Guide to Current State of EB-5 Visas
Guide for EB-5 Visas
The EB-5 Visa Program provides an avenue for foreign nationals to obtain permanent residence in the United States through an investment into the American economy. Understanding the program requirements, processing time and the potential return on investment can be difficult.
It has only become more confusing with the changes on November 21, 2019.
At Lightstone Investments, we know you want straightforward answers to your questions about the EB-5 Immigrant Investor Program. Use this investor visa guide to learn everything you need to know about the program. We’ll take you step-by-step through the process in this EB-5 changes guide to help you understand the requirements, timeline and new changes to the program.
EB-5 Program Overview: What is the EB-5 Visa Program?
Created in 1990, the EB-5 Visa Program was designed to stimulate the United States economy. It’s administered by the United States Citizenship and Immigration Services (USCIS) agency of the United States Department of Homeland Security (DHS).
The program allowed foreign investors to gain a Green Card, or permanent residence, through a monetary investment that generates American jobs. In 1992, the program was amended to add the Immigrant Investor Program. This new part of the program set aside a certain number of EB-5 visas for certain USCIS-approved commercial projects.
Qualified foreign investors can apply for the EB-5 program as a way to obtain permanent residence. Your spouse and any unmarried children under the age of 21 also qualify for permanent residence. Investments must create at least 10 permanent full-time American jobs.
Big EB-5 visa news came this year with the announcement of major changes to the investment cost and other guidelines of the program. These changes took effect in November 2019. If you’re considering to invest in the EB-5 Visa Program, you should contact an investment firm now to start the application process.
Advantages of the EB-5 Visa Program
Unlike other paths to becoming a United States resident, the EB-5 Visa Program gives you the fastest route to living and working in America. The largest advantages of the program include:
- Benefits for Your Spouse and Children: Your spouse and unmarried children under the age of 21 are eligible to live, work and study in the United States.
- No Sponsorship Required: With the EB-5 program, you don’t need sponsorship from an employer to remain in the country.
- Passive Involvement with Investment: The EB-5 program allows you to invest in certified projects from organizations known as Regional Centers. If you invest through a Regional Center, such as Lightstone projects, you won’t be required to manage your investment actively.
- No Education, Business or Language Requirements: Since you can self-petition for an immigrant investor visa, you and your family don’t need to have specific skills related to business experience.
- Fastest Path to Permanent Residence: EB-5 is one of the fastest routes to lawful permanent residence in the United States.
Benefits of Permanent Residence
The ability to obtain permanent residence in the United States is the biggest benefit of the EB-5 Immigrant Investor Program. Permanent residence status gives you and your family access to many advantages not found in other visa or immigration programs, such as:
- Study, Work and Live in the United States: With permanent residence, you and your family won’t have additional immigration requirements.
- Free Education: Your children are eligible for free public education from Kindergarten through high school.
- Potentially Increase Path to Citizenship: EB-5 Visa holders may be eligible to apply for U.S. citizenship 5 years after initial entry in the United States.
- Reduced College Tuition Costs: You and your children may be able to access lower tuition costs based on residence as opposed to fees for international students.
- Social Security Benefits: If you meet the required conditions, you could be eligible to receive Social Security benefits when you retire.
- Increased Employment Opportunities: As a permanent resident, you have access to the same job market as United States citizens. More employers are willing to hire permanent residents because no sponsorship is needed.
- Own and Operate Your Own Business: Unlike other types of Visas, an EB-5 Visa allows you to run your own business, including franchises.
The EB-5 Visa Process: How Does EB-5 Work?
The EB-5 Visa Program works to stimulate the United States’ economy using foreign investments. After investing, a certified project uses your EB-5 funding to create jobs. This creation of permanent full-time job opportunities helps increase economic wealth throughout the community.
