The COVID-19 viral outbreak that began in early 2020 has been a major catalyst in the continued fluctuations in the U.S. financial markets. All the careful planning and projecting EB-5 investment teams performed for the year has likely gone out the window, and we won’t understand the extent of the pandemic-related disruptions for quite some time. EB-5 investment participants would do well to expect ongoing changes as government and regulation bodies’ responses are rolled out in the coming months, as well.

This kind of uncertainty can be especially unsettling for foreign nationals already deeply entrenched in the EB-5 Immigrant Investor Program process. While the challenges faced in 2020 have been difficult on everyone in the industry, the impact on investors who elected to participate in EB-5 distressed business projects may be compounded.

The State of the Market for EB-5 Distressed Projects

A great number of projects within the recreational and entertainment market sectors that were already struggling to meet the financial projections laid out in their original offering materials are now experiencing even greater difficulties doing so. Additionally, the overall number of distressed or “troubled” businesses – especially in hospitality and real estate – has surely increased in the midst of the COVID-19 pandemic.

Financial Market Strain Can Have Devastating Outcomes

All of these businesses are particularly subject to greater distress following significant reductions in workforce, temporary operation restrictions, and disruptions in various supply chains. The financial markets’ reluctance to issue new bonds and other government-backed financing options is also disrupting the funding landscape for these types of projects. Interest rates are trending historically low as well. Unfortunately, even the most diligent EB-5 investors couldn’t have anticipated a sudden viral outbreak, and the culmination of all of these factors can lead to devastating outcomes.

Unexpected financial market fluctuations such as these have made it even more challenging to sell an EB-5 distressed project seeking EB-5 financing. When EB-5 project construction and operation activities cease, jobs can no longer be created, investors are unable to service their financing obligations, and EB-5 investment participants’ visa eligibility is placed at risk.

EB-5 Distressed Business Investors Need to Remain Well Informed

The savvy NCE operator will likely continue re-evaluating the impact of distress factors and determine whether continuing an EB-5 offering is prudent. Note that every NCE has a fiduciary duty to preserve its EB-5 investment participants’ capital as well as their visa eligibility, and they must do their best to identify the best potential remedies through their analysis. This isn’t, however, a failsafe. Every investor has a responsibility to stay abreast of the goings-on with their project, and a primary source of information is the security disclosure updates they should be receiving.

EB-5 Distressed Business Investors Must Continually Reassess Risk

EB-5 investment participants involved in financed projects are not sheltered from the adverse effects other, similar businesses are experiencing in this relatively volatile time. While the uncertainty stemming from temporary business closures, hiring freezes and layoffs, an uptick in medical leave across the nation, supply chain interruptions on a global scale, and even travel industry restrictions can be absolutely unnerving to an investor in an EB-5 distressed business, it isn’t necessarily the end of their EB-5 journey.

NCEs and other EB-5 operators involved with program-approved troubled businesses should all be providing essential updates for securities disclosures. These documents are the backbone of EB-5 investment participants’ resources for the continuous reassessment of the risks for their projects. Staying well informed allows them to be nimble in their actions and to react according to their own best interests.

Every investor should expect disclosures that specifically pertain to COVID-19 and how it may affect both EB-5 projects and the EB5 investment capital they have contributed to them. All distressed EB-5 projects predating the coronavirus outbreak should be preparing or have already prepared updated securities disclosures. Learn more below about what these disclosures could mean for EB5 investments in distressed projects, when investors should receive them, and what rights and options an investor has.

Troubled Business Investment Offerings Prepared Before the Outbreak

All EB-5 investment offerings are legally required by the U.S. Securities and Exchange Commission (SEC) to provide certain risk disclosures during the signing of an EB-5 investment agreement. This body oversees the execution of the laws and regulations put into place to protect investors in the United States. These disclosures usually cover general risks and cautionary language about the particular uncertainties associated with the industry for that specific project. Look for:

• References to safe-harbors availed to NCEs under the Private Securities Litigation Reform Act of 1995 (PSLRA)
• Disclosures on risks related to public health crises and pandemics

What you won’t see is COVID-19 named exactly. You also won’t see the current severity – or even the nature of – the impacts of this pandemic on the U.S. economy. Now is the time, though, for proper fiduciary handling. The SEC requires full and fair disclosure. Find out what that means below.

Full and Fair Disclosure According to the SEC

In its “full and fair disclosure” guidelines, the Securities Exchange Act of 1934 plainly states that both disclosing untrue statements of material fact and the omission of material facts necessary to prevent previous statements from becoming misleading are expressly prohibited. There are no exact quantitative tests to determine that materiality exists under SEC laws. However, there is a precedent for determining violations – that is, whether there exists the substantial likelihood for a reasonable investor to believe an omission or misstatement was an important factor in the decision to hang on to or sell an investment.

The SEC’s scope on materiality is not narrow. As such, issuers are always advised to disclose supplemental offering documents in any situation where doubt may exist as to whether a material fact might influence investment decisions. NCEs that do not provide disclosures for significant changes (like the ones that are occurring within distressed EB-5 projects across the nation due to the pandemic) are potentially violating Exchange Act laws. Additionally, some COVID-19-related changes may be considered material in the eyes of USCIS adjudicators. Both need to be addressed promptly in order to maintain EB5 investment eligibility status.

Disclosures for Material Changes in an EB-5 Distressed Project

Securities disclosures can be very important in ensuring an investor remains eligible for their EB-5 investment visas throughout their project investment period. USCIS offers some level of flexibility on discrepancies between original project documents and final outcomes because there are always unanticipated events in business. Furthermore, some scenarios that require supplemental disclosures do not actually trigger material change findings by USCIS. That said, discrepancies that do materially affect a project can put EB5 investment eligibility at risk.

How USCIS Defines a Material Change

A material change is defined as one that pertains to the consequential aspects of an EB-5 project. These are the changes that may impact an adjudicator’s decisions. While material changes do not always result in a denial of a petition, they can significantly delay processing. So, what types of material changes can affect an EB5 investment? Here are some of the most common ones:

• Major offering document updates or any other project documentation
• Significant changes to regional center sponsorships
• Clear shifts in business plan elements like project scope and timing or employment structures that could change job creation
• Any investment structure or capital sourcing changes

When USCIS adjudication results in a material change during the EB-5 investment period, EB-5 investors are required to refile their I-526 petition with updated details of the project’s circumstances. There are certain signals within post-COVID-19 securities disclosures that may clue you in to those material changes.

