Good news for the many EB-5 investors abroad who have been waiting eagerly to resume their journey to an EB-5 green card: the U.S. Department of State – Bureau of Consular Affairs has announced the phased resumption of routine visa services at U.S. consulates and embassies. Consulates have been closed since March 2020 following the outbreak of the COVID-19 pandemic, which has wreaked havoc on public life in most countries, including the United States.

The effects on the EB-5 Immigrant Investor Program have also been profound, with United States Citizenship and Immigration (USCIS) offices in the United States being closed to the public for several months and EB-5 investors abroad stalled in their EB-5 process due to the closure of embassies. While investors already residing in the United States under different visas have still been able to file I-485 petitions and receive EB-5 visas, investors living abroad have been unable to attend visa interviews and thereby unable to move forward.

While the announcement is good news for some, it doesn’t help all EB-5 investors. According to the Department of State, each embassy or consulate will determine its own opening based on the local situation. Investors are encouraged to check the website of the individual embassy or consulate for details. The Department of State will also post on its official website updates of when various consulates resume specific visa services.

Advancing in the EB-5 Program as Consulates Reopen

As a result of the presidential proclamation signed into law on June 22, 2020, that suspends many forms of employment-based immigration until the end of 2020, U.S. consulates and embassies should have lighter workloads than normal. Since EB-5 investors are exempt from the immigration ban, this may significantly speed up their wait times for visa appointments and interviews.

The EB-5 program can also be beneficial to the United States as it navigates the aftermath of this unforeseen crisis. As U.S. businesses begin to reopen, a damaged economy stares back at them, and millions of freshly unemployed Americans no longer have the necessary disposable income to buy nonessential goods. EB-5 investors and the millions in foreign capital they bring to the United States can help revitalize the U.S. economy and help it flourish once again.

It’s also an opportune time for new investors to consider the lucrative opportunities the EB-5 program offers. Due to the hardships the program has faced throughout 2020, fewer I-526 petitions have been filed, resulting in shorter wait times for the investors who do decide to pursue the program. Furthermore, since the COVID-19 pandemic has particularly ravaged major cities such as New York City and Los Angeles, more areas in these cities may now qualify as targeted employment areas (TEAs).

If you’re an Indian national, it’s an especially good time to invest in the EB-5 program. In July 2020, the Indian EB-5 final action date finally became current, and it’s projected to maintain this status for the foreseeable future. That means EB-5 visas are expected to be readily available for Indian investors, and they may begin their lives in the United States sooner than their counterparts in backlogged countries.

On July 24, 2020, United States Citizenship and Immigration Services (USCIS) published a Policy Alert announcing long-awaited clarification of the guidelines surrounding the redeployment of capital under the EB-5 program. The new guidance, which comes into effect immediately, focuses on Volume 6, Part G, Chapter 2 of the USCIS Policy Manual (A(2)). The update substantially influences the redeployment of EB-5 capital, not only for EB-5 investors but also for regional centers and developers working with project sponsors.

Why Do EB-5 Investors Need to Redeploy Capital?

To qualify for a permanent green card, an investor must show that their EB-5 investment remained at risk throughout the conditional residence period. Conditional permanent residence usually last two years, and in the last 90 days, investors must file their I-829 petitions to apply for removal of conditions and prove that they have met the requirements of the EB-5 program. An EB-5 investor’s funds cannot be released until the end of the investor’s two-year conditional permanent residence period, which begins only when the conditional green card is issued and not upon the approval of the I-526 petition.

Usually, EB-5 regional center investments are structured as loans or equity investments with five-year terms, where the new commercial enterprise (NCE) invests in a job-creating enterprise (JCE). This period initially related to the amount of time it took for most investors to complete the immigration process. However, because of the delays investors have experienced in recent years due to visa backlogs and retrogression and increased USCIS processing times, some investors can wait from three to 15 years to become eligible for permanent residence. During this time, their EB-5 capital must remain at risk for them to keep meeting the requirements of the EB-5 program. According to USCIS policy, an investment in the NCE, with the money simply sitting in an account, is not enough—the money must be deployed again. Thus, EB-5 investors who face significant delays in the immigration process must redeploy their capital to ensure that it remains at risk.

