The EB-5 program is a unique investment immigration program. Offering a fast-track route to permanent residence in the United States, the EB-5 visa is primarily a job-creation program with an additional investment requirement.
Most investment immigration programs offer permanent residence or citizenship in lieu of investment.
To qualify for the EB-5 visa, the applicant must invest in a commercial enterprise and create 10 or more full-time jobs in two years.
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The investor can withdraw the investment after fulfilling the job-creation requirement, making it the primary requirement to qualify for permanent residence in the US.
This makes due diligence of EB-5 projects more challenging compared other golden visa programs, especially after the EB-5 Reform and Integrity Act was enacted in 2022.
Investors must now consider the following points during due diligence when applying under the revamped EB-5 program.
Reserved Visas and Priority Processing
Out of the annual quota of 10,000 visas, the revamped EB-5 program has reserved 20 percent for applicants investing in high-unemployment areas, 10 percent for rural areas, and 2 percent for public infrastructure projects.
Further, the Act provides that EB-5 petitions for rural areas will be processed and adjudicated on a priority basis.
If not utilized fully, then these visas will be carried forward to the same categories for the next year.
Investors from China and India can benefit by focusing their EB-5 due diligence on projects that qualify for these reserved categories. The combination of carry-forward of reserved visas and priority processing makes it an obvious choice for investors seeking the advantage of shorter processing times.
Concurrent Filing
An EB-5 petitioner with a ‘Current’ priority date can now file the I-829 for the removal of conditions concurrently with the I-586. Concurrent filing is beneficial only if the priority date is current at the time of filing and the time of visa approval.
This means choosing a reserved category EB-5 project will give the investor the best possible chance of a reduced processing time.
Limits on Eligible Indirect Jobs
The Act restricts the investor from counting more than 90 percent of indirect jobs created by the EB-5 project towards fulfilling the job-creation requirement.
This limit is reduced to 75 percent of the jobs created through construction activities and lasting for less than two years.
This means the due diligence process must consider these restrictions when creating the right strategy for fulfilling the job creation requirement before the end of the two-year period of conditional permanent residence.
Integrity Measures for Fund Administration
Unless expressly waived, every new EB-5 commercial enterprise must appoint an independent fund administrator to monitor, tracking, approving, and verifying EB-5 capital transfers.
Not complying with these rules or failing to promote economic growth or even failure to submit annual returns and certifications can render the Regional Center liable for termination.
While the Act has provided some cover for investors from terminated Regional Centers, the simplest and safest strategy is to ensure all requirements under the new Act are met in letter and in spirit.
This means proper and thorough due diligence before investing in the project and sustained oversight to ensure the rules are met.