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Risks Associated with Making an EB-5 Investment

Risks Associated with Making an EB-5 Investment

Many foreign nationals are eager to get started on the EB-5 investment process and obtain U.S. permanent resident status. After all, the EB-5 program has enabled thousands of investors to relocate to the United States while benefitting U.S. businesses and reducing unemployment.

Despite the obvious benefits of participating in the reliable and highly-regulated EB-5 program, investors need to comply with numerous criteria. United States Citizenship and Immigration Services (USCIS) evaluates every EB5 investment thoroughly when examining Form I-526 and Form I-829. These visa petitions must prove that an EB-5 investor is in compliance with all USCIS guidelines. If the information provided is ambiguous or does not show adherence to USCIS regulations, the investor will be unable to obtain permanent resident status.

Moreover, the EB-5 industry is complex, and interested foreign nationals may feel overwhelmed by the many investment opportunities available to them. Fraud has occasionally been an issue for EB-5 investors, so interested foreign nationals should work with an experienced immigration attorney. Additionally, the many regulations governing EB-5 funding restrict the way EB-5 investments can be made. Therefore, participating in the EB-5 program may not be a viable option for everyone.

Before making an EB-5 investment, foreign nationals need to evaluate the EB-5 industry carefully to determine whether they will be able to comply with USCIS’s requirements. The financial and immigration risk associated with EB-5 projects must be considered when deciding whether to participate in the EB-5 program.

Financial Risk

One of the most important restrictions on the use of EB-5 funding is that the capital must remain at risk. This means that EB-5 investors must be subject to either loss or gain; there can be no guarantees that the invested amount will be returned. Any contractual rights to repayment are forbidden and would disqualify an EB-5 investor from obtaining U.S. residency. In light of this requirement, interested foreign nationals must realize that there is no guarantee that an EB-5 investment will result in a profit. Of course, many EB-5 investors are comfortable with a degree of financial risk; they are primarily concerned with obtaining U.S. green cards, not gaining high returns on their EB-5 investment.

To avoid fraud, EB-5 investors must do background research on potential EB-5 projects and their management, focusing on the individuals in charge of managing the EB-5 funds. Visiting the EB-5 business and finding third-party information on it is highly recommended.

Immigration Risk

Making an EB-5 investment does not guarantee permanent resident status. When evaluating Form I-526, USCIS will determine if the EB5 investment was made in a qualifying project, complies with the at-risk requirement, and can create at least 10 jobs. If Form I-526 is approved, the EB-5 investor will receive a two-year conditional residency. Toward the end of their conditional residency, the investor must submit Form I-829 and prove that the EB5 investment created 10 jobs and remained at risk. The evidence provided in these applications must be detailed and thorough.

The success of these visa petitions partly depends on the EB-5 project’s management. The most reliable EB-5 businesses from an immigration standpoint (1) offer ample job cushions and (2) have alternative sources of funding in case they fail to raise all the expected EB-5 capital. When examining an EB-5 investment opportunity, foreign nationals must pay close attention to these two factors.

Evidently, the EB-5 process implies taking some risks, and EB-5 investors need professional consultation to succeed. Still, foreign nationals who can tolerate a degree of financial and immigration risk should participate in the EB-5 program. Making an EB-5 investment has enabled many to begin a new life in the United States.