Free EB-5 Project Evaluation

The Benefits of Obtaining TEA Designation

The Benefits of Obtaining TEA Designation

Many U.S. business owners and foreign nationals have been drawn to the EB-5 investment industry. The EB-5 Immigrant Investor Program offers businesses in the United States a convenient source of funding that is often available at below-market rates. Moreover, foreign nationals can qualify for permanent U.S. residency in exchange for making an EB-5 investment in a qualifying business.

The EB-5 industry’s popularity was boosted on June 22, 2021, when a court ruling lowered the minimum investment threshold from $900,000 to $500,000. However, only EB-5 projects that are located in targeted employment areas (TEAs) can receive investments of $500,000.

Consequently, the vast majority of EB-5 investors prefer TEA projects. (Non-TEA projects can receive minimum investments of $1,000,000). Since every EB-5 investment must create at least 10 full-time jobs for U.S. workers, TEA projects benefit communities in need of economic development and funding.

Types of TEAs

TEAs can either be rural or high unemployment. To qualify as a rural TEA, an area cannot be located inside of a metropolitan statistical area (MSA) delineated by the Office of Management and Budget. In addition, rural TEAs cannot be on the borders of a city or town with a population greater than 20,000.

On the other hand, high-unemployment TEAs must have an unemployment rate that is, at a minimum, 150% greater than the U.S. national average. Moreover, a high-unemployment TEA will only qualify as such if it is located within an MSA or in a city or town with a population greater than 20,000.

How to Obtain TEA Designation

Many EB-5 project developers seek TEA designation. State agencies are in charge of granting TEA status; these entities must receive copious demographic evidence showing that an area is indeed a rural or high-unemployment TEA.

Proving rural TEA status is relatively straightforward; state agencies only need information on the area’s location and population. In contrast, obtaining high-unemployment TEA status requires doing further research. Many investors choose to use unemployment data from the American Community Survey (ACS), the Bureau of Labor Statistics (BLS), or a combination of both sources. Since the BLS updates its data more frequently, investors may choose to use that source. In any case, the unemployment statistics should be as up to date as possible.

Obtaining TEA designation can make the EB-5 process far more practical for both investors and project developers. Moreover, TEA projects provide economic stimulus to areas that need it the most, thus contributing to the EB5 investment program’s goals of reducing unemployment and strengthening U.S. businesses.