The EB-5 investment industry is thriving, and many U.S. business owners are realizing that the EB-5 program can provide them with a secure and convenient source of funding. Moreover, foreign nationals interested in relocating to the United States are often drawn to the EB-5 investment industry. Despite its success, the EB-5 program regularly undergoes changes; EB-5 regulations can be modified quickly, and potential investors need to be aware of recent developments in the industry. For example, the EB-5 Modernization Rule, which had significantly altered EB-5 guidelines, was repealed in June 2021. In addition, the regional center program, a key component of the EB-5 industry, was suspended the same month.
Potential EB-5 investors must also become familiar with the numerous United States Citizenship and Immigration Services (USCIS) regulations governing the program. It can be challenging to make an EB-5 investment that complies with all of USCIS’s requirements. Further, it is important to realize that the EB-5 process takes years and requires careful planning. Considering the following factors will help potential investors decide whether to participate in the EB-5 program.
Making an EB-5 investment does not guarantee permanent resident status. USCIS examines every EB-5 investment thoroughly, and an investor’s visa petitions must provide copious evidence of compliance with all the applicable rules. For instance, Form I-829 must show that an EB-5 investment was used to create at least 10 full-time jobs for U.S. workers. If the EB-5 project fell short of creating the 10 needed jobs, then the I-829 petition will be denied, leaving the investor without a U.S. green card. Due to this immigration risk, interested foreign nationals should evaluate potential projects thoroughly, making sure that they will fulfill all of USCIS’s criteria.
Participating in the EB-5 program also entails a degree of financial risk. USCIS dictates that all EB-5 funds must be at risk: the financial resolution of the investment cannot be predetermined, so all EB-5 investors must be subject to either gains or losses. There is no guarantee that an EB5 investment will result in significant returns or even in a profit.
Choosing Sources of EB-5 Funds
Many EB-5 investors and immigration attorneys agree that proving the legality of the EB-5 capital is one of the most challenging stages of the EB-5 process. In Form I-526, investors must trace their capital back to its source using abundant evidence. Even though USCIS allows investors to use any legal source of funds, interested foreign nationals should try to obtain their capital from a source that is easy to document. For instance, salary payments would likely be easier to document than capital from real estate sales or an inheritance.
As of June 22, 2021, the EB-5 investment threshold is $500,000 for targeted employment area (TEA) projects and $1,000,000 for non-TEA projects. However, EB-5 investors are sure to incur many additional expenses, including filing fees for USCIS visa petitions, immigration counsel fees, and relocation costs associated with conditional permanent resident status. Potential investors must be prepared to pay more than $500,000 or $1,000,000 during the EB-5 process.
The risks associated with the EB5 investment program, USCIS’s strict source-of-funds requirements, and additional EB-5 costs must all be factored in when deciding whether to make an EB-5 investment. However, foreign nationals who have the time and resources to go through the EB-5 process should participate—enjoying U.S. permanent residency and even citizenship is well worth the time and effort.