The EB-5 Visa and the American Dream
Each year, more than 10,000 people apply for the EB-5 visa, which allows them to invest in a project in the US to qualify for a Green Card to live and work in this land of the free. Over the past 10 years, applications have increased from a mere 1,200 to more than 12,100 in 2017, according to the US Citizenship and Immigration Services (USCIS).
The industry has recently seen a shift in the market in light of a visa backlog for some nationalities. The EB-5 community is adapting to an increasingly diverse and global EB-5 industry, shifting focus to more emerging markets such as Vietnam, Brazil, India, Russia, and the Middle East.
Understanding the EB-5 Visa
More than 25 years ago, the US Congress passed legislation with the aim of spurring US economic growth through foreign investment. The Immigration Act of 1990 effectively created several types of new immigrant visas, the most popular one being the EB-5 visa. Qualifying for an EB-5 visa starts with having the required minimum capital investment amount of USD 500,000 or USD 1 million for investment into a US business, either through a regional center or a direct investment. The investment amount depends on the location of the business, whether it is in an urban or targeted employment area. The business is also required to generate at least 10 full-time jobs for Americans, and the jobs need to be maintained for a minimum of two years.
Most investors place their money in the management of regional centers, which are public or private entities approved by the USCIS and have been part of the EB-5 program since 1992. The centers oversee EB-5 investment projects located throughout the US, pooling money from multiple investors. As of 1 May 2018, there are 901 USCIS-approved regional centers.
Once investors have made their capital investment, they must submit a petition and, after the investment is approved, they can obtain a two-year, conditional residence card. This card allows investors to live and work legally in the US. When the two years are over, applicants who can prove they have met the EB-5 requirements earn permanent resident Green Cards, which can open them up to US citizenship opportunities about five years later. EB-5 visas are issued by the USCIS to applicants from all over the world, but mostly from mainland China. In fiscal year 2017, the USCIS issued 7,567 EB-5 visas to mainland Chinese nationals, which amounted to 75% of the 10,090 EB-5 visas issued worldwide. Other leading countries in the same fiscal year were Vietnam (471 visas), Brazil (282), South Korea (195), and India (174).
Unlike other visas, the EB-5 program requires no sponsor, special knowledge, skills, or prior experience. It allows investors to bring their family — a spouse and unmarried children under 21 years of age — with them to the US. Obtaining a visa and entry into the US through the EB-5 can also be faster than immigration options. The program also attracts foreign capital to fuel development within the US, often in economic development areas in need of a boost.
Mainland China-born applicants are facing a considerable retrogression, the industry term for the backlog causing applicants to wait some 10 years for their conditional residence permits and even longer for permanent residence. Such a backlog has also started to impact Vietnamese applicants slowly.
In light of the retrogression, the EB-5 industry is facing the challenge of redeployment. EB-5 regulations state that investors must keep their investments ‘at risk’ throughout the application process. With retrogression, however, their investments can mature before applicants receive their permanent Green Cards. Thus, the industry is finding ways to
redeploy investors’ original funds so their money remains at risk under other investments to be able to qualify for an EB-5 visa.
Future of the Program
The EB-5 regional center pilot program has been repeatedly extended over the past couple of decades, this latest round to 30 September 2018. The direct EB-5 option has already been passed into law. Members of Congress have introduced a variety of reforms of the program, including raising the current USD 500,000 minimum investment to at least USD 800,000; however, no decision has been made.
The benefits of the program to the US economy are hard to deny; foreign investment brings economic growth and creates American jobs while eligible investors and their families achieve their goal of living the American Dream — a win–win situation for everyone involved.
In fiscal year 2017, the USCIS issued 7,567 EB-5 visas to mainland Chinese nationals, which amounted to 75% of the 10,090 EB-5 visas issued worldwide