EB-5 ProgramEB-5 Project Diligence

Evaluating Direct EB-5 Investment Opportunities


The popular EB-5 investment program continues to attract foreign nationals from around the world. This visa-by-investment program has been operating successfully for over three decades, bringing much-needed funding to U.S. businesses. However, two events in 2021 significantly changed the way the program works.

On June 22, 2021, the controversial EB-5 Modernization Rule was repealed. One consequence of the ruling is that the minimum investment thresholds were reduced. An EB5 investment in a project located in a targeted employment area (TEA) can now be made for only $500,000, while the minimum for projects outside of TEAs is $1,000,000. The change was welcomed by prospective investors, for whom the program is now more accessible.

Following this good news came an unexpected turn of events. On June 30, the popular EB-5 Regional Center Program expired. Regional center investment relied on regular reauthorization by the government, and when Congress failed to pass the EB-5 Reform and Integrity Act, this investment model was suspended. As of December 2021, there has been no action from Congress to revalidate the regional center program, and United States Citizenship and Immigration Services (USCIS) is not processing Form I-526 petitions related to regional center projects.

For this reason, only direct EB-5 investments are currently allowed, and interest in direct EB-5 investment projects has increased. However, it is important for prospective investors to assess potential direct EB-5 investment opportunities carefully to ensure that they select a project with low financial risk and low immigration risk. There are three key factors to consider when evaluating a direct EB-5 project.

Job Creation Potential

USCIS regulations require each EB-5 investment to create at least 10 jobs for U.S. workers. If a project fails to generate this minimum number of employment positions, an investor’s visa petition to USCIS will be denied.

When examining an EB-5 project’s business plan, prospective investors must carefully evaluate whether the project is likely to create enough jobs to meet this minimum. Some EB-5 projects offer a job cushion, meaning that they plan to create several more jobs than necessary.

Secure Funding

Investors should look for projects that are not entirely dependent on EB-5 funds for their completion. A responsible project developer will fund their business from a number of sources, and a shortfall of EB5 investment capital will not cause the project to grind to a halt. For example, the project developer may have committed their own funds to the project or secured a bank loan for use if the amount of EB-5 funds raised is lower than expected.

The Project Developer’s Reputation

Before committing to an investment, interested foreign nationals must research the backgrounds of the individuals involved in the EB-5 project. In particular, the managers who will be handling the EB-5 investment capital should be researched thoroughly. If these parties have a track record of poor project management, including lawsuits, a poor credit history, or previous failed attempts at similar projects, their offering is unlikely to succeed

Evaluating potential EB-5 investment projects is an important yet time-consuming part of the EB-5 process. To help identify direct EB-5 projects with the lowest risk, foreign nationals are advised to work with immigration counsel. These professionals can apply their experience when considering different characteristics of available EB-5 projects and advise investors on the safest option to choose.