The EB-5 investment industry is highly regarded among foreign nationals and U.S. business owners in need of funding. Since EB-5 investors become eligible for permanent residency while injecting valuable capital into the U.S. economy, the EB-5 program’s merits have long been recognized.
However, the EB-5 industry does face several challenges, many of which are related to bureaucratic issues. For example, United States Citizenship and Immigration Services (USCIS) is known for its slow processing times and substantial backlogs for Form I-526 and Form I-829, the two visa petitions that foreign nationals must submit during the EB-5 process. Moreover, the regional center program, the most popular EB5 investment option, was suspended on June 30, 2021.
A webinar released by the Department of State (DOS) on October 26, 2021, shows a great disparity between the number of visas allotted to the EB-5 program for the 2022 fiscal year and the number of investors eligible to receive these EB-5 visas. According to Charles Oppenheim of the DOS, the EB-5 program has 19,880 visas at its disposal—this is an all-time record for the EB-5 industry, even surpassing the 18,500 visas allocated for the 2021 fiscal year. However, as of early September 2021, only 368 EB-5 investors have received approval for their I-526 petitions and can thus move forward in the visa process. In this article, we explore two of the main factors causing this large number of unused visas.
The Expiration of Regional Center EB-5 Investment
As of October 28, 2021, the regional center program has been suspended for nearly four months. Congress’s failure to reauthorize this investment model has caused industry-wide setbacks. After the program’s expiration, USCIS announced that it would no longer accept I-526 petitions associated with regional centers. In addition, the agency ceased to process pending I-526 petitions from regional center investors.
The regional center program had been the most popular investment option; the flexible job calculation criteria, reduced managerial duties, and other benefits of regional center EB-5 investment made it far more popular than direct investment. Therefore, USCIS now has a large backlog of regional center I-526 petitions filed before the June 30, 2021 expiration. Had the regional center program been reauthorized by now, there would likely be many more investors eligible for EB-5 visas.
USCIS Processing Inefficiency
The second reason behind the low number of eligible EB-5 investors is USCIS’s slow visa petition processing. The agency has become known for allocating insufficient internal resources toward petition adjudication. Since USCIS is no longer working on regional center I-526 petitions, it should, in theory, be able to adjudicate direct I-526 petitions relatively quickly. Instead, direct EB-5 visa petitions are being processed as slowly as ever. Unfortunately, USCIS has not taken advantage of the opportunity to reduce its backlog of direct I-526 petitions.
Even though the EB-5 investment industry is currently facing many setbacks, direct EB-5 investment has never been more popular. All EB-5 projects must be direct because of the regional center program’s suspension, and the June 2021 repeal of the EB-5 Modernization Rule lowered the minimum investment amounts significantly. Therefore, many foreign nationals have made direct EB-5 investments at only $500,000. If the regional center program is reauthorized in the coming months, many new investors will likely be able to benefit from the lower investment threshold.