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Common Questions About the EB-5 Program

Common Questions About the EB-5 Program

The EB-5 Immigrant Investor Program is one of the fastest and easiest pathways to permanent resident status in the United States—eligible investments can qualify investors and their immediate family members for U.S. green cards. However, the program is fairly complex, and prospective investors are advised to familiarize themselves deeply with the program before diving into it. Investors typically have various questions about the investment requirements and what the program entails, and this article answers some of the most common questions prospective EB-5 investors ask.

1. How much do I have to invest for an EB-5 visa?

EB-5 investors must invest a minimum required investment amount in a qualifying EB-5 project to attain their U.S. green card, although they may choose to invest more if they wish. The default minimum required investment amount is $1.8 million, but if the project is located in a targeted employment zone (TEA), the minimum required amount drops to $900,000.

TEAs are defined as high-unemployment or rural areas that stand to particularly benefit from the foreign investment capital that EB-5 investors bring in. If an investor invests the lower required amount, they must demonstrate on their I-526 petition that the project meets the requirements for TEA designation by providing data on the region’s unemployment rate or population. TEA projects can work as both direct-investment projects and regional center projects, but they’re easier to find through regional centers. Regional centers concentrate on TEA projects because of their heightened attraction for EB-5 investors.

2. When will my EB-5 investment capital be returned?

One of the requirements of the EB-5 program is that investment capital remains “at risk” for the duration of the investment period (i.e., the investor’s two-year conditional permanent residence period). Therefore, an EB-5 investor’s funds will be tied up for at least two years. However, specifications in the particular project can delay repayment, and some investors don’t see their capital returned for five years or more.

EB-5 investors should carefully read through the documentation of prospective projects and regional centers so they fully understand the terms and conditions of repayment. Some regional projects return the capital in full and others only partially. The most important step a prospective EB-5 investors can take is conducting thorough due diligence to ensure a particular project meets their financial and immigration requirements.

3. Are EB-5 investments safe?

All EB-5 investments must be “at risk,” but that doesn’t mean they have to be risky investments. To be considered “at risk,” an EB-5 investment must incur both the possibility of loss as well as the chance for gain. Investors should carefully study prospective EB-5 projects and regional centers to determine the level of financial and immigration risk an investment with them would entail. The previous track records of regional centers and developers are often a strong indicator of future success, so look for experienced regional centers and developers with a history of successful EB-5 projects.

4. Can I get a loan to fund my EB-5 investment?

Loans are an appropriate source of funds for an EB-5 project and are typically secured with assets the investor owns as collateral. In essence, EB-5 investors can use any source of funds for their investment, including donations from family, but they must prove the capital came from lawful sources. In the case of a loan secured by personal assets, the investor must document the lawful sources of the assets.

5. How does USCIS decide which EB-5 applications to prioritize?

Until April 2020, United States Citizenship and Immigration (USCIS) used a first-in-first-out (FIFO) approach to determine which EB-5 petitions to adjudicate. Petitions were adjudicated in the same order they were received, regardless of the investor’s country of origin.

In April 2020, USCIS switched to a visa availability approach, which prioritizes EB-5 applicants based on the investor’s country of origin. Certain countries—China and Vietnam, as of September 2020—are subject to long backlogs due to high EB-5 demand, and since each country is only allotted about 700 EB-5 visas per year, the FIFO approach had adjudicators working on EB-5 petitions whose applicants weren’t immediately eligible for an EB-5 visa. Under the visa availability approach, USCIS adjudicates petitions based on whether the applicant’s country has visas immediately available.

To determine which countries to exclude, USCIS uses Chart B of the monthly Visa Bulletins. As of September 2020, China is the only country not “current” in Chart B, which means currently, only Chinese EB-5 investors are negatively impacted by the visa availability approach.