Clues to Material Changes in Post-COVID-19 Disclosures

At first glance, an EB-5 investor should be able to pick up specific references to COVID-19. From there, there are a number of topics that should be addressed within the updated disclosures they receive, including:

• The accuracy of statements that depend on projections and assumptions that the pandemic may have rendered invalid
• Parts of the disclosure that provide explicit notice that COVID-19 may have or has caused expected results to differ materially
• More robust explanations of how the pandemic could present additional risks or exacerbate traditional risks associated with a distressed EB-5 project
• New projections on expected operational changes or the evolution of a project for the successful continuation of the project
• Impacts on job creation or allocation and other direct references to USCIS material changes

These are the clues to potential material changes that could impact an investor’s USCIS processing. Besides these signals to material changes within new disclosure documents, look for an explanation of EB-5 investors’ rights as well as an outline of when changes would require EB5 investment participants’ consent.

What to Do After Updated Disclosure Review

Especially when evaluating next steps for EB5 investment in a troubled business, an experienced EB-5 legal professional is a tremendous help in understanding updated securities disclosures and determining how an investor should proceed if significant material changes need to be addressed with USCIS. More importantly, EB-5 immigration attorneys can offer valuable advice on solutions to insulate an EB-5 investor from becoming ineligible for the program, which might include plans for new sources of funds, effective shifts in organization charts to maintain job requirements, or strategies for capital redeployment.

No matter the impact, EB5 investors should find some comfort in the understanding that the EB-5 Immigrant Investor Program was made for circumstances like this. It was designed and implemented specifically to aid the U.S. economy in less-than-ideal circumstances. It is meant to create jobs in areas where high unemployment exists and to stimulate the local economy, all the while ensuring the best interests of all parties involved. Because of this, everyone is rooting for the success of EB-5 projects. Facing any material changes due to pandemic-related challenges is nothing more than a hurdle for most. Timely securities disclosures and seasoned EB-5 professionals in your corner will mean the best possible outcome for every distressed business investor.

The impacts of COVID-19 on the global economy and the changes to day-to-day life on the planet – from social connections and health care to employment and how, when, and where we travel – are topics of conversation at every table. But, as we do in the face of every crisis, the world continues to adapt. In our personal spaces, we work from home and attend class by Zoom. We stick to online shopping and wear masks when we have to go out.

Likewise, affected industries everywhere have made necessary adjustments, too. A downtick in transportation and hospitality reservations is balanced by the uptick in merchant fulfilment centers, their distribution channels, and medical equipment manufacturing. E-commerce businesses and the industries that support it are booming. And savvy investors see the opportunity. Many are wondering if consumer purchasing habits are likely to be altered permanently by the pandemic.

What does that mean exactly for the EB-5 industry? How can prospective EB5 investment participants tailor their decisions to a quickly and ever-changing U.S. market? Let’s take a cue from current EB-5 investors who are achieving success even during a global pandemic, but first, let’s dive into a brief industry review of 2020.

Redefining EB-5 Operations for Recovery

At the forefront of global markets impacted by COVID-19 crisis are hospitality, retail, and tourism. All three of these industries are a big part of EB-5 Regional Center investment offerings across the United States. Although specific effects vary greatly by project, EB-5 investors on the whole have not been immune to the weight of the pandemic. However, there are clear benefits to immigrating post-COVID-19.

Business Survival Depends on Adaptability

Regional centers and NCE operators have been left scrambling in the face of government and public health mandates to redefine their operations before it’s too late to recover. Many have been forced to delay their plans or shutter their operations for good. The projects that have managed to stick it out have largely done so by making bold and nimble moves, shifting revenue streams from brick-and-mortar to the digital space.

The Shift from Brick-and-Mortar to Digital

Online business has been a true lifeline for adapting businesses, and we’ve seen more than significant growth in the e-commerce industry. The sharp increase in consumer demand for the at-home delivery of everything from groceries to automobiles has consequently driven demand for investment in current-market inventory and the logistics and distribution business sectors.

As custodians of EB5 investment participants’ capital and program eligibility, the EB-5 Regional Centers that remain in operation are diligently working to adapt to market changes while continuing to connect the right project operators with the right immigrant investors.

Basic EB-5 Investment Requirements

There are four basic requirements for successfully obtaining a green card through the EB-5 visa program:

1. Applicants must make a minimum capital investment of $1.8 million (or a reduced investment amount of $900,000 in a rural or high-unemployment area designated as a targeted employment area, abbreviated TEA).
2. Capital must be infused into a program-approved new commercial enterprise (NCE) or a qualified distressed business.
3. The EB-5 investment must preserve or create a minimum of 10 full-time employment positions for U.S. workers that remain viable for a minimum of two years.
4. Lawfully-sourced EB5 investment capital must remain at-risk for the entirety of the investment period.

To avoid (or at least partially quell) the trepidations the fluctuating markets can spur on, many prospective EB-5 investors are choosing experienced industry professionals to counsel them throughout the investment process and best ensure their EB-5 immigration success.

EB-5 Investors Choose Experienced Partnerships for Success

EB-5 networks historically offer investment opportunities across a variety of market sectors. This diversification strategy has been valuable for both aligning with the diversity of client rosters and their individual goals as well as for ensuring the security of the capital they bring to the table. Taking advantage of market trends in this manner provides EB5 investment opportunities that offer greater likelihood for successfully obtaining an EB-5 visa as well as the greatest chances at financial success.

Although the circumstances surrounding the current pandemic have been rather unprecedented, if you step back and take a bigger-picture view, it is easy to see that this strategy still holds strong in the face of challenges brought on by COVID-19. The way EB5AN operates, for instance, hasn’t changed. Our primary goal is still to ensure our clients’ pursuit of permanent residency in the United States, and the projects we elect to present are ones that we are confident will meet (and maintain) all eligibility requirements of the EB-5 Immigrant Investor Program.

Equally important, our next priority is to ensure the security of our investors’ capital. Seeking out projects in sectors that are running strong and projected to continue that way is an obvious choice for EB5AN. For example, more straightforward investment opportunities may involve the creation of at least 10 new jobs at the outset of an project. Or, in riskier opportunities, job creation may depend upon operation of a facility once it’s been constructed.

In either situation, rest assured our team of experienced EB-5 industry professionals will make recommendations based on sound market research and forward-minded analysis. To learn more about how EB5AN helps prospective EB5 investment participants navigate the uncertainties of a post-pandemic immigration scenario, don’t hesitate to reach out!

Industry expert Charles Oppenheim, who heads the United States Department of State’s Visa Control & Reporting Division, provided insights for FY2021 with a virtual keynote address on EB-5 investment visa availability in November 2020. In it, he presented his thoughts on the future effects of consulate activity slowdowns in 2020 and how adjustment-of-status protocols may be a viable solution to the bottlenecking of EB-5 visas expected in 2021 (but likely won’t be implemented as such). He also delved into an area of great interest but that involves little concrete science—EB-5 visa wait times.

