Wondering what the final action dates and dates for filing are for backlogged EB-5 Immigrant Investor Program participants in May 2021? The U.S. Department of State – Bureau of Consular Affairs has released the Visa Bulletin for May 2021. While Chinese nationals involved in an EB-5 investment should prepare for another month of disappointment, Vietnamese EB-5 investors can rejoice in the continued movement in their final action date.

What Are the Final Action Dates in May 2021?

In May 2021, the final action date for Chinese EB5 investment participants has failed to budge, but this shouldn’t come as a surprise. The Chinese final action date has remained at August 15, 2015, since the September 2020 Visa Bulletin, and chances are it will remain there for the rest of FY2021, according to remarks by Charles Oppenheim, chief of the Visa Control and Reporting Division at the U.S. Department of State. China, which has long led the world in EB-5 demand, has suffered a long-standing backlog that first materialized in 2014, and Chinese EB-5 investors should expect significant wait times for an EB-5 investment visa.

While the outlook for backlogged Chinese EB-5 investors is currently bleak, better news could be on the horizon. With both the EB-5 Reform and Integrity Act and the U.S. Citizenship Act of 2021 on the table, massive changes could be coming to United States Citizenship and Immigration Services (USCIS) that speed up the adjudication times of Chinese EB-5 petitions. The U.S. Citizenship Act of 2021 even proposes to remove the country cap on U.S. visas, removing the disadvantage of Chinese nationality.

Vietnam is the only other country with an EB-5 backlog as of May 2021, but unlike their Chinese counterparts, Vietnamese EB-5 investors are seeing progress in their final action date. In the May 2021 Visa Bulletin, the Vietnamese final action date lies at February 15, 2018, representing a two-month jump from the April 2021 bulletin. The final action date in the April 2021 Visa Bulletin was, in turn, a seven-week leap from the previous month. If this trend continues, Vietnamese EB-5 investment participants may see their country hurtling toward “current” status, just as Indian investors did in July 2020.

What Are the Dates for Filing?

In the EB-5 Immigrant Investor Program, Chinese nationals are the only ones to have ever been subject to a date for filing backlog. What that means is not only do they have to wait to receive their EB-5 visa following the approval of their I-526 petition, but they also have to wait just to file their application for the visa after receiving I-526 approval. As of May 2021, the date for filing for Chinese EB5 investment participants stands at December 15, 2015, just as it has for more than a year. The date for filing isn’t likely to move before the final action date does, so it’s likely that USCIS won’t be seeing any new applications for EB-5 visas from Chinese nationals for the remainder of FY2021.

Every year, thousands of foreign nationals make EB-5 investments, aiming for a brighter future with their families in the United States. The EB-5 Immigrant Investor Program is largely seen as the quickest and simplest means to permanent U.S. immigration, and generally, those who prioritize care and meticulous due diligence in their EB5 investment process successfully receive U.S. permanent resident status. However, an EB-5 investment is not a guaranteed ticket to a green card, and one risk—one that is especially pronounced during the COVID-19 pandemic—is the EB-5 project owner defaulting on their loans.

When an EB-5 project defaults, an EB-5 investor’s financial capital and immigration status alike are endangered. The new commercial enterprise (NCE) through which the applicant is investing has a duty to protect the immigration eligibility of its investors, and while a defaulting EB-5 project is a precious situation, it does not necessarily nullify the investor’s chance at a life in the United States. Below is a guide of the steps an NCE should take if its EB-5 project is defaulting.

1. Review the Investment Documents

The first step an NCE should take is reviewing the agreements and documents in place for its investment with the EB-5 project. Such a review allows the NCE to ascertain what rights it has and what solutions are available to execute.

2. Review the Intercreditor Agreement and Senior Loan Documents, If Applicable

If the NCE is not the senior lender in the project—and usually it is not—then it is also imperative to review the senior loan documents and any intercreditor agreements the NCE may have signed with the senior lender. In most cases, an NCE is required to enter into an intercreditor agreement. The intercreditor agreement may prohibit certain actions permitted under the investment documents with the project owner, shortening the list of potential actions the NCE can take.

The NCE should seek to fully understand the conditions of the senior loan documentation before sending written notices to the project owner or senior lender, as such actions could evoke negative consequences that accelerate a foreclosure sale initiated by the senior lender. It’s usually in the best interest of the NCE to avoid a foreclosure sale, as this often prevents repayment of its loan.

