Congress created the EB-5 Immigrant Investor Program in1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors.
You may have heard that the EB-5, as a faster option to a Green Card, accelerated US permanent residency. Foreign students, who have forked out thousands of dollars on their US education, enquire about it as their ticket to stay on in the US. In the post COVID-19 world, immigrant workers, faced with the threat of unemployment, may well have their eye on it. Promoters of the EB-5 program routinely target H-1B workers in their recruitment efforts.
Is the Immigration Investor Visa Program also known as the EB-5 visa an efficient track to citizenship?
EB-5, one of five employment-based (EB) visas, is not banned under President Trump’s proclamation limiting immigration into the United States. The EB-5 program allots green cards to foreign investors in exchange for their investments.
An undertaking to create at least 10 American jobs and invest $1.8 million individually into a business makes you eligible to apply. However, in case you don’t want to manage the business you don’t have to.
Eligible investors must finance $900,000 in an approved commercial real estate project in a targeted employment area (TEA) and demonstrate, through economic analysis, that the resulting economic development will create jobs. An area is declared a targeted employment area (TEA), by the central government based on its rural nature or lower levels of employment. Regional centers (RC) connect foreign investors with commercial real estate developers in need of funding. These projects result in jobs through construction work at first and eventually in the service industry, for example in hotels, restaurants, resorts and stadium development.
Once the money has been received by the US business entity you have promised to invest in, you are on your way to applying for a green card. Two years after the receipt of the conditional green card, proof of employment creation has to be produced. Given the present wait times, it will take 7 or more years for the visa to come through if the country of your birth is India.
The number of EB-5 visas allotted to Indians rose as more people got to know of the visa and applications went up. In 2019 more than 705 visas were allotted to people born in India.
Annually, 10,000 EB-5 visas are issued, with a 7% per country cap (700 per country). For 2020, the Department of State has allocated 11,111 visas to EB-5 in FY2020, of which any one country can get up to 778 visas (7%) under the country caps.
Due to a rush in applications last year, 2020 also has an unusually long list of applicants. In November 2019 the investment amounts were increased from $1 million to $1.8 million and from $500,000 to $900,000. As word spread people rushed to get their applications in before the increase kicked in, as further delaying wait times.
Barron’s reported that the program generated around $5 billion a year for 10,000 visas. For the EB-5 visa aspirants the more attractive EB-5 offerings have offered less than 1% per annum as a rate of return on capital invested by them, say Shai Zamanian and Dina Golfaridan, of The American Legal Center of Dubai.
Thirty four percent of those who received EB-5 visas in FY19 were already living in the U.S. They maintained their status in the US on another visa category and then petitioned to adjust status. The majority of EB-5 visas (42%) went to children.
The practitioners of EB-5 visa are a bit disappointed with the present state of the program. Long waits in the application process, high initial investments, and limited TEA areas dull the shine of this road to residency.
“EB-5 visa has a lot of challenges in addition to the COVID-19 situation. Major problem it faces is the long wait times and high minimum application investment amounts of 900,000 to 1.8 million,” says Suzanne Lazicki, a business plan writer for EB-5 applicants and EB-5 expert.
Additionally, as per her analysis of the EB-5 marketplace, processing of the applications has been slower. From 5000 processed in 2018, the number has dropped to below 1000 in 2019.
“Limited number of areas qualify for the TEA designation. A smaller percentage of people can therefore use the program,” says Suzanne.
On the plus side,” she says,” it is exempted from restrictions in the executive order. To see the steps involved in applying for the visa click here.
Shai Zamanian and Dina Golfaridan of The American Legal Center of Dubai contend that during the Great Recession the EB-5 program provided an alternative source of funding and job creation for the US economy. They make the argument to enhance the EB-5 program as an answer to COVID-19 woes. With 22 million Americans filing for unemployment as of April 2020 and the urgent need for investment, they argue that boosting the program as a stimulus tool could stave off the effects of COVID-19. Revised EB-5 program, with lower requisite investment amounts, would make it a successful financial tool in alleviating the current financial downturn and its aftermath they say.