We explain how USCIS interprets EB-5 legislation and how it varies in key areas.

The laws governing the EB-5 program and its related regulations can be vague. Consequently, what the law seems to say can differ from how the United States Citizenship and Immigration Services (USCIS) implements EB-5 law.

This is not only confusing for EB-5 investors, but also concerning. Failure to comply with EB-5 regulations will delay your Green Card application, or worse, lead to its rejection.

This article will help you understand USCIS’ expectations by explaining how it applies the law to several aspects of the EB-5 program.

What Is the History of EB-5 Legislation?

Congress created the EB-5 Immigrant Investor Program in 1990 to generate job-creating foreign investment in the United States. The program was enacted through the Immigration and Nationality Act, sections 203(b)(5) and 216A. Pertinent EB-5 regulations are located within the Code of Federal Regulations (CFR) in Title 8, sections 204.6 and 216.6.

The EB-5 Reform and Integrity Act of 2022 is introduced

The next major milestone for the EB-5 Program was the EB-5 Reform and Integrity Act of 2022. This new law aimed to make the EB-5 process:

• Fairer
• More transparent
• More efficient

Some of the changes introduced by the act included:

⚖️ A new, lower minimum investment amount of $1,050,000 to reflect the changing cost of living
⚖️ A new, lower investment amount of $800,000 for projects located in a targeted employment area (TEA)—we’ll explain more about what a TEA is later in the article
⚖️ The introduction of set-aside visas for EB-5 applicants who invest in TEA projects
⚖️ Enabling concurrent filing. In other words, EB-5 investors can apply to have their immigration status adjusted to conditional permanent resident via Form I-485 at the same time as applying for the EB-5 Program via Form I-526E. This speeds up the EB-5 process and makes it easier for foreign nationals to live in the U.S. while their application is processed
⚖️ Requiring USCIS to perform background checks on people involved in running a regional center, project developers, and other associated individuals
⚖️ Empowering the Department of Homeland Security to inspect regional centers and regional center projects to ensure compliance
⚖️ Extension of the Regional Center Program, which lapsed in 2021, putting all EB-5 activity on hold. This extension by the RIA will be in place until 2027

The Regional Center Program is reauthorized

The EB-5 Regional Center Program needs to be regularly reauthorized by the government. However, in June 2021, the program lapsed after Congress blocked its reauthorization. This meant that regional centers couldn’t accept investments or visa applications. The program was effectively put on hold for nine months.

Three months after the RIA was introduced, the Regional Center program was finally reauthorized. All previously registered regional centers were able to begin operating again immediately. However, the lapse delayed many pre-RIA EB-5 visa applications.

Six Examples of USCIS Applying EB-5 Legislation

Here are six examples of how USCIS applies the law to different parts of the EB-5 process.

Establishing a new commercial enterprise

What the legislation says: A new commercial enterprise (NCE) is defined in 8 CFR 204.6 as a “for-profit activity formed for the ongoing conduct of lawful business” after November 29, 1990. This may entail (a) creating an “original business” or (b) purchasing a business and then restructuring it “such that a new commercial enterprise results.” It can also mean (c) expanding an existing business “so that a substantial change [40% increase] in the net worth or number of employees results.”

How USCIS interprets it: While a business established after November 29, 1990, is clearly an NCE, the regulation is less clear concerning restructured and expanded businesses. How USCIS interprets these provisions is also unclear, and as a result, they are rarely us

Investing the required capital

What the legislation says: According to 8 CFR 204.6, each EB-5 investor must make a minimum investment of $1,050,000—unless the job-creating entity is located in a targeted employment area (TEA), in which case the required minimum investment is $800,000.

According to the regulation, a TEA is “an area which, at the time of investment, is a rural area [population less than 20,000] or is designated as an area that has experienced unemployment of at least 150% of the national average rate.” Rural areas must also be located outside of metropolitan statistical areas (MSAs).

How USCIS interprets it: USCIS requires verifiable third-party evidence that the project falls within a TEA. Data sources include technical bulletins published by the Bureau of Labor Statistics, the U.S. Census Bureau’s American Community Survey (ACS), and other data disseminated by government departments and agencies.

