Government programs are not known for being simple and easy to navigate, and the EB-5 program is no exception. Along their path to U.S. permanent residency, EB-5 investors are likely to face challenges and difficulties. Here, we outline some of the main challenges EB-5 investors face and common obstacles that investors encounter.
Step 1: I-526 Petition
The I-526 petition is the first document you must submit to United States Citizenship and Immigration Services (USCIS) in the EB-5 Immigrant Investor Program. You must include documentation related to the investment project to demonstrate to USCIS that it complies with the EB-5 program’s requirements, as well as evidence that you obtained your investment capital through lawful means.
The project documents must detail how the EB-5 investor’s capital will be spent and how the project will create at least 10 full-time jobs for each participating EB-5 investor. Relevant documents include a business plan, a marketing plan, and financial projections. For maximum credibility, EB-5 investors should include documentation from trustworthy and objective third parties, and they should have immigration attorneys, securities attorneys, and other EB-5 experts look over the documentation to ensure its legality and validity.
Proving the lawful source of their funds can also be a challenge for investors depending on their country of origin. In China, by far the most popular EB-5 country, banks typically do not issue statements, and in India, the second-biggest EB-5 country, there are restrictions regarding how much money one can transfer abroad, resulting in many Indian investors transferring funds through foreign banks. Regardless of the specific circumstances of an investor’s country, however, all EB-5 investors are subject to the same requirement of proving the lawful source of their capital.
USCIS is often proactive in conducting due diligence investigations for EB-5 projects and sometimes visits project sites to assess for itself the project’s economic and job creation potential. In cases of suspected fraud, the Securities and Exchange Commission (SEC) may get involved. To ensure a safe, secure EB-5 with a limited risk of fraud, investors are strongly recommended to choose projects that work with reputable third-party services for maximum credibility.
Step 2: Consular Processing or Adjustment of Status
If your I-526 petition is approved, you may proceed to the next step of the immigration process, which involves submitting documentation to prove your eligibility for immigration to the US. EB-5 investors currently residing abroad must submit this documentation through a U.S. embassy or consulate in their country, while investors currently living in the US under a different visa must apply for an adjustment of status.
If you are applying through a U.S. embassy or consulate, your application will be reviewed by the National Visa Center (NVC), and you will be required to undergo an interview at your local U.S. consulate. If you are already in the US, USCIS will handle the further review of your immigration application.
Step 3: Form I-829
After you have lived in the United States under conditional permanent resident status for 21 to 24 months, you can finally file an I-829 petition, which is the final stage of the EB-5 immigration process. To have your I-829 approved, you will need to prove that your EB-5 investment created the required 10 full-time jobs it was intended to. Investors can submit payroll records or credible third-party economic reports using approved economic or statistic approaches, if the investment was through an EB-5 regional center.
Investors must also present proof that none of the investment amount has been paid back, since one of the EB-5 requirements is that the investment capital remain at risk for the duration of the immigration process. Inconsistences in documentation between the I-526 and I-829 petitions may result in additional questioning from USCIS, so EB-5 investors are advised to prepare their petitions carefully. Once the I-829 petition is approved, the investor is finally granted unconditional permanent residency and may later apply for citizenship.
Common Obstacles EB-5 Investors Face
Various challenges may also present themselves throughout an investor’s EB-5 journey. Below are a few of the most common.
Legislation is constantly changing, and that means the EB-5 program is subject to policy changes. Sometimes these policy changes can have a dramatic impact on investors’ ability to participate in the EB-5 program, such as the change implemented in November 2019. Before the change, the minimum required investment amounts were $500,000 or $1,000,000, depending on the project’s TEA designation, but they have now been increased to $900,000 or $1,800,000, respectively. Similarly, the regional center program is generally extended yearly, sometimes with changes that can affect EB-5 investors and the success of their investment projects.
Requests for Evidence and Notices of Intent to Deny
For many EB-5 investors, one of the most frightening obstacles is the receipt of a request for evidence (RFE) or a Notice of Intent to Deny (NOID). USCIS may send an RFE if it does not think the application contains enough evidence or information for an adjudication. EB-5 investors should, first, not panic, as USCIS is granting them a second chance, and follow the directions in the RFE carefully. More concerning is a NOID, which the USCIS sends if it intends to deny an investor’s application but wishes to offer an opportunity for him or her to clear up any issues. In both cases, the EB-5 investor’s immigration process will likely be delayed.
Should your I-526 or I-829 be denied, you may request an administrative review. However, with respective average approval rates of 85% and 90%, most EB-5 investors have nothing to worry about.
Fraudulent Activity in the Project
Fraud in the EB-5 program is rare, but the risk is still present. If EB-5 investors inadvertently get wrapped up in a fraudulent project, they may find themselves out of a substantial amount of money as well as the chance for a life in the US, so conducting thorough due diligence is a must. One useful tool EB-5 investors can use to identify the legitimacy and risk level of potential projects is the EB-5 Project Risk Assessment Questionnaire, which provides investors with questions to answer as they comb through a project’s documents.