3. Determine the Solutions Available

After combing through the relevant documentation, the NCE should carefully consider the options available. Factors it should contemplate include what actions it can take against the EB-5 project owner, what actions it could take to safeguard its investors’ interests in the event of a foreclosure sale, how much capital is needed to pay off the senior loan, how viable the EB-5 project is in its present state, and whether the NCE can take over the project or find a “white knight” third-party entity willing to save it while preserving the NCE’s interests. This list is non-exhaustive—NCEs should consider all possible factors for the most accurate analysis.

4. Obtain Documentation to Determine Job Creation Numbers

To protect the immigration eligibility of its EB-5 investment participants, an NCE should request the records and documentation it needs to determine job creation immediately upon catching wind of potential financial distress of the project owner. If the project owner loses control of the project, the NCE will no longer have access to such documents, so speed is key. Once the NCE has the necessary documents, it should have its economist prepare a revised economic report to determine whether a sufficient number of jobs have already been created to satisfy the EB-5 program requirements. This determination will help shape the decision the NCE ultimately makes.

5. Determine the Effects on the Investors’ EB-5 Eligibility

The NCE must carefully consider the immigration status of its EB-5 investors, and if an insufficient number of jobs have been created, it must work carefully to safeguard the immigration eligibility of the investors. The NCE should take into account which actions would be most beneficial from an immigration standpoint and whether a given action would result in a “material change” that must be registered with United States Citizenship and Immigration Services (USCIS).

6. Determine the Best Course of Action

With all the facts on hand and careful deliberations made to determine the available solutions, the NCE should determine its best course of action and communicate its plan with the EB-5 project owner, senior lender, other major investors, and a prospective third-party buyer, if applicable. It should first speak with its business legal counsel to determine the best means of communication with these parties, however, as premature discussions could jeopardize the NCE’s ability to execute its strategy.

7. Determine How to Communicate the Situation to the EB-5 Investors

NCEs have a fiduciary duty to notify EB-5 investment participants of any important material changes to the EB-5 project that could affect their financial or immigration status, but they may keep this information confidential until they have reached a decision on the strategy they will implement. Before it reveals the plan to investors, an NCE should also consult its business legal counsel to determine the best way to break the news. In its communication, the NCE should tell EB-5 investors what the state of the project is, whether enough jobs have been created to satisfy EB-5 requirements, the factors that lead the NCE to believe action is necessary, and why the NCE has deemed the intended action the most appropriate.

8. Document the Justifications for the Decision

Finally, the NCE should keep comprehensive records of its deliberations and justifications of its decision. Despite its best efforts, an NCE may still end up losing the EB5 investment capital of its investors, which could result in lawsuits from the investors. The best way for the NCE to protect itself is to compile ample documentation showing that the decision was made in good faith with reasonable business judgment in consideration of the evidence available at the time of the decision.

Since 1990, the EB-5 Immigrant Investor Program has paved the way to permanent resident status in the United States for thousands of immigrant investors and their immediate family members, generally constituting one of the quickest and easiest means of obtaining a U.S. green card. EB-5 investments are generally successful, but the EB-5 program stipulates a number of requirements investors must satisfy, and failure to do so results in EB-5 denial. One particularly dangerous situation for those with active EB5 investments is when the EB-5 project owner defaults on their loan, which can put the investor’s capital and immigration status alike at risk.

New commercial enterprises (NCEs) are required to preserve the capital and immigration status of its EB-5 investors to the best of its ability, so when a project owner defaults on their loan, an NCE must take various actions to protect its EB-5 investors. Depending on the circumstances, EB-5 investment participants may be able to retain their eligibility for immigration benefits despite a default.

Determining Sufficient Job Creation

One of the key requirements of the EB-5 program is the creation of no fewer than 10 full-time jobs filled by U.S. workers. Direct EB-5 investors must showcase at least 10 jobs on the NCE’s payroll or construction jobs that have lasted at least two years, which can be challenging if a project is defaulting and has not been completed. Regional center investors, on the other hand, may count indirect or induced jobs, which are determined through an economic analysis of the impact of the NCE’s spending and operations in the local economy. Even in an incomplete state, a project may still fulfill the job creation requirements, allowing the applicable EB-5 investors to maintain eligibility for a U.S. green card despite the project defaulting.