Redeployments must also meet several criteria to avoid USCIS viewing them as a material change. Capital can be redeployed only after the initial investment has met the requirements of the EB-5 program and the capital is available to the NCE or has been returned to the NCE. In other words, this implies that redeployment can occur only once the entire investment has been deployed to the JCE, the JCE has created all the required jobs, and most of the goals set out in the original business plan have been met.

Until now, USCIS has not provided clarity about redeploying funds in such a way that investors remain in compliance with the requirements of the EB-5 program. The July 2020 clarifications address in which types of activities and enterprises, where, and when capital should be redeployed.

5 Key Points Contained in the EB-5 Capital Redeployment Policy Update

The clarification of the guidelines covers five key points.

1. The EB-5 capital must be redeployed into a commercial activity. If an investor redeploys the capital into a purely financial activity by investing in securities or financial instruments on the secondary market, the investment does not meet the at-risk requirement of the EB-5 program. Thus, investors should not redeploy their capital by, for example, placing it in a brokerage account or buying stock on the stock exchange.

2. The capital must be redeployed through the NCE in which the investor made the original investment.

3. Investors can redeploy capital into any commercial activity that aligns with the purpose of the NCE to engage in the conduct of lawful business. The most important consideration is that the NCE must engage in commerce that falls within its stated scope. The good news is that USCIS seems to be flexible regarding the kinds of activities that would qualify and that it is willing to allow amendments to NCE operating and partnership agreements to adjust the scope of the business.

4. The NCE must operate within the approved geographic area of the same regional center. However, this includes areas that fall under any amendments to expand the geographic scope of the regional center that are approved before redeployment.

5. Redeployment should occur within 12 months, but USCIS may consider longer periods if the delay was out of the control of the investor, NCE, and regional center. In other words, USCIS will consider evidence that the delay was reasonable.

The Main Implications of the EB-5 Capital Redeployment Policy Update

While EB-5 investors should be aware of the criteria for redeployment to ensure that their capital remains at risk and that they continue to meet the requirements of the EB-5 program, the clarifications have the greatest implications for regional center operators and developers who work with regional center sponsors. Because of the restrictions relating to the geographic scope of regional centers, the latter two groups must consider the future redeployment of capital by expanding the scope of existing regional centers or working with regional centers that offer extensive geographic coverage.

1. Expanding the Approved Geographic Scope of a Regional Center

To expand the existing scope of a regional center, a regional center operator must file a Form I-924 amendment. Doing so is especially important for regional centers with limited coverage. For example, if a regional center covers only three counties, redeployment will have to occur in only those three counties. If the regional center can expand its coverage area by adding another 20 counties, redeployment can occur anywhere within the 23-county area.

2. Working with a Regional Center that Offers Extensive Geographic Coverage

EB-5 project developers who are considering regional center sponsorship must select a regional center with a large geographic coverage area, as this will ensure flexibility for future redeployment. Project developers should factor in this criterion when conducting their due diligence during their search for the ideal regional center sponsor.

How Can EB5AN Help You to Facilitate EB-5 Capital Redeployment?

EB5AN owns and operates 14 regional centers that cover 20 states. Many of our regional centers cover entire states, and some even extend across multiple states. Thus, if you choose one of our regional centers to sponsor your EB-5 project, you can maximize redeployment flexibility—in addition to benefiting from our best-in-class transparency and fund management practices.

If you’re the owner of a regional center, you can benefit from our experience: USCIS has approved more than 150 Form I-924 regional center formation and expansion amendments we’ve worked on. We specialize in expansion applications for larger geographic areas.

To ensure that your EB-5 investors remain in compliance with the EB-5 program by effectively redeploying their capital if the need arises, file a Form I-924 amendment as soon as possible. This will ensure that you can offer them the best investment options and flexibility available when the time comes.

Contact EB5AN today to learn more about the services we offer and to discuss your unique needs with a member of our team.

It’s no secret that EB-5 applicants are subject to long waiting times, especially if they come from a country like China or Vietnam with extensive backlogs due to heightened demand. However, it can be difficult to interpret the backlog and understand the figures involved, especially since I-526 processing is complicated, messy, and nonlinear, which can lead to frustration for EB-5 investors. The key factors are the number of investors in the queue and the pace at which the queue moves forward, but both are complicated and can be difficult to predict.

