB5 investment participants must contend with the inefficiency and, seemingly, the incompetence and ill will of the very agency that oversees the EB-5 program. Over the years, United States Citizenship and Immigration Services (USCIS) has thrown obstacle after obstacle at EB-5 investors, from drawing out the adjudication process to introducing retroactive policy changes. In 2020, wait times for I-526 processing have been unthinkably long, particularly for those who have made their EB-5 investment from China, in light of the massive backlogs for Chinese investors. But while inefficient processing could just be a result of incompetence, it’s hard to paint retroactively applied rule changes as anything but malicious.

Surprise Denial Throws EB-5 Investor for a Loop

Back in 2014, a simpler time, when the well-oiled wheels of the EB-5 program turned smoothly and the explosive growth of the Chinese backlog was only in its beginning stages, Laura (name changed for privacy purposes) had made the major decision to relocate her life and family to the United States under the EB-5 program. She loved her home country, South Africa, but she knew the United States offered significantly better education and career opportunities for her children, and her family ties to the United States only sweetened the deal. She dove into an EB5 investment thanks to an unsecured loan gifted by her father and filed her I-526 in May 2014, excited about the prospects of her future in the United States.

She received her adjudication in November 2015, and it wasn’t the answer she was hoping for. She was devastated to find her I-526 petition had been denied because USCIS had ruled her EB5 investment using capital loaned by her father constituted “indebtedness” instead of cash. As Laura watched her family’s bright future in the United States crumble before her eyes, she felt as if she’d been blindsided, with her immigration counsel never tipping her off to such a possibility. However, her immigration lawyers were just as stumped: the policy that formed the grounds for her denial hadn’t existed when she filed her I-526 petition.

Retroactive Policy Changes Disguised as “Clarifications”

Laura fell victim to a USCIS “clarification” that, in reality, constituted far more than a simple clarification. In April 2015, USCIS released a memo stating that third-party loans were unviable as EB-5 investment capital unless the investor proved their personal liability for the indebtedness by securing the full amount of the loan with their personal assets. As the EB-5 community had long believed unsecured loans to fulfill EB-5 requirements, countless investors had made their EB5 investment through such means, dooming scores of I-526 petitions filed in good faith to undeserved rejection.

USCIS’s disingenuous classification of the rule change as a “clarification” rather than a proper rule change allowed the immigration body to apply the new interpretations to previously filed I-526 petitions, whose unwitting applicants had followed the rules as laid out at the time of submission. The release of the information as a “clarification” furthermore allowed USCIS to bypass the notice and comment requirements of the Administrative Procedures Act (APA), rendering unnecessary a general notice of the new interpretations and offering the opportunity for stakeholders to submit feedback, opinions, and suggestions for policy change.

Court Rules USCIS’s “Clarification” Not Suitable Grounds for Denial

Fortunately, while those who make EB5 investments may have to battle against USCIS, the courts usually serve as allies. Laura was not the only EB-5 investor whose dreams were retroactively crushed by the policy shift, and two such other investors filed suit against USCIS a few months after the release of the memo. The long-awaited ruling finally came on November 30, 2018, with the courts annulling all I-526 denials issued due to the policy change and ordering USCIS to readjudicate the petitions.

The ruling was a blow to USCIS and its dishonest practices, with the court further declaring that third-party cash loans clearly constitute capital and not indebtedness and that USCIS was acting capriciously in rejecting some I-526 petitions on that basis. More devastating for USCIS was the determination that the “clarification” constituted unlawful rule-making that violated the regulations of the APA. According to the court, the clarification was clearly a policy shift, introducing sweeping changes to EB-5 program requirements without the due notices and stakeholder input. The U.S. Court of Appeals for the District of Columbia echoed this determination in October 2020, ruling that USCIS’s interpretation “violated the regulation.”

Court Decision Too Slow for Many Investors

Laura was delighted when the courts ruled in favor of her and the numerous other EB-5 investors whose perfectly viable EB5 investment capital had been unfairly deemed unacceptable by USCIS. However, the decision came too late: the original decision was declared in 2018, but an appeal elongated the waiting period to late 2020. With the political and economic outlook for South Africa deteriorating faster and faster, Laura opted to make a new EB-5 investment rather than wait for the court decision. It paid off and afforded her family a cozy life in an idyllic Southern U.S. town, but Laura has been forced to face the financial consequences that come with effectively doubling her EB5 investment. Not all EB-5 investors in her situation have been as fortunate, with some lacking the means to dive into a new EB5 investment and others having their children age out of eligibility due to the prolonged wait times.

The EB-5 program remains one of the simplest and fastest ways to permanently immigrate to the United States, but investors must be wary of USCIS and the curveballs it can throw. While the courts will always be there to back investors up should USCIS introduce unlawful policy changes or denial decisions, court proceedings are notoriously lengthy, and investors could nonetheless lose their chance for a better, more stable life in the United States.