The benefits of the EB-5 industry have had a tremendously positive impact in the United States. It has allowed for the creation of U.S. jobs—a criterion every EB-5 investor must meet—provided capital at frequently below-market rates, and served as a pathway to citizenship for many foreign nationals who aspire to build a life in the United States.
Another positive characteristic of the EB-5 process is that it is simple and transparent. United States Citizenship and Immigration Services (USCIS) approves EB-5 visa applications that have followed the regulations set forth by the agency. Any investor who plans to apply and does so with careful consideration of the rules can rest assured that their application will likely be successful. Thanks to the program, countless foreign nationals can now call themselves permanent U.S. residents and, in some cases, U.S. citizens.
The EB-5 investment program has not been without its drawbacks, however. The last several months have been tumultuous, as the EB-5 regional center investment model – once the most popular in the industry—is no longer active. This suspension has led to consequences for industry stakeholders and left them wondering when the program will be reauthorized or if they will be provided with any alternatives.
Billions of EB-5 Investment Dollars at a Standstill
There is a possibility that the regional center program will be reauthorized, but there are no guarantees as to when, or if, that will happen. As a result, billions of EB-5 investment dollars – approximately $15 billion– are currently at a standstill. This significant amount of funding may become inaccessible to U.S. businesses who, as a result of the instability of an economy still recovering from COVID-19, may need it now more than ever.
In addition, the expiration of the regional center program has caused USCIS to pause adjudication of I-526 visa applications from regional center investors. If those investors were to try to recover their funds, the money may, in fact, be lost for good. There is also the highly unlikely scenario that USCIS will decide to deny all regional center I-526 petitions.
Limited Job Creation Possibilities
One of the criteria for EB-5 investors is to create at least 10 jobs. It is a cornerstone requirement of the EB5 investment program and one that has had a tremendously positive impact on the U.S. economy. With the expiration of the regional center program, however, job creation is now at risk. In fact, according to IIUSA, an estimated 487,000 jobs that regional center investors would have created are now at risk. Projects sponsored by regional centers do have advantages in that they are able to count several types of employment to meet the criteria, including indirect employment and standard W-2 jobs. Even with these advantages, many potential jobs are still up in the air, and entire communities may potentially lose out on much-needed economic growth.
Families Could Lose Their Life Savings
Foreign nationals who hope to invest in businesses in the United States now find themselves in a frustrating and unfair situation. For many of them, their entire life savings are wrapped up in regional center projects that are now up in the air. USCIS has halted visa processing, leaving many investors and their families in a tough situation. It would be a great relief if investors who already took the time to complete their applications were “grandfathered in.” However, this is a provision that only the U.S. government could enact. The ideal scenario would be a complete reauthorization of the regional center program for an extended period. However, any solution for EB-5 regional center investors would be better than none at this point.
In the best interest of foreign investors and U.S. businesses, Congress should address the expiration of the regional center program as soon as possible. At the very least, an alternative should be provided for regional center investors.