If, conversely, the NCE cannot demonstrate sufficient job creation to safeguard all its investors, it must engage in discussions with the project owner or a third-party purchaser to ascertain whether the project will continue as originally planned and whether the formerly projected jobs will still be created. If so, the NCE may suffer financial loss but nonetheless protect its investors’ eligibility for U.S. permanent residency.

Given this delicate situation, if an NCE learns that the EB-5 project it has invested in is in distress, it should immediately reach out to obtain the necessary documentation to showcase job creation. If a higher-up lender holds a foreclosure sale, the NCE may lose its rights to request such documents, creating a need for urgent action upon news of a default.

Navigating Material Changes Due to Foreclosure Sales

If a defaulting EB-5 project that has not created sufficient jobs to satisfy the needs of all its EB-5 investment participants is sold in a foreclosure sale, the EB-5 investors are thrust into a precarious situation. If the new business owner revamps the entity such that it constitutes a “material change” for United States Citizenship and Immigration Services (USCIS) purposes, it may still be possible for the EB5 investment participants to earn their immigration benefits. However, unless the NCE was repaid with excess capital derived from the foreclosure sale, it’s unlikely that the entity will have sufficient funding to make more EB-5 investments in the new project.

Such a scenario begs numerous questions: Would the NCE need to elicit extra EB5 investment funds from its investors? If so, how much extra capital would investors need to inject into the revamped project? Who would pay for the fresh business plan and economic report that would also be required for the new project? With careful planning with the project owner, it may be possible for the NCE to avoid making a new investment by preserving the job-creating ability of the original entity. This would be an NCE’s best bet, as the logistics around an additional EB5 investment may be tricky at best and impossible at worst.

If, on the other hand, enough jobs have indeed been created to satisfy the job creation requirement, an investor may still receive their immigration benefits regardless of a default. History has shown USCIS to issue I-829 petition approval even to investors whose EB-5 projects have failed in ways that have left them incomplete.

When it’s said that the EB-5 Immigrant Investor Program is among the fastest and easiest ways to immigrate to the United States, that doesn’t mean an EB-5 investment isn’t without its risks. All EB5 investments are inherently subject to immigration risk, and one of the EB-5 program requirements is that the EB-5 investment capital remain subject to financial risk (the possibility for both loss and gain) throughout the investment period. While most EB-5 projects are successful and earn the investor and their dependents U.S. permanent resident status, some do fail, and the COVID-19 pandemic has accentuated this risk. In particular, hotels and other hospitality businesses are experiencing distress, with some project owners defaulting on their loans. What happens to the new commercial enterprise (NCE) funneling EB5 investment capital into a project when the project defaults?

Since EB-5 investments can be structured in numerous ways, there’s no one simple answer to this question. Different options are available for different types of EB5 investments, but generally, the terms are not overly favorable for the NCE.

If the NCE Is Secured by a First-Lien Mortgage

Most EB5 investments are not secured by a first-lien mortgage, but some are, and this is by far the best situation for an NCE to find itself in upon default by the project owner. In this case, the NCE has the right to hold a foreclosure sale on the project, either taking ownership of it itself or selling it to a third party. Each state follows its own foreclosure laws that NCEs must abide by, which generally means hiring a foreclosure expert to conduct the sale.

In the foreclosure sale, the NCE may bid up to the full amount of its loan. If the NCE does so, and if no other bids exceed this amount, the NCE pays nothing and assumes ownership of the project. If, however, a third party does outbid the NCE, they will have to pay cash at the foreclosure sale, allowing the NCE to receive full repayment for its loan. Any excess cash goes to the project owner, who must pay it out to other creditors.

If the NCE Is Secured by a Second-Lien Mortgage

NCEs with loans secured by a second-lien mortgage have similar rights to first-lien mortgage lenders, but they are subordinate to the first-lien mortgage lenders. In other words, NCEs with a second-lien mortgage on an EB-5 project may call a foreclosure sale, but only if the senior lender chooses not to.

If the senior lender does choose to exercise this right, however, the junior lender cannot receive any repayment until the senior lender’s loan has been repaid in full. If the excess funds cannot cover the junior lender’s loan amount, the NCE loses its second-lien mortgage and the rights associated with it. In cases where the defaulting project owner cannot fully repay the junior loan with the proceeds from a foreclosure sale, the NCE may obtain a monetary judgment against the project owner that can be satisfied with other assets the project owner possesses, but generally, the project owner’s sole asset is the EB-5 project, leaving the NCE with little recourse to recover its loan.