As with any investment, very little is ever 100% guaranteed in the EB-5 Immigrant Investor Program. Dealing with predictions on EB-5 visa wait times is a less than absolute science, and that uncertainty lies squarely in the variables—visa availability, backlogs, petition withdrawals and denials, and the time it takes for the investor to develop a petition packet, just to name a few. While published wait times do not officially guarantee a timetable, they should not be entirely dismissed, either. Rough (but educated) estimations are especially helpful for identifying issues with visa availability.

Basic Wait Time Theory: The Law of Supply and Demand

The greatest influencer of EB-5 investment visa wait times is I-526 petition volume. The I-526 petition the submission that initiates the EB5 investment process through United States Citizenship and Immigration Services (USCIS). In the best-case scenario, if many prospective investors file this petition, eventually many prospective investors will be deemed eligible for EB-5 visas. However, the fluctuating volume of I-526 forms to be processed affects the volume of available visas. Increased numbers of eligible investors mean increased wait times due to annual visa quota constraints. Additionally, folks who file early on during a demand surge will experience shorter wait times than those who submit later on.

The Supply of EB-5 Visas Typically Underserves Demand

In a typical fiscal year (October 1–September 30), only around 10,000 visas are earmarked for the EB-5 Immigrant Investor Program. This relatively small number of visas may be allocated to both eligible investors and their qualifying family members. On average, USCIS sees applications for two family members per EB5 investment participant, which amounts to roughly 3,300 visas being available for different EB-5 investments each year.

These visas are also evenly divided among participating countries, regardless of overall population, with 7% assigned to each country of origin. Simple math shows that this leaves about 700 visas available to each country in a normal fiscal year. Any unclaimed visas are reassigned to countries with higher demand for the program. Overall, EB-5 investment visa demand has outpaced supply, thus impacting EB-5 visa wait times.

EB-5 Visa Bulletin Attempts to Balance Supply and Demand

The Department of State (DOS) publishes its Visa Bulletin monthly, wherein it lists cut-off dates by country, which are meant to determine visa availability. USCIS establishes a cut-off date each month for individual countries in which demand significantly exceeds visa availability, which is supposed to ensure fair distribution across all 10,000 visas. Only applicants with priority dates (the date by which USCIS received their application) falling before the cut-off date listed in the bulletin are eligible for EB-5 investment visas or green cards during that month. Eligible applicants with priority dates earlier than the published cut-off date are allowed to apply for permanent residency in the United States. Furthermore, according to USCIS, in order for an adjustment in status to occur, an EB-5 visa must be available to the applicant from the time of submission to the time adjudication is complete.

Visa Retrogression

Visa retrogression is the state in which application volumes (demand) begin to exceed visa availability (supply). For the EB-5 program, if visa retrogression occurs, it usually continues through to the end of the fiscal year but then returns to pre-retrogression levels. Throughout a fiscal year, high-demand EB-5 countries like China or Vietnam may exhaust their allotted limit of EB-5 visas for the year, triggering visa retrogression, but they are also the first candidates for any leftover visas at the end of the year. Thus, most years, once the fiscal year ends on September 30 and the new fiscal allocation takes effect on October 1, dates return to pre-retrogression dates. Additionally, cut off dates typically move forward depending on the current supply and demand of a given country.

Predicting the Ebb and Flow of EB-5 Wait Times

Essentially, a review of the monthly Visa Bulletin offers a glimpse into how long other EB-5 investment participants have had to wait and which priority dates are currently being processed. This is not exactly a concrete foundation for how long it will take to process applications in the future, true. However, considering backlogs and current visa limits in an investor’s country of origin can at least offer insight into how long it will take.

Standard Formula for Calculating EB-5 Visa Wait Times

Here is the industry standard for estimating EB-5 visa wait times:

A ÷ B = C

A: Estimated number of EB-5 investment participants currently in line for a visa
B: Estimated average number of visas available each year (generally ~700)
C: Estimated wait time

Oppenheim’s Use of Standard Calculations

This same calculation is used in Oppenheim’s November 2020 presentation. The last column in the first graphic represents variable A, and the gray bars in the second one equal variable C. Oppenheim’s assumptions in B may be inferred by dividing A by C.

Even Charles Oppenheim’s predictions aren’t fail-proof, however. Let’s take a closer look at why…

The Primary Issue with Oppenheim’s Predictions

Oppenheim’s timing predictions are specifically applicable to a single point in time: October 1, 2020. As petitions are adjudicated daily, the estimated years to visa availability are technically subject to change every day, too. As a queue issue, at any other point in time, the remaining wait time of each individual investor standing in line is uniquely dependent upon how close or far they are from the front of the queue. Thus, instead of saying “the wait time for China,” a better way to conceptualize the queue would be to day “the wait time for a Chinese EB-5 investor who entered the queue at this certain point in time.”

Moreover, Oppenheim’s calculations are specifically based on the very back of the queue on October 1, 2020. EB-5 investors who have been in the queue longer than others will have a shorter wait time than the estimated wait time for the country as a whole. One way to obtain a more accurate estimate is by factoring in data from the DOS on the number of applicants who have earlier I-526 filing dates than a specific investor.

Oppenheim Also Discounts Applicants

Also note that the the first two columns in the above tables do not equal the total inventory of future EB-5 applicants. He only counts EB-5 investors in two categories: USCIS’s pending I-526 petitions and the National Visa Center’s pending documentarily qualified applicants. In other words, those with pending I-485 petitions and those who have already received I-526 approval but are experiencing delays in some other part of the process are left out of the calculation.

While he may have valid reasons for discounting the other applicants, these missing categories of EB5 investment participants can significantly alter wait times. For instance, an estimated 50% of Indian EB-5 investment applicants are working on status adjustments inside the United States.

For those who wish to leverage the extensive experience Charles Oppenheim brings to the table, the real question then becomes whether an EB-5 investor thinks he overestimates or underestimates EB-5 visa wait times in his calculations.

Are Oppenheim’s EB-5 Wait Times Over- or Underestimated?

The easiest way to answer this question is that it’s complicated. Going back to the industry standard equation, A ÷ B = C, Oppenheim’s estimations for C (wait times) are dependent upon the accuracy of the data used in variables A and B. There’s no way around the fact that there must be assumptions about future filings in order to settle on those variables. Anyone who wishes can challenge his calculations with questions regarding future family size and the entire categories of applicants discounted.

