The lower investment threshold of $900,000 is allowed for projects located within targeted employment areas (TEAs). For any project not located within a TEA, the minimum investment amount is $1,800,000.
TEAs must either be high-unemployment or rural areas. High-unemployment TEAs qualify as such if they possess an unemployment rate that is at least 150% the national average. For instance, a high-unemployment TEA would need to have at least 5.49% unemployment if the national unemployment rate were 3.66%. Moreover, high-unemployment TEAs must be located in cities or towns with a population greater than 20,000 or within metropolitan statistical areas (MSAs) designated by the Office of Management and Budget.
Rural TEAs, on the other hand, must be located outside MSAs and cannot be on the borders of a municipality with a population greater than 20,000. Further, the population of a rural TEA must be less than 20,000. This population data must be taken from the latest 10-year national census.
To benefit from the lower investment amount, investors must prove that their projects are located in TEAs. This is typically much easier for rural TEAs, which need comparably fewer data to prove their validity. In contrast, investors seeking designation for high-unemployment TEAs will likely have to provide copious information taken from the American Community Survey (ACS) or the Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics (LAUS). Investors can choose to use only ACS data or combine them with BLS statistics into a yearly estimate of the area’s unemployment.
Besides the minimum investment amounts, there are many other expenses associated with participating in the EB-5 program. For example, investors will have to budget fees for their immigration counsel, regional center operators, and any EB-5 consultants. Additionally, all EB-5 capital must remain at risk for the duration of the investment. Given these constraints, many EB-5 investors opt for TEA projects to invest at the lower amount of $900,000 and thus reduce their expenses significantly.