The US EB-5 program offers permanent residency to wealthy investors who invest at least $500,000 in eligible job-creating enterprises and ventures. This program, which was introduced in 1990, has been very popular amongst foreign investors seeking fast-track permanent residency in the world’s most- developed country.
While the program’s supports highlight the benefits enjoyed by real estate developers during the prolonged recession in the USA, detractors assert that combination of very low investment limit, gerrymandering, and mismanagement has led to the program devaluing American citizenship. This is why lawmakers are considering these four major changes that may make it tougher for investment immigrants to get the coveted US green card.
Higher Investment Requirement
The current investment requirement of $500,000 in targeted areas and $1 million in other areas has not been revised since the program’s inception in 1990. The reapproved EB-5 program is expected to require higher investments from applicants—$800,000 in enterprises situated in targeted employment areas and $1.2 million for all other enterprises.
An increase in the minimum investment requirement will hit Chinese applicants harder due to the country’s rigid controls on capital outflows. Applicants will have to revise their strategies to ensure they have adequate funds to finance their investment immigration venture in the USA.
Yet, a higher investment requirement is unlikely to hit demand because the program will still be cheaper than similar programs offered by other countries like Australia and the UK.
EB-5 investors will probably have to make more disclosures about the source of funds, how the investment money is being allocated, and the background and criminal history of the recipients of the funds. The reapproved program may bar declare certain sources like high-value gifts as ineligible sources for the purpose of EB-5 investments. These measures are likely to be introduced to reduce risk of the investment immigration program being used as a vehicle for money laundering and other fraudulent activities.
Shift to Rural Projects
One reason why the EB-5 program is being criticized is the fact that most projects are located in big cities and other urban areas. Developers have resorted to gerrymandering and other questionable interpretation of rules to locate projects in affluent areas despite the fact that the Regional Center program was originally intended to boost investment in low-employment and rural areas.
Supporters of the program point out that a project located in a big city is likely to create jobs for people living in nearby rural and semi-urban areas. However, lawmakers are likely to introduce new restrictions that require investors to focus primarily on rural areas.
Wealthy foreign investors are unlikely to be comfortable investing funds in projects setup in rural centers. However, this change is unlikely to deter applicants because of lack of affordable alternatives to the US EB-5 program.
While applicants are likely to take other changes in their stride, retrospective application of the revised rules will be considered a significant negative development by investment immigrants. Retroactive application may compel even those who have filed their applications to comply with new requirements and investment limits in order to remain eligible for permanent residency in the USA.
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