An additional factor complicates matter further—generally, a junior lender is required to sign an intercreditor agreement with the senior lender. Usually, this agreement disallows the second-lien lender from taking enforcement action against the project owner until the senior loan has been entirely repaid. This often means the only option is for the NCE to repay the senior loan itself or find a third party willing to do so while keeping the NCE’s junior lien intact. However, most NCEs have no additional funds to pay off the senior loan, rendering this solution inviable. The best practice for junior lender NCEs in this case is to work with the project owner to avoid a senior-lien foreclosure and sell the project at a high enough price to pay off both the senior and junior loans.

If the NCE Is Secured by Pledges of Membership Interest

Many EB-5 investments are secured by pledges of membership interest, either by the project owner, the entity that owns the project owner, or another entity above the NCE. Such a loan structure offers the NCE the right to hold a foreclosure sale of the membership interests, which operates similar to a regular foreclosure sale in that the secured party may bid up to the full amount they are owed. Should no other bids exceed this amount, the NCE obtains ownership of the membership interests.

However, like with junior lenders, NCEs with loans secured by pledges of membership interest are usually required to enter into an intercreditor agreement that prohibits them from holding a foreclosure sale on the membership interests until the senior loan has been fully repaid. To make matters worse, if the senior lender holds a foreclosure sale, the membership interests may be rendered useless—and if the entity pledging the membership interests is above the project owner in the chain of command, the project owner must first repay all unsecured lenders before the NCE. Thus, NCEs with loans secured by membership interests should work with the project owner to avoid a foreclosure sale.

If the NCE Is Unsecured

An NCE with an unsecured loan has no rights to hold a foreclosure sale, leaving the only recourse to file a complaint in court against the project owner to obtain a monetary judgment. After the monetary judgment is obtained—which can take months or years—the NCE would have to file a writ of attachment on any assets the project owner might have, allowing them to be sold to help fund the repayment of the NCE’s loan. Since assets that the project owner has already pledged to other creditors would first have to satisfy their loans, it could be a lengthy or even impossible process for an NCE with unsecured loans in a defaulting EB-5 project to receive repayment.

The Third-Party Rescue

In all above-described scenarios other than the one in which the NCE is the senior lender, the NCE cannot receive its repaid funds until the senior lender’s loan has been repaid. In such cases, the NCE may locate a third-party entity—often called a “white knight”—to either purchase the project or repay the senior lender’s capital and take their position as the first-lien mortgage lender while maintaining the NCE’s interest in the project. To make this arrangement financially attractive for the white knight, the deal is usually structured such that the NCE is not repaid until the white knight receives their full repayment and a specified return and all other creditors have been repaid. While this almost inevitably represents a higher-risk investment for the NCE, it’s still preferrable to losing the entire investment to a foreclosure sale.

The EB-5 Immigrant Investor Program, in place since 1990, offers the ideal opportunity for any foreign investor dreaming of a life in the United States: for $1.8 million—or $900,000, depending on the targeted employment area (TEA) status of the project—investors can make a passive EB-5 investment and gain U.S. permanent resident status for themselves and their dependent family members, contingent on satisfying EB-5 program requirements. But what if you don’t have the funds?

A prospective EB-5 investor’s journey is not necessary over if they don’t personally possess the necessary capital for an EB5 investment. Those with wealthy relatives can embark on an EB-5 investment journey with capital gifted by their family members, as long as they prove to United States Citizenship and Immigration Services (USCIS) that the funds were truly a gift and that they originated from lawful sources. It’s relatively common for parents not personally interested in immigrating to the United States to gift their child the necessary capital to make an EB-5 investment and forge a brighter future in the United States.

Satisfying the Source-of-Funds Requirement

USCIS accepts EB-5 capital from nearly any source, including gifts, as long as the investor demonstrates its legality. The transfer of the gifted funds from the donor to the recipient alone doesn’t count as the capital’s source—the donor must prove that they obtained the funds legally. According to USCIS guidelines, investors must provide evidence that suggests it is “more likely than not” that the funds derive from a legal source. For gifted EB5 investment capital, USCIS primarily cares about the legitimacy of the gift and how the donor obtained the funds.

