As advantageous as the EB-5 Immigrant Investor Program is for foreign nationals looking for a permanent life in the United States, the slow, inefficient processing practices at United States Citizenship and Immigration Services (USCIS) can cause major headaches for EB-5 investment participants, particularly those from backlogged countries. The program has been plagued with problems since FY2019, with the COVID-19 pandemic only compounding existing issues. While Indian EB-5 investors experienced a monumental clearing of their backlog in July 2020, the backlogs have remained for Chinese and Vietnamese investors. In fact, with the addition of Hong Kong EB5 investment participants following Beijing’s implementation of the controversial Hong Kong national security law, China’s EB-5 backlog has grown even larger.
USCIS’s lackluster efforts in I-526 petition adjudication are understandably off-putting to foreign nationals considering making an EB-5 investment, particularly if they hail from China or Vietnam. However, investors hoping to gain permanent residency rights in the United States would be wise to not write off this popular residency-by-investment program just yet—pending legislation could be a game-changer for the EB5 investment world.
How the U.S. Citizenship Act of 2021 Can Benefit the EB-5 Program
Immigration-friendly President Biden may not have the EB-5 program specifically in mind with his proposed overhaul of the U.S. immigration system, but the sweeping changes his administration is looking to enact could change the landscape of the program and revitalize lost interest among prospective EB5 investment participants. The bill contains a myriad of provisions that would tighten up the U.S. immigration system as a whole, and among them are three important proposals that could finally eliminate EB-5 backlogs.
Eliminating Country-Based Caps on Visa Issuance
As of March 2021, the EB-5 program is subject to a country-cap restriction that limits the number of visas that can be issued annually to recipients of a given nationality to a mere 7%. Putting aside the fact that this system ignores differences in population and demand, with the same figures reserved for China and Andorra, the restrictive rules discriminate based on nationality and force honest EB5 investment participants into processing limbo through no fault of their own. If the country caps were done away with, the backlogs may largely disappear.
Fortunately for Chinese and Vietnamese EB-5 investors, Biden seems to agree that the system is unfair. One of his proposals is the elimination of the country-cap system, which would free up thousands of investors to finally receive the EB-5 visa they earned long ago. With no more country caps, the need for investors to redeploy their EB-5 investment capital may also be reduced, lessening financial risk and allowing investors to have their capital repaid more quickly.
Exempting Families from the Visa Pools
One of the key motivations of EB-5 investors is to forge a better life for their children in the United States, including by sending them through the U.S. public school system or securing higher chances of college admission for them. Even if this isn’t one of the driving factors to make an EB5 investment, investors would hardly move to the United States if it meant leaving their spouse and dependent children behind. So don’t worry—this proposal isn’t suggesting families be disallowed from claiming green cards in relation to an EB5 investment.
But the addition of family members on most EB-5 petitions eats away at the available EB-5 visas for a year, which typically clocks in at around 10,000. Estimates have put the number of visas going to primary investors at a little over 3,000, with the rest being taken by family members. If family members were exempted from the pool, as the U.S. Citizenship Act of 2021 proposes, they would still receive permanent residency rights, but their visas would not be taken out of the pool of EB-5 visas, meaning the program could grant visas to roughly 10,000 primary investors per year. This would roughly triple the program’s output capacity, driving down backlogs and wait times.
Reclaiming Historically Unused Visas
The EB-5 program’s underutilization in its early years could also constitute a boon to those with active EB5 investments in 2021. Though the residency-by-investment program was born in 1990, it failed to gain significant traction until the 2010s, regularly issuing fewer than 500 EB-5 visas annually. With the capacity to issue about 10,000 visas each year, tens of thousands of EB-5 visas have been lost throughout the years.
If the U.S. Citizenship Act of 2021 comes to pass, the EB-5 program can reclaim the tens of thousands of visas it failed to distribute in its first two decades. This move alone could clear up the EB-5 program’s lengthy backlogs, and combined with the above two initiatives, backlogs could remain a relic of the past for the foreseeable future of the EB5 investment program. Though not specifically focused on the EB-5 program, the U.S. Citizenship Act of 2021 is just what is needed to reinvigorate the program and attract new EB-5 investment capital from foreign nationals seeking a better life in the United States.