An entirely new job description could be made of EB-5 industry professionals laying out tables and playing what-if games with the variables and formulas to estimate how long it will take for EB-5 visas to be processed. A better use of time, however, is to assist individual EB-5 investors on a case-by-case basis, evaluating their unique circumstances to better derive an estimated wait time.

A great starting point for any individual EB-5 investment participant is to understand each of the five basic steps in the EB-5 process and to work with an experienced EB-5 professional to ensure extended waits can be avoided wherever possible.

Five Steps to the EB-5 Investment Process

Generally speaking, from start to finish, an EB5 investment usually takes several years to complete. Below are the five main steps in the process.

Step 1: I-526 Petition Packet Submission

When an EB5 investment participant files their I-526 petition packet and USCIS receives it, the investor is assigned a priority date. Any eligible investor may initiate the process at any time.

Step 2: Awaiting I-526 Adjudication and Approval

The processing of petitions is based on visa availability. Investors from countries that still have visas available are prioritized. I-526 processing often takes years, depending on visa supply and demand and the efficiency of USCIS adjudication.

Step 3: Consular Processing

Applicants who live abroad must visit the closest National Visa Center to become documentarily qualified after receiving I-526 approval. After applying for a U.S. green card and undertaking a visa interview, they are eligible to receive an EB-5 visa, if available.

Step 4: I-485 Petition for Adjustment of Status

Once the previous steps have been completed, EB-5 investment participants already living in the United States may file an I-485 Adjustment of Status application when visas become available. This is the stage in which the monthly Visa Bulletin becomes relevant. Applicants whose countries have a “current” status in the bulletin are least likely to be at risk for missing the 700-visa limit. For others, this step can also cause delays that span years.

Step 5: Petition to Have Conditions Removed

Within the last 90 days of an EB-5 investor’s two-year conditional residency period, they must submit a Form I-829, which petitions to have their conditions removed and their residency in the United States made permanent.

U.S. financial market conditions have fluctuated wildly in the wake of the COVID-19 pandemic as well as the governmental and regulatory responses that have followed. Existing operations and prospective businesses across a myriad of industries have seen disruptions in both planning and results. While the true extent of pandemic effects has yet to come to light, one thing is certain—significant changes will generally continue at least as long as the COVID-19 crisis does. This can be especially concerning for foreign nationals who are counting on the EB-5 Immigrant Investor Program as a pathway to U.S. permanent residency.

COVID-Related Disclosures Help Potential EB-5 Investors Evaluate Risk

Projects that use EB-5 investment financing are subject to the same adverse effects any other business would be in this comparatively volatile time. Industry and operational uncertainty, permanent and temporary closures, interruptions in supply chains and travel, hiring freezes and extended medical leave among employees—these are only a few of the most important considerations.

As EB-5 investors continue vetting program-approved projects, it is important to understand there are essential disclosures potential partners should be providing to them so that they may properly evaluate investment risks ahead of submission. Prospective EB5 investment participants should expect certain disclosures regarding COVID-19 and its possible impact on both EB-5 investments and on the project as a whole.

Learn more about what these disclosures mean for an EB5 investment, when they should be received, and under what circumstances consent for change is required. First, we provide an overview of new EB-5 investment offerings in the recent economic climate.

EB-5 Operators Adopt a Wait-and-See Approach

Although the COVID-19 pandemic has clearly impacted EB-5 project business and operations, which seems to have led to a further stifling of new EB-5 offerings by NCEs, this wasn’t the only contributing factor. Rather, an addition to recent years of turbulence from changes such as

• A lack of definitive policy determinations from U.S. Citizenship and Immigration Services (USCIS)
• Changes to methodologies and allocation of targeted employment areas (TEAs)
• Substantial increases in minimum investment requirements
• Massive visa backlogs in certain countries
• Political uncertainty in the United States

That said, the uncertainties caused by the global pandemic have essentially become the final straw for may EB-5 operators that hadn’t already slowed, and even a good number of those overseeing the continued success of operating exceptional projects and/or maintaining meaningful relationships with migration agents have come to adopt a wait-and-see approach to new EB-5 investment offerings. This strategy isn’t necessarily a red flag, but instead more likely signals proper fiduciary handling. Additionally, a downturn in the economy doesn’t mean EB-5 investments should discontinue. There are actually a number of benefits from the global pandemic already surfacing. In fact, depending on the project, it may make the most financial sense to invest now. Those operators in an investor’s consideration set who do go ahead with new EB-5 offerings simply have a responsibility to provide the proper disclosures with their offering materials. It is the duty of the investor (and their attorney) to perform due diligence prior to investment.

Legal Obligations of Full and Fair Disclosure According to the SEC

The U.S. Securities and Exchange Commission (SEC) governs by laws, rules and regulations that are designed to protect every investor in the country. One of the core requirements to ensure investor protection is offering documents that contain “full and fair disclosure” of material information as outlined in several federal statutes.

Specifically, the guideline that can be directly applied to prospective EB-5 investors is that the Securities Exchange Act of 1934 prohibits disclosure of untrue statements of material fact and the omission of material facts necessary to prevent previous statements from becoming misleading. There is no hardline quantitative test for materiality under SEC laws, but precedent for evaluating a violation is to determine whether there exists a substantial likelihood for a reasonable investor to consider a misstatement or omission an important factor in the decision to buy or sell a security. So how does that apply to disclosure documents for an EB5 investment offering?

Full and Fair Disclosure within New EB-5 Offering Documents

Within the context of a new EB-5 investment offering documents, there are three hallmarks of full and fair disclosure investors should seek out: cautionary language, investment risk factors, and in the current climate, statements regarding COVID-19.

Cautionary Language and Risk Factors

Offering documents need to include statements of general caution and the various traditional risks and uncertainties associated with the particular type of EB-5 project under consideration. It should also reference in forward-facing statements the safe harbors availed to new commercial enterprises (NCEs) under the Private Securities Litigation Reform Act of 1995 (PSLRA) as well as the Securities Exchange Act itself. NCEs will tailor language to the specific industry under which the project is housed.

Statements Regarding COVID-19

Specifically, in the statements looking forward, the risks and uncertainties a project may be subject to in relation to COVID-19 should exist. Emphasis should also be placed on the accuracy of certain statements that depend upon future events and assumptions. Investors should be able to find notice that COVID-19 may cause expected results to differ materially. The proper documents will also include robust disclosures on exactly how the pandemic might present additional risks and/or exacerbate traditional risks associated with this type of project.

Topics Proper Disclosures May Address

For instance, in addition to disclosure statements traditionally provided, an NCE would clearly disclose how the virus may have caused construction delays on a real estate project or that demand for a hotel project may dwindle following potentially ill effects on the travel and tourism industry due to an additional viral surge. A well-prepared NCE may even provide projections on how they expect operations to change or a project to evolve in various scenarios as the hospitality industry moves through recovery.

