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Why Direct EB-5 Investments Are Getting More Attention

Why Direct EB-5 Investments Are Getting More Attention

Because of a June 22, 2021, federal court ruling, United States Citizenship and Immigration Services (USCIS) has reversed to the pre-November 2019 EB-5 regulations. Because of this court ruling and the expiration of the regional center program, direct EB-5 investment has come to be the sole option for foreign nationals.

Industry leaders agree that direct EB-5 investments are essentially the only available path for investors—USCIS is not accepting I-526 petitions associated with regional centers. Since the minimum EB-5 investment amounts have been lowered significantly, direct investments are promising for foreign investors who want to gain U.S. green cards.

The Repeal of the Modernization Rule

In the June 22 court ruling, Judge Jacqueline Scott Corley determined that former acting Homeland Security Secretary Kevin McAleenan did not have the authority to implement the EB-5 Modernization Rule. As such, the many controversial changes made by the Modernization Rule have been reversed.

The court ruling effectively overturned the decision to raise the minimum required EB-5 investment amounts. This change had previously caused the number of EB-5 applications to plummet upon its enactment, but foreign nationals can once again invest at $500,000 for targeted employment area (TEA) projects and $1,000,000 for non-TEA projects.

After the ruling, interest in the EB-5 program surged. Although many speculate that the minimum EB-5 investment amounts may be raised once more, it is unclear when such a change could take place.

I-526 Priority Dates

The repeal of the Modernization Rule means that there is no longer priority date retention based on an approved I-526 petition. Also, former USCIS regulations for removing conditions on permanent residency are once again in force. Further, the agency will accept the pre-November 2019 version of Form I-526.

Even though interest in the direct EB-5 investment route increased due to these changes, some industry stakeholders believe that EB-5 investors and companies in the industry will soon realize the disadvantages of making a direct EB-5 investment. The biggest of these is the job creation requirement, which is much stricter for non-regional center projects.

Investing in Franchises

Franchise businesses are valid EB-5 investment opportunities. By choosing this route, investors can replicate a well-established business model and open new locations.

Franchises that are already successful and can offer EB-5 investors the creation of a least 10 new jobs are expected to become more popular. Nonetheless, making an EB5 investment in a new business can be more convenient in many cases.