After a very turbulent 2020, where the EB-5 Immigrant Investor Program had just 114 new applicants, demand for the famous residency-by-investment program has dramatically increased in 2021. Many new EB-5 applicants already reside in the United States under a different visa program, such as the H-1B. Many are also Indian or African nationals hoping to receive U.S. permanent resident status.
The EB-5 investment program’s applications peaked in 2015, when approximately 15,000 EB-5 investors and families decided to apply for U.S. permanent residency. Since then, applications to the program have fallen, with 2020 seeing the lowest number of applications since 2015. However, EB-5 investment demand has increased in 2021, making many industry representatives hopeful about the future.
Why Did EB-5 Demand Decrease in 2020?
The COVID-19 pandemic had a massive effect on the EB-5 investment industry. U.S. embassy and consulate services were suspended around the world, with many EB-5 investors finding themselves unable to make an investment. In addition to the pandemic’s lockdowns preventing many investors from participating in the program, the pandemic also encouraged many investors to wait to invest until the pandemic subsided.
The Modernization Rule, which was enacted in November 2021, further discouraged many prospective investors from investing in 2020. The Modernization Rule increased the minimum required investment amount from $1 million to $1.8 million, with an EB-5 investment in a targeted employment area (TEA) now requiring an investment of $900,000 instead of $500,000. Many EB-5 investors hurried to submit their I-526 petition before the rule came into effect, which resulted in many applications being filed in October and November 2020, with essentially none in the following months.
United States Citizenship and Immigration Services (USCIS) also faced numerous issues in 2020, which disincentivized investors. At the beginning of 2020, prospective investors from China, India, and Vietnam faced massive backlogs, and although the backlog facing Indian investors cleared up in July 2020, the potential for a new backlog frightened many prospective Indian investors. Additionally, USCIS processing speeds hit near historic lows, and many investors simply decided that the program was not worth the long delays.
Why Has EB-5 Demand Increased in 2021?
Although the pandemic is still ongoing as of April 2021, the world has begun to adapt. The arrival of the Biden administration has also incentivized foreign nationals to invest through the EB-5 investment program. Biden is much more immigration-friendly than his predecessor, and the friendlier immigration environment has led to more I-526 filings. Biden’s administration has also put forth a list of recommended changes to the U.S. immigration system, most of which would benefit EB-5 investors.
Perhaps the biggest reason why foreign nationals are looking to make an EB-5 investment in 2021 is that the EB-5 Regional Center Program is set to expire on June 30, 2021. The regional center program was previously a part of a larger government spending bill that was renewed whenever Congress passed a new budget. However, in December 2020, Congress created a separate reauthorization process for the EB5 investment program, making the regional center program significantly more vulnerable to termination.
The Regional Center Program’s Sunset Date
Senators Chuck Grassley and Patrick Leahy have introduced the EB-5 Reform and Integrity Act to prevent the popular regional center program from being terminated. If passed, the bill would improve the program’s integrity measures, provide sturdier protections for EB-5 investors and developers, and reauthorize the regional center program through 2024. Many EB-5 industry leaders believe that reform is required for the program to be reauthorized, making this bill particularly significant given the looming sunset date of June 30, 2021.
If the program were terminated, many foreign nationals would be unable to make an EB-5 investment. Consequently, investors may rush to file their I-526 petitions as the EB5 investment program’s sunset date approaches. Given the uncertainty regarding the program, prospective EB-5 investors should consider investing before the June 30, 2021, deadline.