What are the impacts upon job creation and allocation? At what points could material changes come into play? Could operational changes lead to material changes? These are all questions that may be addressed within those disclosure documents. Along with potential changes, there should be an outline for an EB-5 investor’s rights and when changes would require their consent. The reason these topics are so important is the potential for material changes to impact USCIS processing of investor petitions.

Material Changes for EB-5 Projects

While some degree of flexibility between original project documents and final outcomes exists with USCIS adjudication of EB-5 petitions, discrepancies that materially affect a project can put an EB5 investment participant’s visa eligibility at risk. Material changes are ones pertaining to significant aspects of an EB-5 project—ones that can affect adjudication decisions. These changes do not in and of themselves equate to petition denial, but the two types of changes that can lead to the biggest processing snags are fund sourcing and business plan elements.

Having an experienced EB-5 professional or immigration attorney review new offering documents and disclosures can help to ensure that solutions are in place that insulate an EB-5 investor for projects that could be negatively impacted by COVID-19 in the future. Additionally, this type of review can confirm the availability of an exit strategy that would allow an EB-5 investor to remain compliant with program eligibility requirements.

From the perspective of an operator’s liability, it is always best practice to disclose to EB-5 investors the greatest amount of meaningful information possible (including updates made necessary by the ongoing pandemic). It is important to realize they are held to a higher standard by the SEC than what USCIS may require.

For this reason, an EB-5 investor is best advised to seek the counsel of an attorney to clarify what information USCIS might deem “material,” exactly how much information should be provided and when, as well as what rights the investor has following the receipt of these disclosures. Ultimately, the proper evaluation of these disclosures will help potential investors more aptly navigate the decision to participate in an EB-5 project.

Foreign investors looking to permanently immigrate to the United States would do well to consider the EB-5 Immigrant Investor Program, which is considered among the fastest and simplest ways to attain U.S. permanent resident status. Those who choose to make an EB-5 investment to gain green cards for themselves and their immediate family members are presented with two options: direct investment in an EB-5 project or indirect investment via an EB-5 regional center. While both options have their merits, the undeniable winner is the regional center route, selected by most EB5 investment participants for its relative security and freedom as well as the easier job creation requirements it affords investors.

The problem is that, unlike U.S. permanent resident status, the EB-5 Regional Center Program is not permanent. While Congress has made the EB-5 Direct Investment Program permanent, its far more popular counterpart remains temporary, with Congress issuing continuous reauthorizations to sustain the massive flows of foreign EB5 investment capital into the U.S. economy. Since the EB-5 Regional Center Program represents a key factor in attracting foreign capital and bolstering job creation, EB-5 stakeholders do not anticipate a revocation of the program, especially given that President Trump spared EB-5 investors from his broad immigration ban in 2020. However, until the overwhelmingly popular EB-5 investment program is made permanent, it will be a constant source of uncertainty in the EB-5 industry.

Back-to-Back Regional Center Program Reauthorizations in Late 2020

Upon each reauthorization of the EB-5 Regional Center Program, Congress determines anew the period of validity, so the program is constantly reauthorized for varying periods of time, ranging from years to a single week. In 2020, the first reauthorization came on September 30, the end of fiscal year 2020, having remained steadily authorized throughout the year until that point.

When the EB-5 Regional Center Program was reauthorized on September 30, it was only for a short two and a half months until December 11, 2020. The Regional Center Program’s reauthorization was bundled in with numerous other government funding bills, and Congress was likely attempting to buy itself more time to deliberate over funding issues for 2021 as the government continues to navigate the devastating effects of the COVID-19 pandemic.

However, two and a half months proved too short. On December 11, 2020, Congress pushed the sunset date of the EB-5 Regional Center Program ahead just one week, setting it to expire on December 18, 2020. This way, the government had one more week to iron out the issues in its funding bills and other government programs heading into 2021.

On December 18, 2020, came the first sizeable EB-5 Regional Center Program reauthorization of 2020. Part of the Consolidated Appropriations Act 2021, the Regional Center Program has been secured through June 30, 2021, alongside various other government programs.

Potential Changes on the Horizon

December 18’s EB-5 Regional Center Program reauthorization simply prolongs the period of validity of the popular EB5 investment program—nothing more. Indeed, this is the typical form Regional Center Program reauthorizations assume. But changes could be coming to the EB-5 program, such as the abolition of country-based restrictions in visa numbers or a major EB-5 reform. A bill proposing the elimination of country caps at United States Citizenship and Immigration Services (USCIS) has passed through the Senate with broad, bipartisan support, which could spell major changes to I-526 processing, particularly for the direly backlogged Chinese EB-5 investment participants. Simultaneously, a bill pushing for major EB-5 reform to strengthen integrity measures, better foster job growth, and more strongly protect EB5 investment participants has been presented in the Senate. One of its proposals is to reauthorize the EB-5 Regional Center Program for longer-term periods, such as several years.

While these much-anticipated changes to the EB-5 program have not materialized in the December 18 reauthorization of the Regional Center Program, Congress has introduced one deviation from the norm. Interestingly, the EB-5 Regional Center Program has been reauthorized until the end of June 2021 as opposed to the end of the fiscal year. This separates the EB-5 Regional Center Program from the other federal spending bills it has been grouped together with and could signal a stronger focus on the EB-5 program as a standalone issue in the future. Perhaps, the reforms the EB-5 program so desperately needs are indeed on the way.

The EB-5 Immigrant Investor Program has been a favorite among foreign investors since its debut in 1990. Established by Congress to funnel foreign capital into the U.S. economy and drive job creation, the program attracts foreign nationals from all over who infuse their EB-5 investment capital into qualifying new commercial enterprises (NCEs), in exchange receiving U.S. green cards for themselves and their eligible family members, assuming their EB5 investment meets all the EB-5 program requirements. Over the years, the program has been responsible for bringing billions in foreign capital to the U.S. economy and securing new jobs for hundreds of thousands of U.S. workers.

In fact, the popularity of the program is the very cause of one of its primary problems: lengthy backlogs for EB-5 investment participants. United States Citizenship and Immigration Services (USCIS) uses country-based caps on annual visa issuances to ensure balance across countries in immigration matters, but with population sizes and immigration demand differing starkly among nations, this policy quickly results in huge backlogs for nationals from certain countries. In the case of the EB-5 program in December 2020, it’s Vietnamese and Chinese EB-5 investors who are subjected to backlogs.

