The EB-5 program attracts investors from around the world.
The EB-5 employment-based immigration program isn’t well known, but has nonetheless generated some bad press due to fraudulent actions by a few; and some general misunderstandings within the immigrant and U.S. population. Here are a few that are up for debate.
Myth: Most investors are mom-and-pop owners or entrepreneurs.
While at first only small-scale, mom-and-pop-business investors fell under the EB-5 visa, in 1992, Congress created a new investment method using what are known as regional centers, allowing immigrants-to-be a way to invest in commercial, for-profit enterprises leading to a more diverse group of investors.
Most investors apply for the visa by associating with regional center projects, says Cletus Weber, a Mercer Island-based immigration attorney who works with regional centers and immigrant investors. Language and business barriers can be factors, but “in general, it’s more efficient to invest in larger projects,” he says. They own a small share of a big project, without having to participate in daily decisions – picking out the carpet color, for example.
Myth: The EB-5 program is just a way to buy a green card.
The program is all based on job creation, says Weber. “You can’t just put a million dollars in the bank or spend a million and get a green card,” he says. “You must invest and create jobs for 10 U.S. workers.”
The minimum investment is $500,000, if investing in a Targeted Employment Area, so designated due to rural status or high unemployment – 150% of the national average rate – which includes urban locales. Outside of TEAs, investors must invest at least $1,000,000.
Myth: Most investors create a bare minimum of U.S. jobs.
While only 10 job-creations are expected, 90 percent of EB-5 investors say they created more than 10 jobs, according to the Government Accountability Office. Either way, the investor’s venture must produce at least 10 jobs, whether direct hires (for example, in construction) or hired as a result of the completed project (for example, a cafeteria worker in the new hospital wing).
Myth: The EB-5 visa process plays favorites with some nations.
The EB-5 program attracts investors from around the world, and a complex visa-allocation system ensures that investors from countries using the most EB-5 visas typically wait longest to receive them. EB-5 investors primarily hail from China, South Korea, India, Vietnam and Brazil, with about 85% going to Chinese nationals, who must wait longer than everyone else to receive their green card.
Myth: The EB-5 visa is a quick process that allows an immigrant to bypass usual wait times and approvals.
The two-step process for entering the U.S. can take more than a decade, even after the U.S. Citizenship and Immigration Services approves an investor’s petition for EB-5 classification.
Depending on the applicant’s nationality – some nations have more applicants, and therefore longer wait times – the immigrant investor and his or her family (spouse and unmarried children) typically must wait two years before they can enter as conditional permanent residents.
After two years of U.S. residency, all EB-5 visa holders petition for removal of conditions, by providing proof that they’ve invested in a project that created at least 10 jobs. Typically, the USCIS verifies the job creation, then removes conditions.
Myth: Immigrants could use drug money or other illegally sourced cash to fund their U.S. ventures.
Every applicant is reviewed closely. The investor’s money must come from lawful sources, take a clear path to the investor, and then directly to the commercial investment.
Myth: EB-5 visa applicants must live near the projects they fund.
Investors can live anywhere. While Washington is the fifth-most popular state for final relocation for EB-5 visa applicants, their developments can be anywhere in the U.S. However, some people do enjoy watching their building development come together.
Myth: EB-5 investors are privileged individuals
“As a group, many EB-5 investors are successful business people or are spouses or children of successful business people in their home countries,” according to Weber.
“Lots of these people worked so hard to get where they are,” he says – even if it took repeated failures, and borrowing money from friends and relatives. They’re typically self-made millionaires, not just spending inherited money.
Myth: The EB-5 program is rife with fraud
“There has been a history of fraud,” says Steve Smith, president of EB5 Coast to Coast, which acts as a financial matchmaker of sorts between investors and developers. Most of the fraud was committed by U.S. citizens misusing immigrant investor funds at regional centers, he says. “Thanks to increased federal oversight, much of this has been eliminated and it’s extremely difficult for a fraudster to do business in this environment.”
Myth: Immigrants are a drain on the U.S. economy
EB-5 immigrants have invested at least $20 billion in the U.S. economy since 2008; more than $5 billion was invested in 2017, according to the American Action Forum, a center-right nonprofit think tank.
Smith says his work is fun because he enjoys the process of bringing immigrant investors into the U.S. “They’re good people who work hard,” he says. “They’re high achievers, and it doesn’t matter where they come from. They contribute greatly as a group to our society and economy.”
EB5 Coast to Coast LLC is a strategic adviser to a network of USCIS-designated EB-5 Regional Centers in 35 states across the U.S., including most major metropolitan areas.