The Future of the EB-5 Investment Immigration Program
After months of litigation, expiring statutes, and other unknowns, the uncertainty surrounding the EB-5 investment immigration program is finally coming to an end.
The EB-5 Visa program has been a popular way for wealthy foreigners to gain access to U.S. citizenship. However, the program has undergone several changes in the past 14 months, making it less predictable and reliable. As a result, many people are reconsidering their options for obtaining U.S. citizenship.
As the world slowly recovers from the pandemic, many industries are still struggling to get back on their feet. The EB-5 visa program, which allows foreign investors to get permanent US residency in exchange for investing in US businesses, was one of the many casualties of the pandemic. The program was put on hold in 2020 as the pandemic caused uncertainty in the markets, and many potential investors were reluctant to commit to long-term projects. However, with the passage of new legislation in March 2022, and upcoming regulations from USCIS, the program is now back on track. This article provides a brief history of the EB-5 program, recounts the key events from the last 14 months of chaos, and outlines the new rules for potential investors.
The EB-5 visa program offers a path to citizenship for foreign investors.
The EB-5 path to citizenship provides an incentive for foreign investment in the United States, which creates or preserves jobs for American workers. This program is a win-win for everyone involved, and it is one of the best ways to attract foreign investment.
The EB-5 visa program is a great way for foreign nationals to get permanent residency in the United States. After two years of compliance with the requirements, permanent residence is pretty much guaranteed. The same benefits apply for one's immediate family members. This program is a great way to get a green card and live in the United States permanently.
The EB-5 visa program has been a boon for foreign investors looking to immigrate to the United States. The program has allowed them to pool their resources and invest in larger enterprises that satisfy the requirements for multiple investors. As of the end of 2021, over 632 Regional Centers have been authorized to accept EB-5 investments. This has been a great way for foreign investors to get a foot in the door in the United States and to create jobs and spur economic growth.
Who and How Many?
The EB-5 program is limited by statute to 10,000 visas annually. In 2019, of the 9,478 EB-5 visas, UCSIS granted 77% of visas to investors from Asia. 96% of visas granted were based on investment in a Regional Center. The EB-5 program has been a popular visa category for foreign investors looking to obtain permanent residency in the United States.
The EB-5 program has been a boon for the US economy, attracting foreign investment of over $40 billion. In 2019 alone, EB-5 applicants invested over $5 billion, injecting much-needed capital into businesses across the country. With the recent changes to the program, it is expected that even more foreign investment will flow into the United States in the coming years.
The End of Uncertainty: What Recent Developments Mean for You
The EB-5 process and community have been rocked by three major events in the last 14 months. First, the Trump administration proposed major changes to the program that would have made it much harder for investors to qualify.
The EB-5 program is a federal program that provides visas to foreign investors who invest in certain projects in the United States. The program has been criticized in recent years for its lack of transparency and for the fact that it has been used to fund some questionable projects. The regulations governing the program were doubled in 2017, which led to a significant increase in the number of applications. However, a federal district court in California has now invalidated these regulations, holding that they were improperly created and effectively revoking them. This is good news for foreign investors who were previously priced out of the program.
The expiration of the statutory authorization for Regional Centers creates significant uncertainty for all involved. Without authorization, Regional Centers cannot support new EB-5 visas. This could have a negative impact on the economy and could lead to job losses.
The EB-5 Reform and Integrity Act of 2022 has partially revived the EB-5 program, which had expired earlier this year. The new law re-authorizes the use of Regional Centers through 2027, but also repeals the previous statutory authorization for them. As a result, USCIS has announced that all "regional centers previously designated...are no longer authorized" and that they must seek redesignation if they wish to continue operating. Business associations focused on the EB-5 program have expressed concerns about this development, and at least one regional center has already sued USCIS over the new guidance. It remains to be seen how the EB-5 program will evolve in the coming years, but the recent changes have certainly created some uncertainty for those involved.
Eligibility requirements changing for certain programs
Eligibility for an EB-5 visa requires that a foreigner make an at-risk investment of a threshold amount of legally obtained funds in a new U.S. business in which the foreigner actively participates and that creates at least 10 jobs. Requirements 3, 4, and 5 are usually easy to satisfy, and 6 much more so when an investment is made through a Regional Center. The EB-5 visa program is a great way for foreign investors to get permanent residency in the United States. The requirements are not too onerous, and the potential benefits are great. If you are considering making an investment in a new U.S. business, the EB-5 visa program should definitely be on your radar.
It is important for foreigners looking to invest in the United States to understand that their investment must be placed at risk in order to qualify for a visa. This means that they must make an equity investment, rather than simply loaning money or making a personal guarantee. Funds can be placed in escrow pending visa approval, but they cannot be kept separate from the investment once the visa is approved.
The additional rules surrounding investments in Regional Centers are designed to ensure that funds are being used to create jobs. By only counting funds held by entities closest to the job creation, these rules help to ensure that money isn't being wasted on start-up and administrative expenses. This is important in ensuring that Regional Centers are able to create jobs and spur economic growth.
The government has announced that the standard threshold investment for citizenship by investment will be increased to $1.05 million. This is up from the original threshold of $900,000, but down from the $1.8 million level that was in place before last year's regulations were invalidated.
The new threshold investment of $800,000 is a positive step for rural and targeted employment areas. This will help to attract more investment and create more jobs in these areas.
It is clear that legally obtained funds are required for this purpose. USCIS may request evidence to demonstrate the source of these funds, and greater burdens of proof may apply for funds from Iran and other countries of concern.
It is misleading to refer to "new business" when discussing foreign investment in Cuba. Since 2009, foreigners have been able to invest in existing businesses. Therefore, investing in an existing business is permitted under common circumstances.
It's encouraging to see that the USCIS is taking a more active role in ensuring that investors are actually involved in the businesses they're funding. This will help to ensure that businesses are actually getting the investment they need to grow and thrive, and that investors are getting a return on their investment.
The target business must create 10 full-time jobs for 2.5 years after the visa is granted. To demonstrate that this will happen, a foreigner’s visa application must include a business plan showing how the job creation requirement will be met. This is a great way to ensure that businesses are creating jobs and contributing to the economy.
The most difficult hurdle of the program is by far the business plan. According to business advisor and tax lawyer Roberto Santos, "The business plan needs to hit all the criteria they're looking for.
There are many benefits to investing through a Regional Center, one of which is that it makes it much easier to satisfy the job creation requirement. By investing through a Regional Center, investors are able to count both direct and indirect jobs. This means that jobs created by a Regional Center's suppliers and service providers are counted, even if they are not in the targeted geographic area. The job creation requirement is also significantly reduced for businesses that fail to meet their target, though this is typically less attractive to immigrant investors.
Looking Forward to a Bright Future
The U.S. tax structure is the main disincentive to using the Puerto Rico tax incentive program, according to a leading immigration treatise. This separate article discusses how some foreign investors mitigate the impact of becoming subject to worldwide taxation.
