Although the EB-5 Immigrant Investor Visa program began in 1990, it wasn’t until the 2008 repression negatively affected developers, impacting their ability to obtain funding for their ongoing projects, that the program experienced a surge in popularity and participation. While foreign nationals have realized since the inception of the EB-5 program that the easiest route to gaining citizenship for entire families was through investment, developers’ interest in the program opened the doors for new money to flood in.
Unfortunately, the overall climate surrounding immigration continues to become chillier and less welcoming, even for investors able to commit as much as $1,000,000 to new commercial enterprises that boost the economy while generating new jobs. Since 2015, Congress has debated the merits of and concerns about the EB-5 program, with regular discussions about transforming the program to create even higher thresholds for qualification than are currently in place. In March 2018, it once again approved an extension of EB-5 (until August 2018) instead of taking any definitive action.
While the current program continues to gain extensions, developers and other investment managers are already working under the expectation that future funding through EB-5 may become restricted. With the economy finally showing renewed strength and potential, lenders are reappearing, giving borrowers new options for obtaining the financing they need for future deals. While EB-5 funding has not been crossed off the list, entrepreneurs have the opportunity to shop around and compare their various financing choices.
This new situation has also created three new concerns investors and project managers are watching closely to see how they develop or how they change the EB-5 landscape.
The Uncertainty of Future EB-5 Projects
The combination of inaction by Congress and its distaste for the current EB-5 structure have both investors and project managers prepared for the worst. Those who carefully monitor proposed changes and modifications to the EB-5 program hear a similar message from politicians, especially concerning raising the investment limits from their current minimums of $500,000 for Targeted Employment Area investments and $1,000,000 for all other EB-5 investments.
Not surprisingly, many developers are placing new projects on hold until Congress acts; others are already exploring new sources for financing their future developments. In contrast, developers already working with EB-5 funds know the value and importance of this source of financing and appear to be moving forward with little hesitation.
The Possibility of Fewer Future EB-5 Investment Programs
Developers who prefer to carry on with new projects instead of pausing while Congress makes up its mind are already seriously considering different pathways to funding their projects. While they understand that EB-5 investors have been significant contributors to projects in the past and will likely continue to be in the future, they need the financial agility to access funds under favorable and swift terms.
Interestingly, on projects exceeding $40 million, a larger percentage of funding typically originates through EB-5 funding, while on projects with smaller budgets, EB-5 funds often represent only 20–30% of all funds contributed to the project.
A Push for Cash Infusions by Existing EB-5 Projects
Perhaps on the positive side, this shadow of uncertainty is encouraging developers currently raising funds to pick up the pace and seek even more funding. They are finding that many EB-5 investors who have been undecided are now initiating their applications before the current minimum investment thresholds are increased or other terms are unfavorably changed. By locking in their EB-5 visas under the current, and likely more positive, terms than those being proposed, investors have a clear understanding of the requirements they need to meet to gain permanent residency for them and their immediate family members.
Because the pressure to modify the EB-5 program will continue, foreign investors anxious to remain informed and educated on the EB-5 immigration process are wisely connecting with qualified EB-5 consultants and advisors. Even foreign citizens who are undecided about proceeding with the EB-5 Immigrant Investor Visa program are working with EB-5 professionals to remain current on the ever-changing immigration landscape.