One of the many aspects of the EB-5 program that makes it popular among foreign nationals and U.S. business owners is its beneficial impact on the U.S. economy. The COVID-19 pandemic has made the importance of investment capital more apparent than ever, and thousands of U.S. businesses have benefitted from EB-5 funding. Each EB-5 investment must create at least 10 full-time jobs. Moreover, EB-5 funding is also available for troubled businesses in need of capital.
One of the most appealing aspects of the EB5 investment industry is the reduced investment threshold for projects located in targeted employment areas (TEAs), which have a great need for economic development. This provision has allowed many more foreign nationals to make an EB5 investment and thus strengthened the U.S. economy.
The EB-5 Investment Threshold for TEA Projects
As of June 22, 2021, EB-5 investors who choose projects located in TEAs can invest at only $500,000—significantly less than the non-TEA investment threshold of $1,000,000. TEAs do more than simply make the EB-5 program more accessible: through the reduced TEA threshold, foreign nationals are incentivized to invest in the areas that need EB-5 funding the most. Moreover, since every EB-5 investment must create 10 positions, these jobs are often generated in locations with little economic development.
Types of TEAs
TEAs can either be rural or high unemployment. To qualify as a rural TEA, a location cannot be located in a metropolitan statistical area (MSA) or on the borders of a municipality with a population of 20,000 or greater.
In contrast, high-unemployment TEAs must have an unemployment rate that is at least 150% greater than the U.S. national average. If, for example, the average U.S. unemployment rate were 3.66%, a high-unemployment TEA would need an unemployment rate of at least 5.49%. In addition to possessing a high unemployment rate, these TEAs must be within an MSA or an urban area with a population greater than 20,000.
Proving TEA Status
Proving the validity of rural TEAs is relatively straightforward; areas with fewer than 20,000 inhabitants qualify as such. EB-5 investors can use data extracted from the latest 10-year U.S. Census to prove that their project is in a rural TEA. Statistics from the U.S. Office of Management and Budget can also help prove a rural TEA’s validity.
However, calculating a potential TEA’s unemployment rate is more challenging. United States Citizenship and Immigration Services (USCIS) typically prefers statistics taken from the American Community Survey (ACS) or the Bureau of Labor Statistics (BLS). Since the BLS updates its data more frequently than the ACS, the former is usually the safer choice. The TEA statistics included in an EB-5 investor’s I-526 petition must be as recent and accurate as possible.
Make a TEA EB-5 Investment at $500,000
TEAs offer EB-5 investors the valuable opportunity to invest at only $500,000, but USCIS or the Department of Homeland Security (DHS) may take sudden action to raise the EB-5 investment threshold. Therefore, interested foreign nationals should identify suitable TEA projects as soon as possible. Doing so will allow them to obtain U.S. permanent resident status at a reduced price.