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How Has the EB-5 Program Fared in the COVID-19 Pandemic?

How Has the EB-5 Program Fared in the COVID-19 Pandemic?

There’s hardly a person in the world who hasn’t been affected by the worldwide pandemic caused by the COVID-19 virus. With millions of deaths, small businesses decimated, and public life entirely shut down, the world has never seen anything like it. EB-5 investment stakeholders were among those affected—2020 was, in various ways, not a good year for the EB-5 Immigrant Investor Program.

U.S. Embassy and Consulate Shutdowns

The first way the pandemic affected EB-5 investors was through the mass shutdowns. In March 2020, United States Citizenship and Immigration Services (USCIS) closed all offices nationwide, canceling all visa appointments and only partially reopening in June 2020. Overseas, all U.S. embassies and consulates suspended routine visa services, staying open only for emergencies. This meant that EB5 investment participants could no longer schedule or attend visa interviews, even if they already had I-526 petition approval. Unable to complete this final step of securing an EB-5 visa, investors were left in limbo, with no way to claim the conditional permanent resident status they had earned through their EB-5 investment. Services were phased back in starting in August 2020, but decisions were left up to the individual consulates based on the situation in the respective country.

Immigration Bans

Immigration and travel bans around the world have been a key mark of the pandemic, with most countries restricting access to foreign nationals. The United States, under the Trump administration, was no exception: in April 2020, Trump announced a ban on most forms of employment-based immigration for 60 days, eventually extending it to run through the rest of 2020. EB-5 investment participants were initially exempt, much to the disappointment of certain U.S. senators, who wrote to Trump to ask the EB-5 program to be similarly banned, citing hyperbolic allegations of widespread fraud. EB5 investment stakeholders struck back, pointing out all the positive impacts the EB-5 program has had on the U.S. economy and development, all at no cost to the U.S. taxpayer.

When the Trump administration extended the immigration ban, they also tightened it to include more classes of immigrants—but to the relief of EB-5 participants, the EB-5 program was still exempt. Of course, in reality, it wasn’t that simple: investors still had to overcome the various travel restrictions in place in other countries. Some countries had exit bans on their citizens, and others refused to allow layovers, meaning that some investors who were technically permitted to enter the United States still couldn’t travel.

Economic Impacts

When talking about the EB-5 program, it’s important to remember that EB-5 investors aren’t the only stakeholders. EB-5 project developers are also key actors in the program, and in some cases, the devastating economic impact of the COVID-19 pandemic brought their projects to a screeching halt. The hospitality and tourism sectors were particularly decimated, and hospitality happens to be one of the biggest industries for EB-5 projects. The single largest industry is commercial real estate development, which was also badly affected. Not only did these impacts force many projects to suspend development, but they also hurt the ability of EB5 investment participants to create the 10 full-time jobs needed for EB-5 program requirements. The high rates of unemployment that quickly followed the initial shutdowns also altered which areas of the United States qualify as targeted employment areas (TEAs), affecting projects with investors who had yet to file their I-526 petitions.

USCIS Funding Shortages

Unsurprisingly, USCIS saw a steep drop in the number of immigration petitions received in the wake of the COVID-19 pandemic and lockdowns. USCIS largely funds its activities through the processing fees received with petitions, so when this cash supply was suddenly cut off, the agency suffered. USCIS announced massive furloughs in August 2020, although the immigration body was ultimately able to skirt the furlough by reducing spending and upping revenue. The shortfall was addressed in a funding bill for 2021, which approved hikes to premium processing fees to help the agency stay afloat. The bill also required USCIS to provide Congress with a five-year plan to address processing inefficiencies and improve processing times for all types of immigrants. Since premium processing is not available for EB5 investment stakeholders, the change had little impact on the EB-5 program, although the five-year plan will.