Each year, roughly 10,000 visas are earmarked for the EB-5 program, which receives approximately 7.1% of all annual EB visas. Of the 10,000 EB-5 visas, each country can receive roughly 700 visas. The numbers are not set in stone and change every year, and it is expected that FY2021 will see increased numbers of visas allocated to the EB-5 program due to unused family visas rolling over. In FY2021, there could be as many as 14,000 visas allocated to the EB-5 program.

One can conceptualize the EB-5 visa queue in numerous ways. It is difficult to calculate because of the many different stages EB-5 investors must go through and the lack of data United States Citizenship and Immigration Services (UCSIS) provides on some of the stages.

The first way to look at the EB-5 visa queue is to break it down in terms of USCIS and the Department of State. This is the approach adopted by Visa Control Office Chief Charles Oppenheim, who uses it to calculate the estimated wait times for EB-5 visas, but his is less nuanced: He only counts EB-5 investors with pending I-526 petitions and pending applicants at the National Visa Center (NVC). Since USCIS does not have data on EB-5 investors with I-526 approval who have not yet submitted a visa application nor pending I-485 applications, he omits these populations in his estimates, which may result in inaccurate figures. While the number of I-485 petitions has historically been low, the number of EB-5 investors with I-526 approval who have not yet filed their visa application could be significant, particularly in China.

The second approach to looking at the EB-5 visa queue is to divide it by I-526 approval and visa availability. The number of I-526 petitions pending at USCIS is a readily available statistic, but the addition of a newly added figure—the number of approved EB-5 investors with I-526 approval waiting for visa availability—has made this approach possible. The only factor left is EB-5 investors with I-526 approval waiting for their priority date to become current on the Visa Bulletin, but presently, no such data is available. However, it partially addresses a gap in the first approach: EB-5 investors with I-526 approval who have not yet filed their visa application are a subgroup of those with I-526 approval still waiting for visa availability.

The third method for calculating the EB-5 visa queue is the easiest: It simply subtracts the number of visas issued since a certain date from the number of I-526 petitions filed since the same date. The approach easily avoids the pitfalls of the others, although it provides no information on where investors are in the process.

Breaking Down Data from October 2019 and April 2020

In the below tables, the number of EB-5 applicants from China, India, and Vietnam who have I-526 approval and are waiting for visa availability is displayed. The first is from October 2019, and the second pulls data from April 2020.

EB-5 Visa Figures for China

The data shows a clear decline between October 2019 and April 2020 in the number of Chinese EB-5 investors with I-526 approval awaiting visa availability. In October 2019, a total of 27,251 Chinese investors had approved I-526 petitions and priority dates more recent than November 1, 2014, which was the final action date for Chinese investors in the November 2019 Visa Bulletin. By April 2020, this figure had fallen to 23,511, with the final action date moving forward to May 15, 2015.

Even in April 2020, the number of Chinese investors waiting for visa availability was humongous, and the majority of these investors have been in the backlog for a while: The movement of the final action date from November 2014 to May 2015 only accounted for an extra 3,740 investors. A decrease in this number does not mean thousands of Chinese EB-5 investors received visas—it simply means there are more Chinese investors with visas available.

One also mustn’t forget that many EB-5 applicants apply for visas for their spouse and dependent children as well. Historically, each Chinese EB-5 investor has been granted 2.7 visas, which means 63,889 EB-5 visas need to be available to Chinese investors as of April 2020 to account for all those waiting for their priority dates to become current.

EB-5 Visa Figures for India

The figures for India are significantly lower because China has long maintained the dominant position in the EB-5 program. In October 2019, 189 Indian EB-5 investors had I-526 approval and a priority date more recent than December 8, 2017, and in April 2020, that number had decreased to 51, despite the final action date advancing all the way to January 1, 2019, in a shockingly rapid advancement that eventually led to a “current” final action date in the July 2020 Visa Bulletin.

