Among Asian nationals, South Koreans tend to have a good understanding of the immigration picture in the United States. In conjunction with their improved economy, South Korean citizens have recently exhibited greater interest and participation in the EB-5 Visa program offered through the U.S. Citizenship and Immigration Services (USCIS).
An EB-5 Immigrant Investor Program Overview
The EB-5 Immigrant Investor Program is perhaps the most ideal format designed to create American citizenship opportunities for foreigners. Even with the subject of immigration remaining a hot topic for many Americans, few U.S. citizens voice concern about the intent of the EB-5 Visa.
This is because the EB-5 Program is built to invite foreign investors to start a U.S. business which generates new American jobs. Specifically, $1,000,000 is required to fund a new commercial enterprise. Within 2 years, at least 10 new full-time jobs are created from the efforts of that operation. This concept has proven successful, infusing billions of dollars of new capital into the American economy while generating new employment opportunities for working Americans.
Even more attractive is the TEA investment option within the EB-5 Program. TEA stands for Targeted Employment Area, and it identifies areas in America needing businesses that can provide work for locals. Specifically, a TEA is defined as either a rural area (which must be beyond the outskirts of any town populated by 20,000 or more people) or areas in metropolitan areas experiencing high unemployment. High unemployment is deemed to be any region with unemployment rates 150% higher than the national average. The fiscal year of 2017 ended with a national 4.4% unemployment rate, so any region suffering from unemployment of 6.6 percent or higher is eligible for TEA designation. Selecting an investment with a TEA designation cuts the financial commitment in half, down to $500,000, a significant reduction in the original investment requirement.
In return for this sizable commitment, the foreign investor is granted EB-5 Visas for immediate family, which includes the spouse of the investor and unmarried children under age 21. This unique feature of issuing bulk visas makes the EB-5 Visa the most attractive and surest choice for families desiring entry into the U.S.
Perhaps best of all are the methods of investing available to a foreign investor. Most EB-5 Program participants opt for a regional center investment, which is a pooled fund managed by seasoned professionals. Each investor is allocated a proportionate share of the investment, and it is common to have upwards of 1,000 investors in a regional center program, providing a regional center with hundreds of millions of dollars. This gives the fund sufficient financial muscle to construct hospitals, hotels, or other large projects, which in turn will easily generate the required 10 jobs per investor. The investor has no direct responsibility for the performance of the regional center, and may pursue other interests, including a separate career.
Some EB-5 investors choose an entrepreneurial path, building their own commercial enterprise which they directly manage and control. This path demands more commitment and attention to the business by the owner; however, potential returns are usually greater for such a hands-on operation. Entrepreneurs like this thrive in the direct involvement of their investment.
A Growing Popularity Boosts Demand
South Koreans can look to both Chinese and Vietnamese EB-5 participants in the past to gauge the popularity of and subsequent difficulty of gaining admission to the EB-5 Immigrant Investor Program. This is because both China and Vietnam are now marked as oversubscribed countries—both have been put on waiting lists due to the flood of prior EB-5 submissions from citizens of these nations.
The ruling for determining oversubscription is simple: immigrants from one country are allotted no more than 7% of all types of U.S. visas issued in a given year. Once a country has exceeded their 7% allowance, a backlog is created which captures and holds all future applications until a future date, called the cutoff date, is reached. Once an application reaches or passes the cutoff date, it can be processed by the USCIS.
To get an idea of how far back this date may be pushed, in May 2018 the State Department set June 22, 2014 as the cutoff date for both Chinese and Vietnamese immigrants, creating a nearly 4-year processing delay. As time moves forward, the cutoff date will also push forward, but not equal to the passing of time. For instance, by May 2019, it is probable that the new cutoff date will not be June 22, 2015 (a year longer than the current cutoff date). More realistically, the new cutoff date will be closer to December 2014 or perhaps early 2015. In other words, as time progresses, the cutoff date will likely be further away than the almost 4-year wait currently in place.
Reasons for Prompt Action
South Korean citizens interested in taking advantage of the EB-5 Program should not delay in submitting their petition. While South Korea has not yet reached the stage of oversubscription, all indicators point to this nation being next in line to do so.
In addition to the increasing number of South Korean applicants, there is a strong likelihood that Congress will make changes to the EB-5 Program. There have been discussions of raising the minimum investment requirement, tightening definitions for TEA designations, and possibly reducing the number of visas issued in the future.
Also, families with children nearing the age of maturity (21) should be concerned about locking in a date before a child reaches age 21. If South Korea is hit with delays of 3 years or longer due to oversubscription, a child near maturity may end up “aging out” and no longer be considered a dependent minor of the EB-5 applicant.
USCIS has established a clause, the Child Status Protection Act (CSPA), to address the problem of minors aging out before completion of the EB-5 Visa process. The CSPA allows children who were minors at the time of the EB-5 application to retain their minor status through the processing period. However, if the visa is delayed due to backlogs or waiting lines, this protection will likely be lost.
Even without cutoff dates or backlogs, there is a minimum 2-year wait before permanent residency is granted to a foreign investor, as the applicant is required to document the 10 new jobs that were created from the investment program from the first 2 years of operation.
Experts caution that the recent escalating activity by South Koreans in the EB-5 Immigrant Investor Program may soon create backlogs like those experienced by aspiring Chinese and Vietnamese immigrants. This fact alone should motivate South Korean nationals to begin immediate plans for participating in the EB-5 program.
Since so many options are open to the South Korean immigrant investor, working with a qualified EB-5 consultant is a smart choice. By doing so, the petitioning South Korean national can remain informed and up to date on the ever-changing EB-5 Program.