While EB5 investment participants from other countries can simply apply for their U.S. green card after their I-526 petition is approved, Chinese and Vietnamese investors must wait until an EB-5 visa becomes available. Availability is determined by an investor’s priority date—the date on which USCIS received their I-526 petition. Each month, USCIS publishes a Visa Bulletin that outlines the final action dates for petitioners from different countries, and anyone whose priority date is earlier than the indicated date is eligible to receive an EB-5 visa that month.

In 2020, the EB-5 community, just like the rest of the world, was blindsided by the COVID-19 pandemic. The pandemic certainly did not spare EB-5 investors amid its wrath, with temporary shutdowns of U.S. embassies and consulates preventing thousands of investors from completing their visa interview and claiming the U.S. permanent resident status their EB5 investment affords them. Likely also due to the lack of consular activities is the stalling of the Chinese final action date and the slow progress of the Vietnamese final action date. Interestingly, India, which faced a backlog at the dawn of 2020, shot forward rapidly, with the backlog clearing up by July 2020.

The final action dates in January 2021 stand at August 15, 2015, for Chinese investors and September 15, 2017, for Vietnamese investors, with Indian investors remaining “current” for the seventh consecutive month. The Chinese final action date has failed to advance since August 2020, when it moved ahead a single week from August 8, 2015. Not even the earmarking of an astounding 18,000 visas for the EB-5 program in FY2021 at the advent of the new fiscal year on October 1, 2020, could shake the inertia of the Chinese EB-5 final action date. USCIS has an incredible opportunity to issue a previously unfathomable number of EB-5 visas in FY2021 and dramatically shorten the backlogs that have long plagued the program, but so far, it is not acting on this one-of-a-kind opportunity.

Meanwhile, the final action date for Vietnamese EB5 investment participants has moved ahead two weeks to September 15, 2017. While the Vietnamese date, unlike the Chinese one, is moving forward, the progression is disconcertingly slow. The EB-5 world can only hope consular visa progressing resumes quickly and the final action dates begin to shoot forward.

Countries other than China and Vietnam are current in the January 2021 Visa Bulletin, which USCIS signals by entering a C. The dates for regional center investors are listed as U, which stands for “unauthorized,” because Congress had not reauthorized the EB-5 Regional Center Program at the time the figures were drawn up. The EB-5 Regional Center Program has, however, been reauthorized, with a new sunset date on June 30, 2021, so the final action dates for those who have made their EB-5 investment through a regional center should be assumed to be identical to the direct investment dates.

In terms of Chart B, which discloses the date for filing for particularly backlogged countries, China remains the only EB-5 nation without “current” status. With the date for filing staying put at December 15, 2015, for the tenth month in a row, Chinese EB-5 investors whose priority date is later than December 15, 2015, are not even eligible to file their application for a U.S. green card, even if they have already attained I-526 approval. As the EB-5 world hurtles toward the very real possibility of the Chinese date for filing failing to move for an entire year, Chinese nationals with active EB-5 investments can but pray the situation improves.

With 2020 finally wrapping up after throwing curve ball after curve ball to the entire world, it’s a good time to stand back and take stock of what has happened in the EB-5 industry in 2020. As of December 17, 2020, United States Citizenship and Immigration Services (USCIS) has not released detailed data on petition processing for the latter two quarters of FY2020. However, the statistics for the first half of the year are available, and they paint a distinctive picture for I-526, I-829, and I-924 petitions.

The good news is for EB-5 investment participants with I-829 petitions: I-829 processing volumes have increased, demonstrating the obvious intent of the Immigrant Investor Program Office (IPO) to prioritize I-829 petitions over I-526 petitions. I-526 petitioners find themselves in altogether different circumstances, with the IPO prolonging the slow processing volume it sustained in FY2019. To accompany the low processing figures, I-526 petitioners also experienced record-high estimated processing times, although actual processing times seem to be lower than USCIS’s estimates.

The situation is not so rosy for I-924 petitioners, either. Ever since the Modernization Rule went into effect on November 21, 2019, EB-5 regional centers have faced a tumultuous environment, with USCIS issuing terminations left, right, and center. The added challenge of the COVID-19 pandemic and the subsequent shutdowns made FY2020 a brutal year for regional center operators. With the virus still looming in the air even as 2020 comes to a close, FY2021 isn’t off to a great start, either.

The full picture of FY2020 for EB-5 regional center owners and I-924 cannot be known until USCIS releases the data for the second half of the year, but the figures for the first two quarters were already dismal. With rampant regional center terminations and astonishingly high estimated processing times, the EB-5 regional center landscape could be affected for years to come.

Mass Terminations Bring Regional Center Numbers Down to 2014 Levels

The Modernization Rule encompassed some modifications surrounding the designation of targeted employment areas (TEAs), which had the profound effect of disrupting EB5 investment activity at regional centers across the United States. Lack of investor activity is grounds for termination, and USCIS had no shortage of termination letters to distribute to EB-5 regional centers in 2019 and 2020.

Regional center terminations were increasing even before the Modernization Rule took effect, with regional center numbers falling since 2018. But the starkest decline was after November 2019, with USCIS terminating 140 regional centers and approving none between November 2019 and October 2020. The total number of EB-5 regional centers, which amounted to 646 in October 2020, was down 20% from FY2019 figures.

Most EB-5 regional centers terminated in FY2020 had been approved in FY2015 and FY2017. Given that USCIS tends to terminate regional centers with no investor activity for three to five years, it stands to reason that most were terminated due to lack of investor activity. It is clear, then, that foreign nationals interested in participating in the EB-5 program should carefully vet regional centers before entrusting one with their EB-5 investment capital

Extreme Fluctuations in Processing Times for I-924

The troubles for EB-5 regional centers stem from not only rampant terminations but also the overwhelming lack of new approvals. In March 2019, the estimated processing times for I-924 petitions were steady at 16.5–21.5 months, where they had rested for more than a year prior. But then, they suddenly started shooting up, until they reached a whopping 62–115.5 months in November 2019, when the Modernization Rule went into effect. For reference, that’s 5.1–9.6 years just to gain approval for a regional center.

While estimated processing times did fall back down from their peak at 115.5 months, they never returned to pre-April 2019 levels. With heavy fluctuations from November 2019 to October 2020 taking the estimated processing time range everywhere from 14.5 months to 115.5 months, predicting processing times for I-924 petitions has effectively become impossible. Most months bring strong fluctuations in either direction, so prospective regional center owners are left in USCIS limbo with no indication of when they can actually begin operations. But perhaps it doesn’t matter, because USCIS did not adjudicate I-924 petitions favorably in FY2020 anyway.