Proving the Legitimacy of the Gift

To count as valid EB-5 investment capital, gifted funds must constitute a bona fide gift with no repayment terms. To satisfy this USCIS condition, the donor should draft a written gift agreement that explicitly states the gift is “irrevocable” and the recipient is not obligated to repay it, and both parties should sign it. If the donor does not speak English, they should compose the agreement in a language they speak and obtain a certified translation into English for the investor to include in their I-526 application. While gifts may come from anyone, USCIS will exercise more scrutiny toward gifts from friends or business associates than from family.

Proving the Lawful Source of Funds

USCIS also requires those making an EB-5 investment with gifted funds to demonstrate the capital’s lawful sources, just like with any other type of fund. As part of the gift, the donor should provide documents to the recipient that prove the legal origins of their capital. The documents should be as detailed as possible, constituting anything from employment records, bank statements, and tax returns to investment records, loan documents, and property records. If any documents are not in English, the donor or investor must obtain a certified translation into English.

Consult EB-5 Immigration Counsel to Help

USCIS regulations can be complicated, and the source-of-funds requirement is one of the trickiest requirements of an EB-5 investment. Depending on the capital used, obtaining the necessary documents to prove the legality of the funds can be challenging and time-consuming. The best practice for any EB-5 investor (or their donor) is to hire an experienced EB-5 immigration lawyer to determine which sources to use to prove the lawfulness of the EB5 investment capital.

International travel has become significantly more difficult during the COVID-19 pandemic. However, while travel and immigration to the United States remain challenging during the pandemic, immigration remains a great option in a post-pandemic world. The EB-5 program is considered the most efficient path to obtain U.S. permanent residency. This article explains the benefits to immigrating the United States under the EB-5 investment program.

You Will Be Able to Be with Your Family

Whether your family resides mostly in the United States or in your home country, they are a dominant factor in your decision to move to the United States. If you have family that lives in the United States, this is a great opportunity to spend time with them.

To maintain conditional permanent residency status, you must reside predominantly in the United States without taking extended international trips. If you are the first of your relatives to relocate to the United States, this requirement may seem daunting, but after five years of permanent residency you may apply for U.S. citizenship. Once you have citizenship, there are no international travel restrictions. When an investor receives an EB-5 visa, their spouse and unmarried children under the age of 21 are also eligible for U.S. green card status.

Invaluable Access to American Education

Colleges and colleges worldwide have moved to online learning to minimize the spread of COVID-19. However, U.S. universities have not lost their prestige during their shift to virtual classes. It is difficult to be accepted to these prestigious universities, such as Harvard, Stanford, and Yale, and international students often have to battle for the few spots open to them.

Attaining a U.S. green card, however, opens up many academic opportunities for students. With a green card, EB-5 visa holders will have an easier time getting into these competitive universities. Green card holders and U.S. citizens have a 4.5 percent chance of being accepted to Harvard, whereas international applicants have only a 0.1% chance of admission. EB-5 visa holders applying to public universities could also be eligible to benefit from in-state tuition savings. In addition, many U.S. students work during their time at a university and EB-5 visa holders would be eligible to do so as well.

The U.S. Economy Is Already Recovering from COVID-19

In order to keep small businesses running during the financial downturn caused by the pandemic, the U.S. government has provided extensive aid. However, this downturn was not due to diminished consumer demand, which is often the case during recessions. Consequently, many expect a quick recovery following the pandemic. We may also see an influx in innovation in industries that have become prominent during the past year, such as health care, technology, and e-commerce businesses.

The Pandemic Has Created an Ideal Environment for EB-5 Projects

The coronavirus hit many cities hard, and places where rents were high, such as New York City, have seen significant vacancies and drops in property values. As unemployment rates have increased in many parts of the country, different parts of the United States could qualify as targeted employment areas (TEAs). This would result in EB-5 investors having a lower minimum investment amount for projects in these areas.

An accumulation of all these factors and the end of the pandemic may make this the ideal time for investors to make an EB-5 investment.

The COVID-19 Pandemic Should Not Deter Prospective EB-5 Investors

Immigrating to the United States during the pandemic has been difficult, to say the least. Despite the closure of U.S. embassies and consulates, EB-5 applications have continued. In fact, I-526 petitions have the potential to be processed faster than they were before the pandemic, making this a great time to make an EB-5 investment for those who are able to.

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.