The EB-5 Visa process involves three basic steps:
- Permanent Residence and Removal of Conditions
EB-5 Visa Requirements
To apply for an EB-5 visa, you need to meet certain requirements. Although the EB-5 requirements may vary based on your situation, requirements generally include:
- Investment: The investment required to get EB-5 Visa approval is $1,800,000 in areas that are not designated as TEAs. If you invest in a TEA, your required investment decreases to $900,000.
- At-Risk Investment: The investment you make must be considered “at-risk,” similar to an investment into stocks. The risk of your investment may also determine your EB-5 Visa return on investment.
- Job Creation: Your investment must create full-time jobs for at least 10 U.S. workers, either through a direct investment or directly and indirectly through a regional center.
- Required Form: Your immigrant attorney must file Form I-526, or the Immigrant Petition by Alien Entrepreneur to the USCIS.
- Investment Documentation: The USCIS has strict requirements in place to ensure investment funds are obtained legally. Documentation for investment funds includes:
- At least 2 years’ worth of bank records.
- Personal tax returns for the previous 5 years.
- Business income tax records for the previous 5 years.
- Proof of business ownership, such as business registration or licensing.
- Certificates of employment.
- Proof of ownership of any relevant securities.
- Gifted Funds Documentation: If you plan to fund any part of your investment using money received as a gift, you’ll need additional documentation:
- Detailed documents on how the gift was received.
- Death certificate for inheritance gifts.
- Proof of inheritance gift tax paid if using funds from an inheritance.
- Gift tax returns.
- Documentation of the relationship between donor and investor if funds were donated to you.
- Documentation of the donor showing they have funding to provide a gift.
- Screening and Interview Requirements: You’ll need to complete a screening interview process and background check.
How to Apply for an Investor Visa
To apply for an EB-5 Visa, you’ll need to determine your eligibility, find an investment project and work with an immigration attorney to file your paperwork. Before you begin the search for an investment project, it’s a good idea to understand the different investment categories available to you.
EB-5 Direct Investment VS. Regional Center
The 1992 addition of the Immigrant Investor Program made it easier for foreign nationals to get an EB-5 Visa by creating Regional Centers. Investors now have the choice to make a direct investment or invest through a Regional Center.
Direct investments involve starting your own business in the United States using your investment money. If you decide on direct investment, you must create 10 full-time permanent jobs for authorized workers in the United States within 2 years of forming your company. You may not count yourself, your spouse or your children towards the 10-employee minimum. Direct investments are not considered passive and require you to manage your new American business actively.
The other, and often easier, option to obtain an EB-5 Visa is through a Regional Center. EB-5 Investor Visa Regional Centers are entities or organizations approved by the USCIS to sponsor EB-5 projects. Regional Centers essentially act as a bridge between foreign investors and the EB-5 project in which you invest. Working with a Regional Center allows you to make a passive investment.
Unlike direct investments, you won’t need to manage the day-to-day operation of the project. You will still retain certain voting rights and the ability to influence policies on the project. A passive investment gives you more time to focus on other personal investments or the EB-5 Visa processing steps instead of managing a large commercial project.
Steps to Apply for the EB-5 Visa Program and Timeline
The application process and EB-5 Visa processing time are fairly standard for new investors.
- Determine Eligibility
You must first determine your eligibility for the program. One of the biggest factors for many investors is the ability to make the minimum investment. As we explore further in this EB-5 Visa change guide, the minimum investment is increasing in November 2019. This means you’ll need to potentially factor in the increased cost of investment as you determine eligibility.
- Choose a Project
Your next step is to choose a project. If you work with a Regional Center, the Center will collect much of the research needed for due diligence. You can use the information from the Center to help choose the right project for your investment. Direct investors must complete all of the due diligence on their own. Choosing a project usually takes between one to three months.
- File Your Paperwork
This final step to apply for an EB-5 Visa is to hire an immigration attorney and file your necessary forms and documents. The main application is form I-526, which shows how you legally obtained your investment funds. Your attorney will take about a month to collect the necessary data and file the form.