As 2020 winds to a close, the world remains volatile and unpredictable. COVID-19 vaccines are in the works, with the first doses having already been administered in the United States and a handful of other countries, but the pandemic rages on, threatening to keep public life heavily restricted for the foreseeable future. The EB-5 Immigrant Investor Program has not escaped the effects of the pandemic and the associated lockdowns, with temporary suspensions at U.S. consulates and embassies blocking countless foreign investors from claiming the U.S. green cards their I-526-approved EB-5 investments have earned them.

The situation for EB5 investment applicants with pending I-526 petitions is hardly any better, with I-526 processing volumes continuing their downward spiral under Immigrant Investor Program Office (IPO) chief Sarah Kendall. Simultaneously, the estimated processing times for I-526 petitions jumped to unprecedented highs in FY2020, frustrating those with active EB5 investments and discouraging future participation in the program.

FY2020 wasn’t such a bad year for I-829 petitioners, however. I-829 adjudications rose despite the dramatic downturn of I-526 processing, granting many foreign nationals with a successful EB-5 investment their coveted U.S. permanent resident status even in the midst of the most severe pandemic since the Spanish Flu.

High Adjudication and Approval Rates for I-829 Petitions

In contrast to the low I-526 processing volumes, FY2020 saw a jump in I-829 adjudications, surging to 1,229 total I-829 petitions adjudicated and positioning FY2020 as the year with the third-highest I-829 processing volume in its first two quarters since FY2012. This represents a 62% increase over the same period in FY2019, which still saw more I-829 petitions processed than the average since FY2012. The consistently high approval rate for I-829 petitions was also maintained in FY2020, clocking in at 95% for the first two quarters.

The situation in the latter two quarters is unknown as of December 17, 2020. In July 2020, USCIS published a policy memo about redeployment, which directly affected how I-829 petitions are adjudicated. The impact of this policy change will become evident in the latter half of FY2020 and in FY2021, but the EB-5 industry could see I-829 approval rates suddenly falling in the second half of FY2020.

I-829 Estimated Processing Time Range Grew Wider

It’s difficult to predict how long it will take USCIS to adjudicate an I-829 petition. The IPO’s actions in FY2020 make it clear that the organization is prioritizing I-829 petitions over I-526 petitions, but with its snail-like pace under Kendall’s direction, processing times may not have actually decreased since Julia Harrison ran the IPO in FY2018. In January 2020, the estimated processing time range for I-829 petitions was 21–45.5 months, but by October 2020, the range had risen to 35–56 months, despite USCIS’s clear focus on I-829 petitions. Additionally, the range growing wider leaves room for more unpredictability in I-829 processing times. Processing statistics from the latter two quarters of FY2020 and beyond will reveal how the changes to redeployment policy have affected I-829 processing and may offer an indication of the direction processing times will take in the future.

Since 1990, the EB-5 Immigrant Investor Program has provided a relatively quick and simple pathway for foreign investors to obtain U.S. green cards for themselves, their spouse, and their unmarried children younger than 21. Even throughout the turmoil of 2020, with much of the United States shut down due to the COVID-19 pandemic, the program has pattered along, infusing new bouts of foreign EB-5 investment capital into the U.S. economy. But the EB-5 program hasn’t been without its fair share of strife in 2020—from the threat of a massive United States Citizenship and Immigration Services (USCIS) furlough to demonization and unfounded claims of fraud from U.S. senators, the EB-5 program needs help to turn around, improve its image, and continue creating new jobs for U.S. workers.

Senators Chuck Grassley (R-IA) and Patrick Leahy (D-VT) have long formed a bipartisan partnership to improve and promote the EB-5 program, serving as living proof of the immigration program’s ability to cross party lines. The two senators have worked tirelessly to strengthen integrity without stifling the program and optimize the benefits that EB5 investment capital can bring to the United States while offering foreign investors and their family members promising new lives in the land of the free. To this end, Senator Grassley has introduced Bill S.2540 – EB-5 Reform and Integrity Act of 2019 to the Senate, cosponsored by Senator Leahy.

What Does Bill S.2540 Propose?

In brief, the EB-5 Reform and Integrity Act of 2020 proposes measures to increase EB-5 program integrity, clamp down on fraud, and reauthorize the ever-popular EB-5 Regional Center Program through 2025. Under the proposed bill, those qualified to make EB5 investments and regional centers operating lawfully would enjoy stronger protections, while fraudsters and others engaging in illegal activities would be more stringently weeded out.

Reauthorization of the Regional Center Program through 2025

While the EB-5 program offers investors two pathways to make their EB-5 investment—direct investment and regional center investment—the majority of investors opt to invest through an EB-5 regional center. The advantages of regional center EB5 investment are manifold—for example, regional center investors are generally not required to involve themselves in the daily management of the new commercial enterprise (NCE) and may count indirect and induced jobs toward the job creation requirement, facilitating the process of obtaining U.S. permanent residency.

Despite its popularity, the EB-5 Regional Center Program is not a permanent U.S. government program, which means it is subject to frequent re-evaluations and reauthorizations. While discontinuation is highly unlikely, the program’s temporary status leaves its future uncertain. The proposed bill would see the EB-5 Regional Center Program extended through 2025, solidifying it in U.S. law for a substantial period.

Stricter Regional Center Integrity Measures

While fraud in the EB-5 program is rare, it does still exist. To more strongly combat fraud in regional centers, the proposed bill would stipulate that 10% of the jobs counted toward a regional center project’s job creation requirement be created directly. It would also require regional centers to retain records for five years and undergo an audit in five-year intervals at a minimum.

Another integrity measure targeting EB-5 regional centers is the proposal to require project-specific business plans with a prospective regional center’s Form I-924 petition. As of December 14, 2020, such inclusion is optional and constitutes an exemplar application, expediting the I-526 approval process for those who have made an EB5 investment in a previously approved project.

Perhaps most importantly in terms of fraud prevention is the preclusion of certain people from work in an EB-5 regional center, as stipulated under the proposed “bona fide requirements” of EB-5 regional center involvement. Those who have previously committed fraud offenses, have received an adverse order from a financial regulator, are inadmissible for immigration to the United States, or have been listed, reprimanded, or disciplined for fraud are not permitted to work with an EB-5 regional center.

A Second Chance at Job Creation

While the majority of EB-5 investors succeed in creating the necessary 10 jobs for U.S. workers within their two-year investment period, not all do. Those worried that their EB5 investment capital will not create all 10 jobs within two years should be cheering on Bill S.2540, as it offers investors an extra year to fulfill the job creation requirements. The same rules apply to the extra investment time as to the standard two-year investment period: the EB-5 investment capital must remain at risk for the duration of the period.

