Five Common EB-5 Misconceptions Explained
Created by Congress in 1990, the EB-5 Immigrant Investor Program was designed to stimulate the U.S. economy through job creation and capital investment by foreign investors. Since its inception, the Program has impacted thousands of foreign nationals and, in its current form, is extended through Sept. 30, 2016. Though we have previously addressed the many myths surrounding the Program, some common misconceptions remain and should be explained.
1. Investment into the EB-5 Immigrant Investor Program guarantees a green card (Lawful Permanent Residence).
To participate in the Program, a foreign national must find a suitable business project in which to invest. The investment must be at-risk, and a return on the capital is not guaranteed. The foreign national must file an I-526 petition with USCIS, which is closely scrutinized regarding both the source of funds for the investment capital and the validity of the business project. Once the I-526 petition is approved and an immigrant visa in the fifth preference employment-based immigrant visa category is available, the foreign national is eligible to adjust status if lawfully in the U.S. to apply for a green card, or may apply for an immigrant visa abroad in order to receive a green card after entry. The green card would be conditional, granted for only two years; in order to remove the conditions, an I-829 petition must be timely filed with evidence demonstrating that the capital is still at-risk and the other requirements have been met. Lawful Permanent Residence is never guaranteed. Rather, each stage of the process involves close scrutiny by USCIS, the Department of State if a visa is applied for abroad, and other relevant government agencies. Each stage’s requirements are stringent, and approval in the first and/or second stage does not automatically lead to the non-conditional green card at the conclusion of the third stage.
2. Investment into the EB-5 Immigrant Investor Program creates a fast path to a green card.
The three stages mentioned above can take several months or even years to successfully pass through, and there are additional potential delays depending on immigrant visa category country of chargeability (usually country of birth). The current processing time for I-526 petitions is 13-14 months, with additional time needed to adjudicate Requests for Evidence or responses to Notices of Intent to Deny. Adjustment of Status applications tend to take at least five months to be adjudicated, while it can take several months to over a year to complete the process for an immigrant visa abroad once an immigrant visa is available and depending on the consular post. Availability of immigrant visa numbers is listed on the Department of State’s monthly Visa Bulletin; as of January 2016, there is a backlog for foreign nationals in the fifth preference employment-based category born in main-land China, such that immigrant visas are available only for those whose I-526 petitions were received by USCIS before May 1, 2015. The current processing time for I-829 petitions is 11-12 months. There is no Premium Processing service available at any of the stages. In sum, there are no shortcuts to a green card, even (or especially) through the EB-5 Immigrant Investor Program.
3. The EB-5 immigrant visa is available only to the wealthy.
The foreign national must make an investment of at least $500,000 if the project is situated in a defined Targeted Employment Area known as a TEA (i.e. an area of high unemployment or rural area), or of at least $1,000,000. Certainly these amounts are high for the average person. However, the EB-5 Immigrant Investor Program is not meant for only the wealthy in either design or practice. The source of funds for the investment must be legitimate, and there are a variety of common legitimate sources, including gifts or inheritances from family members and loans from companies of which the investor is a shareholder. Many of our clients gather the investment funds from the sale of or home equity loan against their property, for which they had used their life savings from their employment to purchase. All of our clients, no matter their source of funds or overall net worth, participate in the EB-5 Immigrant Investor Program in order to improve the lives of and opportunities for their families: a relatable and traditional American pursuit.
4. The EB-5 Immigrant Investor Program benefits only the wealthy.
The EB-5 Immigrant Investor Program is, by definition, a job creating program for U.S. workers. An investment into a Regional Center project must result in the indirect creation of at least ten jobs, while a non-Regional Center project investment must directly create or preserve at least ten permanent full-time jobs. EB-5 investments commonly support the development of hotels, amusement parks, residential and commercial real estate projects, factories, small businesses, and other local businesses in urban, rural, and other areas throughout the United States, typically leading to additional economic opportunities and overall improvement of their communities. Additionally, foreign nationals who receive their green cards through the Program contribute to their local economies. As recently reported by the Bipartisan Policy Center, the Program has supported the creation of at least 77,150 jobs and has further raised a minimum of $4.2 billion in investments for the United States.
5. The EB-5 Immigrant Investor Program is a runaround of the security checks in place in the U.S. immigration system.
The security of the United States remains of utmost priority to the government, and foreign nationals investing into the EB-5 Immigrant Investor Program must undergo the same rigorous background checks as other green card applicants, by the Department of Homeland Security, or the Department of State, or both. In fact, their backgrounds are reviewed both when applying for the conditional green card and for the permanent green card. Moreover, the project in which they invest is reviewed for its compliance with the regulatory requirements as referenced above, and the projects and Regional Centers are carefully reviewed for risks of fraud. As aforementioned, the source of funds for the investment must be legitimate and proven, and there are numerous other compliance checks involved in the transfer of the funds into the project’s escrow account and other security checks in place in the Program.