Despite the EB-5 Immigrant Investor Program being among the quickest ways to obtain U.S. residency, the wait time can be long—often two years and sometimes longer. For EB-5 investors from countries not listed as “current” in the monthly Visa Bulletins, the wait is longer: five to 15 years. The benefits of living in the United States, including a high-quality public education system, state-of-the-art medical facilities, and political and economic stability, are worth the wait, but the years spent in limbo at the mercy of U.S. Citizenship and Immigration Services (USCIS) can cause undue stress and increase the likelihood of challenges arising.
For EB-5 investors with an urgent need for a green card, there exists another option: expedited EB-5 projects. Expedited status can reduce an investor’s wait time for I-526 processing from approximately two years to between four and ten months. Most EB-5 projects do not qualify for expedited status, so any investors considering this path must carefully conduct their research to find a qualifying expedited project. Expedited status exists simply as a way for a project to gain quick access to the funds of its EB-5 investors and begin construction and is available only to projects that USCIS has deemed to represent urgent humanitarian needs or be of compelling interest to the U.S. government.
The Process of Obtaining Expedited Status
To have an EB-5 project designated as an expedited project, the project’s owner must obtain a substantive letter from a high-ranking government official, such as a cabinet officer or agency head, outlining the benefits the project promises to the United States. This letter alone does not suffice, however. The letter must be accompanied by detailed information about the project and evidence of why the project is of compelling interest to the U.S. government, and elucidating the urgent need for the swift release of EB-5 capital into the project’s pool of funds. Included with the submission should be a convincing cover letter arguing the case, credible evidence supporting the arguments, and a completed sample I-526 petition to secure exemplar status. The request should be submitted as an I-924 petition. USCIS will have 90 days to respond.
Considerations for EB-5 Investors
With the potential for considerably quicker I-526 approval that expedited EB-5 projects offer, one might question why EB-5 investors do not clamor after the very few expedited projects that exist. One important caveat to bear in mind is that expedited status does not free up additional EB-5 visas, meaning investors from backlogged countries may still be subject to long wait times to apply for and obtain their U.S. green card, effectively rendering the benefits of expedited projects pointless for such investors. Furthermore, while the advantage of faster adjudication is certainly beneficial, expedited projects often have significant downsides, including higher financial risk and higher immigration risk to EB-5 investors.
USCIS applies the same scrutiny to the I-526 petitions of investors in expedited projects as it does to those of investors in non-expedited projects. Having expedited status does not make it easier for I-526 petitions to be approved and, importantly, does not lessen the risk to EB-5 investors. In fact, the opposite may be true. This means careful EB-5 due diligence is more important than ever for applicants investing in expedited projects.
Evaluating Financial Risk
When evaluating an EB-5 project for financial risk, a prospective investor should look at the additional sources of financing in the project. The lower the percentage of overall funding that EB-5 investment capital occupies, the safer the project. The safest EB-5 projects are those that use EB-5 capital to replace expensive debt or equity, not fund essential construction and operational activities.
Expedited EB-5 projects are granted expedited status precisely due to the essential role EB-5 capital plays in the successful construction and operation of the project, meaning the risk is generally elevated in these projects. In these cases, investors should also consider whether their EB-5 investment is secured by tangible assets, such as real estate, which would offer an extra layer of protection.
Another important aspect in financial risk calculation is the exit strategy. Investors should make themselves acutely aware of when and how they can expect their EB5 investment capital to be repaid. Investigating the project’s cash flow can shed light on the riskiness of the project. Guaranties should be a further consideration: Is there a completion guaranty? If so, who is offering it? Perhaps most importantly, investors should also confirm that their EB-5 investment capital will be returned if their I-526 petition is denied—any project that does not offer such a guaranty in writing is inherently risky.
Evaluating Immigration Risk
Generally, EB-5 investors are more concerned with immigration risk than financial risk, so conducting thorough due diligence to ascertain the immigration risk of an EB-5 project is vital. Whether an EB-5 project is expedited or not, the requirement for each participating EB-5 investor to prove the creation of at least 10 new full-time jobs for U.S. workers remains, so it’s crucial for an investor to evaluate the nature and timetable of the projected job creation of the new commercial enterprise (NCE).
When evaluating the job-creation potential of an EB-5 project, investors should look at where the jobs are coming from—construction work versus operational activities—as well as the number of projected jobs per EB-5 investor. If the estimated figure is close to 10, it’s risky. The lowest-risk projects plan for higher job creation than is necessary to cover each EB-5 investor.
Determining the project’s viability is also a critical part of EB-5 due diligence: Has the project obtained the required licenses and approvals? Does the developer have access to sufficient funding to construct the project? Does the project company own the land? The wrong answer to these questions could automatically negate all of the project’s advantages.
Finally, an investor should find out more about the project’s developer and sponsor, and if an investor is working with an EB-5 regional center, they must not overlook the regional center in the due diligence process. EB-5 investors are advised to determine the experience and expertise of each key person involved in the project and their success records with previous projects. In the case of regional centers, an investor should investigate the percentage of previously approved I-526 and I-829 petitions for projects sponsored by the regional center.
When conducting due diligence, an investor should carefully read as much project documentation as possible and ask as many questions as they can. Working with an experienced EB-5 immigration attorney can be invaluable in helping the investor determine what to look for and what to ask. A consultation with an EB-5 attorney can also help the investor decide whether investing in an expedited EB-5 project is the right choice for them in the first place. Ultimately, expedited EB-5 projects can be an ideal option for EB-5 investors on short timelines, such as those already residing in the United States on a different visa that is set to expire, but the disadvantages can outweigh the quick adjudication process.