Faster Processing

The EB-5 industry has long lamented the slow processing times for EB-5 petitions, which have even been ruled unreasonably slow in court. USCIS’s snail-like pace, particularly under Sarah Kendall, chief of the Immigrant Investor Program Office (IPO), has contributed to a drop in EB-5 demand, with foreign investors instead opting to pour their capital into countries like Canada or Australia.

Bill S.2540 endeavors to bring changes to the EB-5 program’s longstanding problems with processing times. Under the proposed EB-5 reform bill, USCIS would be required to conduct a fee study no later than one year following enactment. It would then set fees at an appropriate level to carry out petition processing according the following schedule:

• 180 days for regional center designations and exemplar applications
• 90 days for regional center designations and exemplar applications in targeted employment areas (TEAs)
• 240 days for investor petitions
• 120 days for investor petitions in TEAs

A Promising Future for EB-5

Should Bill S.2540 pass, the EB-5 program will undergo significant changes that will make it more appealing to foreign investors and help it better fulfill its Congress-defined goals of stimulating the U.S. economy and creating new jobs for U.S. workers. Those with EB-5 investments would enjoy swift processing times and an extra year to meet the job creation requirement, reigniting interest in the immigration program.

The bill is only in its beginning stages as of December 14, 2020, so its future is impossible to predict. It’s worth it for EB-5 industry participants to keep an eye on this bill as it moves through the bodies of government, as the changes it can bring to the EB-5 program are significant and more than welcome.

As calendar year 2020 comes to an end, fiscal year 2020 already ended on September 30, 2020. The year constituted the most unpredictable and volatile one on record in the EB-5 Immigrant Investor Program’s 30-year history, with the COVID-19 pandemic sweeping the globe, destroying economies, and placing EB-5 investors waiting for visa interviews in limbo. The program managed to escape President Trump’s immigration ban unscathed, but while immigration based on EB-5 investment remained legal, global travel restrictions, reduced flight schedules, and the suspension of routine visa services at U.S. consulates and embassies resulted in a de facto ban.

COVID-19 wasn’t the only change the EB-5 program faced in FY2020. In April 2020, United States Citizenship and Immigration Services (USCIS) introduced the visa availability approach for I-526 processing, shifting away from the classic first-in, first-out approach it had been using since its inception. By prioritizing I-526 petitions from EB5 investment applicants whose countries of origin had immediately available visas, the approach was meant to increase processing efficiency, but it disadvantaged the heavily backlogged Chinese investors.

The enactment of the Modernization Rule on November 21, 2019, was, however, the first blow to the EB-5 program in FY2020. The Modernization Rule entailed a stark increase to the minimum required EB-5 investment amounts, with both regular and targeted employment area (TEA) investment amounts increasing by 80% to $1.8 million and $900,000, respectively. This naturally resulted in the disqualification of countless prospective EB-5 investment applicants. The Modernization Rule furthermore altered the rules surrounding TEA designation, resulting in mass terminations of EB-5 regional centers that continued throughout FY2020.

The unprecedented circumstances of FY2020 created atypical I-526 processing patterns throughout the fiscal year. In this post, we dive into the specifics to discover the full story behind I-526 processing in FY2020.

Major Increase in I-526 Filings Before Modernization Rule Effective Date

Those considering making an EB5 investment were given advance warning of the planned implementation of the Modernization Rule in November 2019. With the 80% fee increase undoubtedly rendering an EB-5 investment unviable for numerous investors, applicants rushed to submit their I-526 applications before November 21, making for a steep increase in I-526 filings in the first half of FY2020. With 4,285 I-526 petitions filed between October 1, 2019, and March 31, 2020, USCIS recorded an 80% increase in I-526 petitions compared to the same period in FY2019.

Of the 4,285 I-526 petitions filed in the first half of FY2020, a whopping 4,264 were submitted in the first quarter, comprising the period of October 1 to December 31, 2019. While a more detailed breakdown of the data is not available, we can assume that most of these petitions were filed before November 21, 2020, when the previous investment amounts of $1 million and $500,000 were still permissible. Subsequent filings were dramatically lower, likely due to both the enactment of the Modernization Rule and the onset of the COVID-19 pandemic.

I-526 Approval Rate Fell, Denial Rate Remained Steady

In the first half of FY2020, USCIS processed a total of 1,359 I-525 petitions, continuing the steep downtrend that began after Sarah Kendall’s takeover as chief of the Immigrant Investor Program Office (IPO) in FY2019. Coming off Julia Harrison’s all-time high in FY2018, Kendall’s abysmal figures were all the more disappointing, and FY2020 brought little improvement. According to the IPO, the low processing volume can be attributed to a greater focus on integrity and fresh training for I-526 adjudicators.

USCIS’s adoption of a visa availability processing approach for I-526 petitions in April 2020 could also have a positive impact on I-526 processing figures, with USCIS focusing its efforts on petitions from countries with readily available visas. But as of December 17, 2020, detailed processing statistics for the latter half of FY2020 remain unavailable. Going by the processing time data published on USCIS’s website, however, the situation does not look to have improved much.

It’s important to note that while adjudications overall have declined significantly, the denial rate has not fallen. The I-526 approval rate in the first half of FY2020 was 81%, the lowest figure since FY2016’s 76%, but the statistics prove that the approval rate is well within EB-5 norms. EB-5 investment applicants have reported increased instances of requests for evidence (RFEs) and notices of intent to deny (NOIDs), but these seem to have largely resulted in delays, not denials.

I-526 Processing Times Hit an All-Time High

With the COVID-19 pandemic wreaking havoc across the globe and I-526 processing almost grinding to a halt, the record-breaking high wait times for I-526 petitions in FY2020 should come as no surprise. One of the many shocks that FY2020 presented to the EB-5 investment industry was the sharp increase in I-526 estimated processing times in August 2020, nearly doubling from 29.5–44.5 months to 46–74.5 months. Fortunately, the range fell back down, standing at 30.5–50 months as of December 17, 2020, but the steady increase of processing times is nonetheless disconcerting.

In August 2020, USCIS also added a separate estimated processing time range for Chinese I-526 petitioners, given that their petitions are deprioritized under the visa availability approach adopted in April 2020. The Chinese processing times have remained far above those for EB5 investment participants from elsewhere, maintaining a gap of roughly two years.

Despite the unprecedentedly high processing times indicated on the USCIS website, actual processing times have been significantly quicker. In many cases, EB-5 investors received their I-526 adjudication sooner than suggested by USCIS, but the trend is still increasing. The EB-5 industry can only hold its breath and wait for USCIS to finally increase its processing capabilities.