When immediate family members are considered, India’s 51 EB-5 investors waiting for visa availability grows to an estimated 124 Indian nationals waiting for a U.S. green card. Since the Department of State still has approximately 200 visas to allocate to Indian investors and their families in FY2020, there may be enough visas to completely clear the Indian backlog in FY2020.

EB-5 Visa Figures for Vietnam

While the difference between the October 2019 and April 2020 figures for Vietnamese EB-5 investors is smaller than that for Chinese and Indian investors, there were still fewer Vietnamese EB-5 investors with I-526 approval waiting for their final action date to become current in April 2020 than in October 2019. In October 2019, with a final action date of November 15, 2016, there were 491 Vietnamese investors with I-526 approval waiting for visa availability. By April 2020, this number was down to 443, with the final action date having moved ahead to February 8, 2017.

The small difference between these two figures suggests either a large number of I-526 approvals and a large number of investors reaching the final action date, or a small number of I-526 approvals and a small number of investors reaching the final action date. The figures alone cannot reveal which situation Vietnamese EB-5 investors are in.

Vietnam’s final action date has not moved forward as quickly as India’s likely because there are not enough visas available to account for all Vietnamese EB-5 investors with I-526 approval. When spouses and dependent children are considered, the figure exceeds 800, which is more than the approximately 700 EB-5 visas available for Vietnamese nationals in FY2020.

United States Citizenship and Immigration Services (USCIS) has released statistics about its processing data from the second quarter of 2020 financial year (January 1 to March 31, 2020). Processing rates have increased considerably compared to Q1 FY2020; however, the processing rate remains far lower than it was in previous years.

USCIS also received far fewer petitions than it did in previous years. The marked difference can be ascribed to the implementation of the EB-5 Modernization Rule on November 21, 2019, which doubled investment amounts and led to an application rush in Q1 of FY2020. Additionally, I-924 filings have probably declined because of the processing delays and USCIS’s estimated processing time of 53 to 99 months.

Download USCIS I-526 and I-829 Visa Processing Statistics for Q2 FY2020

I-526 Petition Statistics for Q2 FY2020

In Q1 of FY2020, USCIS received 4,264 I-526 petitions. This dropped to only 21 in Q2. In Q2, USCIS approved 714 petitions and denied 190, leaving 16,633 pending. While these numbers are an improvement on the first quarter of the year, when 383 petitions were approved, 72 were denied, and 17,468 remained pending, only 904 petitions were processed. This is on par with Q2 FY2019.

I-829 Petition Statistics for Q2 FY2020

While the number of I-829 petitions has also decreased from Q1 to Q2 of FY2020, the decrease as not been as significant, falling from 1,013 to 604. The processing backlog has remained largely steady, decreasing from 10,373 in Q1 to 10,309 in Q2. However, the number of petitions approved increased from 436 to 730, which is the largest number of I-829 petitions approved since Q1 FY2018. USCIS did not include the number of petitions denied in Q1 2020, citing protection of privacy, but in Q2, it denied 57 petitions. Thus, the Q2 denial rate is 7%.

Are the Improved Processing Times a Reason for Optimism?

During the March 2020 EB-5 stakeholder engagement, Sarah Kendall, chief of the Immigrant Investor Program Office (IPO), mentioned infrastructure development as one of the reasons for the decrease in the processing of EB-5 petitions in FY2019. She noted that preliminary statistics for February 2020 showed a marked improvement in processing rates, and the Q2 FY2020 EB-5 data seems to support that claim. Nevertheless, the IPO’s productivity remains shockingly low compared to FY2018, despite no significant changes having been made to the staffing levels.

On June 16, 2020, Charles Oppenheim, the chief of the Visa Control and Reporting Division of the U.S. Department of State, participated in an EB-5 webinar hosted by IIUSA. During the webinar, he discussed not only the FY2020 processing statistics but also the way forward, focusing on investors from countries with high application volumes, the possibility of offering additional EB-5 visas in FY2021, and the improved processing output at the IPO. Based on his comments, there might be some reason for optimism, but only the Q3 and Q4 processing will provide a clear view of the situation at the IPO and USCIS.