Once your initial form is filed, expect at least a year of waiting to hear if your application is approved. If USCIS approves your application, you begin consular processing by an interview at a US embassy or consulate. This process can take between four and nine months. Once your status is approved, you’ll be given a conditional Green Card and allowed to enter the United States. Your conditional Green Card is valid for two years.
- Remove Conditions
The final step to obtaining your permanent residence status is to remove the conditions from your Green Card and receive your permanent Green Card. The process of final approval looks at your investment to confirm all EB-5 Visa requirements were met.
2019 EB-5 Law Changes
The status of the EB-5 Program was changed on November 21, 2019. These were the first major changes to the program in its almost 30 years of existence.
As an investor, you need to know what the new changes are and how they might affect your application for the program. While the process to apply remains unchanged, there are several significant policy changes that could make it more difficult for you to invest in the program.
Read below to learn about the major EB-5 law changes and how they could affect you.
EB-5 Investment Amount Increase
On November 21, 2019 the minimum EB-5 investments were increased. The new minimum investment for a TEA project is now $900,000. The new minimum for a non-TEA investment is now $1,800,000.
These significant increases in the investment minimums are designed to account for nearly 30 years of inflation. The investment amounts have never been increased.
Along with the initial increase in investment requirements, USCIS plans to enact a new rule that requires the agency to increase the investment amount every five years. The USCIS hopes the automatic increase every five years helps investment amounts keep up with inflation over the years.
As an investor, these increases to the minimum investment may have a significant effect on your application. Investors who complete an application prior to November 21 will still be able to invest at the lower amounts. After the official change is made, you must invest the new required minimums. If you’re an investor and need to invest before the changes take effect, be sure to talk with a certified Regional Center right away to start your application process.
Priority Date Retention
One of the lesser EB-5 law changes, the new rule allows flexibility for some immigrant investors to retain their priority dates. That means you’ll be able to keep your priority date from your first approved EB-5 immigration petition when you file a new one.
Targeted Employment Area (TEA) Designations
Over the life of the EB-5 Visa Program, the ability to designate TEAs rested with individual states. Against the initial intent of the program, this has created a large number of TEAs, which include affluent neighborhoods that may not need the economic stimulation of a lower-income area.
In the past, states have used census data to designate TEAs with both thriving economic neighborhoods and areas with high unemployment. When the EB-5 projects begin, they can be completed in a neighborhood that is not in need of new jobs or economic help while still retaining TEA status.
Additionally, the USCIS has noticed a lack of projects in rural areas. Many foreign investors believe there to be a high EB-5 Visa return on investment in large cities or expensive luxury projects. This leaves many rural areas that qualify as TEAs without the commercial projects they need to improve the economy.
The focus on luxury commercial projects in affluent neighborhoods lead USCIS to eliminate states’ abilities to designate TEAs. TEAs will now be designated by USCIS to help bring economic wealth to rural areas and urban areas with high economic distress.
Investors may need to consider different projects than they originally wanted after the changes take hold. You may find more opportunities for projects in a rural area. Unlike urban projects, which often include luxury hotels or residences, rural projects often feature several retail chains or fast-food restaurants. While this is a different investment than you may have expected, it can still be a lucrative option and allows you the fastest path to lawful permanent residence.
Clarification on Removal of Conditions on Permanent Residence
New guidelines will be put in place to clarify the process of removing conditions from certain family members of an immigrant investor. The current EB-5 policy can be confusing and doesn’t the process of removing conditions clear. The upcoming program changes rework the language to specify that certain derivative family members who are lawful permanent residents must file to remove conditions independently of their family members.
Apply for an EB-5 Investor Visa
As a potential investor in the EB-5 program, now is the time to apply. If you wait until after the EB-5 law changes, your required investment increases significantly. Get more information and start your EB-5 application process by contacting Lightstone Investments today.