The EB-5 Immigrant Investor Visa is a US federal programme launched in 1990 that allows international investors and their immediate family members to obtain permanent residency in the US. By investing a certain amount specified by law in business or in projects that create American jobs, global families can receive conditional green cards within 24 to 36 months, and convert these into permanent green cards 2–3 years later.
With a green card (whether conditional or permanent), investors and their family members are allowed to live, study, work, and travel in the US without restrictions. Green card holders have better career mobility than most visa holders, since it eliminates the need for a company to sponsor your visa.
Green card holders can also contribute to the US treasury and receive retirement benefits, are eligible for in-state tuition rates (typically half or a third of full tuition rates), and have the freedom to start a company without tying their family’s residency to the company’s ongoing operation. The benefits of the EB-5 are many, and that is why almost 3,000 Indian nationals have received the EB-5 visa over the last 10 years.
Although the programme was created in 1990, it witnessed real growth only since 2008. The global financial crisis made the programme an attractive alternative source of financing for businesses, providing substantial benefits to the US economy. The EB-5 programme has financed new real estate developments and other new businesses across the country, creating hundreds of thousands of American jobs at no cost to the US taxpayer.
The base programme was created in 1990 by an Act of Congress to stimulate the US economy through foreign direct investment and job creation. The associated Regional Center programme, which permits pooled investments (and thus allows investors to make indirect investments in government-authorised projects they do not control), was enacted in 1993 as a pilot programme. The Regional Center route is used by 95 per cent of EB-5 applicants, whereas only about 5 per cent of EB-5 applicants invest directly into businesses under their control.
In the last two weeks, however, the EB-5 industry has seen a lot of activity culminating in major changes. To start with, from the 1990 creation of the EB-5 visa until November 2019, the minimum investment amount was $500,000 for applicants willing to invest in a “targeted employment area,” usually a rural area or an area of high unemployment. But in November 2019, regulatory changes that aimed to account for inflation since 1990 increased that minimum to $900,000.
On June 22, 2021, a federal court ruling lifted the regulations, and the minimum investment went back to $500,000. To complicate matters, the Regional Center route (of making indirect investments) was already facing a June 30 sunset date, leaving applicants with less than 10 days to take advantage of this window of opportunity to invest at the lower amount.
Protecting the integrity
While the EB-5’s direct investment route to a green card is permanent, the Regional Center programme itself (which allows investors to make indirect investments) must be periodically extended or reauthorised by Congress. Throughout most of the history of the Regional Center programme, reauthorisations were more or less pro forma. But the success the programme faced in 2014–2015 caught greater public and Congressional attention, leading to the realisation that certain changes were needed to protect the integrity of the programme and to make it more efficient.
Since that period the programme has received extensions, not reauthorisations. The most recent extension, enacted in December 2020, hit its sunset date on June 30. As a result, as of July 1, the EB-5 Program via Regional Center has been suspended, despite significant efforts in Congress to make the needed reforms and reauthorise the programme. Now it is expected that Congress will keep negotiating controversial points of the proposed Bill in order to reauthorise the programme and make it current again before the end of the US fiscal year (at the end of September).
Rush to meet deadline
All this activity has not scared investors away from the programme, which has received over $40 billion in investments in the US in the last five years. In fact, many scrambled to file their applications before June 30 once the minimum investment amount was lowered on June 22, especially since the EB-5 is an attractive programme that brings many benefits to investors who wish to obtain permanent residency in the United States.
It is unfortunate to see a lapse in this important programme, but we do not believe Congress intends to discontinue the EB-5 Immigrant Investor Visa. As of the close of business on June 30, USCIS has already published guidelines on how it will deal with pending petitions until the programme gets reauthorised. We already see a lot of “backstage” activity to amend the proposed Bill and get the programme reformed and reauthorised.
It may take a few weeks or months, so applicants need to wait patiently, but we expect to have a current programme again before the end of this US fiscal year in late September.
The writer is Executive Chairman and Founder of LCR Capital Partners