It’s worth noting that rural areas tend to remain consistent, while high unemployment areas change often as employment rates fluctuate. Investors must therefore use the most recent census data to prove their investments are in high-unemployment TEAs.

Furthermore, 8 CFR 204.6 requires each investor to invest or be “actively in the process of investing” the appropriate amount of capital. USCIS requires that such investors make their entire investment upfront or that their capital be irrevocably committed to the NCE.

Proving lawful source of investment funds for EB-5

What the legislation says: According to 8 CFR 204.6, the capital invested must be “obtained through lawful means.”

How USCIS interprets it: USCIS requires extensive documentation regarding source of funds. USCIS expects immigrant investors to prove beyond reasonable doubt that their capital was obtained lawfully.

This expectation requires investors to trace their capital from its source to the EB-5 project, and in some cases, it may require them to demonstrate multiple layers of lawful source of funds. For example, if invested capital was obtained as a gift, USCIS requires documentation that proves the money given to the investor was obtained lawfully.

Some examples of the documentation that USCIS accepts include:

• Business registration records
• Personal, partnership, and corporate tax returns, or similar documentation filed within the preceding five years
• Employment records
• Purchase agreements, ownership certificates, deed tax payments, etc.
• Proof of relationship to a deceased family member who has left an inheritance
• Proof of initial investment when selling assets like shares
• Certified copies of court judgments, pending civil or criminal court cases, and government administrative proceedings in or outside the United States within the past 15 years

Creating jobs

What the legislation says: According to 8 CFR 204.6, an EB-5 investment must create “full-time positions for not fewer than 10 persons either directly or indirectly.” This employment creation must be demonstrated by “reasonable methodologies” that include “economically or statistically valid forecasting tools.”

How USCIS interprets it: Over time, what USCIS has accepted as “reasonable methodologies” has changed. For example, USCIS originally accepted the tenant occupancy model. This methodology said that direct jobs created by future tenants could be counted towards job creation figures. Then, for a time, this model was not accepted. Now, USCIS may accept it if sufficient evidence is provided.

Title 8 section 204.6 also calls for investors to submit a “comprehensive business plan showing . . . the need for not fewer than ten (10) qualifying employees.”

USCIS requires a comprehensive business plan to be credible and feasible and treats it as more than just a prediction—the likelihood that the business plan will successfully result in the creation of the necessary number of jobs must be clearly demonstrated.

An EB-5 investment may also be made in a troubled business (i.e., one which has incurred a net loss of 20% or more in the past 12 or 24 months), and in such cases, the regulation stipulates that the number of existing employees must “be maintained at no less than the pre-investment level for a period of at least two years.”

In practice, because EB-5 investments in troubled businesses are rare, little information is available regarding how USCIS addresses such petitions.

Managing the enterprise

What the legislation says: According to 8 CFR 204.6, an EB-5 investor must be engaged in managing the NCE, either through “day-to-day managerial control” or “through policy formulation.” The investor cannot maintain a “purely passive role.” For new commercial enterprises structured as limited partnerships, if the investor is a limited partner with all the rights, duties, and powers typical of that role, such an investor will be regarded as “sufficiently engaged” in managing the NCE.

How USCIS interprets it: This section of the regulation is fairly straightforward, and USCIS adheres to it closely.

Removing the conditions to resident status

What the legislation says: The requirements that must be met to remove the conditional basis of the EB-5 investor’s Green Card are outlined in 8 CFR 216.6. Form I-829 must be filed within the last 90 days of the two-year conditional status, and supporting documents must demonstrate the following:

• An NCE was created
• The required capital was invested in the NCE
• The NCE and capital investment were sustained for the two-year conditional period
• The employment creation requirement was met

How USCIS interprets it: USCIS will not approve Form I-829 if it’s materially different from Form I-526.

Understand EB-5 Legislation with EB5AN

EB-5 law can be confusing and unclear. However, investors need to understand it to ensure their immigrant petition for permanent residence is accepted.

EB5AN has many years of experience working with the EB-5 Program. We work closely with USCIS, so we understand the law and how the organization applies it.

If you’re thinking of gaining permanent residency in the United States via the EB-5 Program and need help, book a consultation with one of our experts today. They’ll talk you through the process and explain how we can help you invest in a low-risk project.