Additional Factors Influencing EB-5 Petition Processing in FY2020

On March 31, 2020, USCIS changed from a first-in, first-out approach to a visa availability approach for adjudicating I-526 petitions. This change comes at the end of Q2, so it is not reflected in the latest statistics. While it will not affect overall processing output, it will affect processing on a per-country basis.

Additionally, the COVID-19 pandemic that is wreaking havoc worldwide brings its own uncertainties to the EB-5 program. Although the reopening of some U.S. consulates and embassies might mean that USCIS can issue all available EB-5 visas before the end of the financial year on September 30, 2020, only time will tell whether this will be the case.

On April 22, 2020, President Trump signed into law a temporary immigration ban, intended to last for 60 days. The purpose of the legislation was to ensure U.S. workers were prioritized as the economy reopens after being ravaged by the COVID-19 pandemic. However, the decree included a number of exceptions, including the immediate family members of U.S. citizens and residents and investors in the EB-5 Immigrant Investor Program.

On June 22, 2020, Trump extended the immigration ban, effective June 24. Citing the belief that economic recovery in the United States will take several months, Trump has prolonged the ban dramatically, with the United States now disallowing immigrants until the end of 2020. The proclamation was also extended to include holders of nonimmigrant visas H-1B, H-2B, L, and J. Any would-be immigrants who do not have a valid visa or travel document other than a visa by June 24, 2020, will be ineligible to enter the United States until the end of 2020, unless they also fall into one of the exception categories. Any foreign nationals already living in the United States under a work visa remain unaffected by the decree.

Exemptions to the Immigration Ban

Foreign nationals with permanent resident status are always permitted to enter the United States, as are the spouses of U.S. citizens or residents. Similarly, the unmarried children younger than 21 of any U.S. citizen or resident are always welcome in the country. In the fight against COVID-19, physicians, nurses, and other health care professionals are also exempt from the extended immigration ban. Additionally, EB-5 investors can breathe a sigh of relief, because they are once again exempt from the immigration ban, despite an open letter to President Trump from May 7 pressuring Trump to extend the ban to EB-5 investors.

Of course, EB-5 investors may face additional obstacles in the chaotic year of 2020. Any travel restrictions in place for an investor override the immigration ban exemption, so some EB-5 investors will still be unable to enter the United States. Investors must also obtain their U.S. green card before relocating to the United States, but the temporary suspension of routine visa services at U.S. embassies and consulates has halted the EB-5 process for investors overseas. Thus, while immigration to the United States is technically allowed for EB-5 investors, it is infeasible in practical terms for many investors.

Why the EB-5 Program Is the Best Choice for U.S. Immigration

Beyond the obvious advantage of the EB-5 program in the face of the pandemic, the EB-5 program offers numerous advantages over popular nonimmigrant visas such as the H-1B or L visa. To obtain such a visa, an applicant must locate an employer willing to sponsor them, which is easier said than done, and even then, acceptance is not guaranteed—applicants must compete in the annual H-1B lottery, since demand is too high. Those lucky enough to be accepted then face tough restrictions once in the United States, able to perform work activities only for the employer who sponsored them, and are generally only allowed to stay in the United States for a temporary period.

Conversely, EB-5 investors enjoy the freedoms the United States is known for. As green card holders, they have permanent resident status, which allows them to live, work, study, and travel freely anywhere in the United States. Permanent residents can also freely travel abroad and will always be welcomed back in the country simply by presenting their U.S. green card. An EB-5 visa allows an investor and their spouse and unmarried children younger than 21 to live in the United States indefinitely, enjoying almost all of the same rights and freedoms as U.S. citizens.

The EB-5 program is also generally easier for applicants, as long as they have the necessary investment capital. The key requirements of the EB-5 program are an investment of the appropriate amount—either $1.8 million or $900,000, depending on whether the chosen project is in a targeted employment area (TEA)—and proof of the lawful sources of the EB-5 investment funds. Once an investor’s I-526 petition is approved, they may apply for an EB-5 visa and are granted conditional permanent resident status for two years. During this two-year period, they must keep their investment capital at risk, and before their conditional permanent resident status expires, they must file an I-829 petition to prove their investment created at least 10 new full-time jobs for U.S. workers. Upon approval of the I-829, they and their immediate family members can enjoy U.S. permanent resident status—it’s as simple as that.