The EB-5 visa is a United States visa program for immigrant investors that was first instituted by the federal Immigration Act of 1990. The EB-5 visa provides means to obtain a green card, and eventually a path to permanent residency in the United States, for foreign investors who invest large sums of money in the United States. The EB-5 visa program has faced much criticism since its inception over 25 years ago. Critics contend it discriminates against applicants for green cards who do not have the money to qualify for the EB-5 program, instead relegating such persons to the annual green card lottery, in which a person’s chances of obtaining a green card are infinitesimal. These critics go even further to argue the EB-5 visa program in essence allows foreign investors to buy a visa and an eventual path U.S. citizenship, which they contend is against everything the United States stands for. To these persons, instead of being a nation of equals, the EB-5 visa program merely represents the corrupting influence money has on every facet of government in the United States by allowing those with more money to shortcut the line to obtain a visa, and an eventual path to U.S. citizenship. However, the program has proved successful at attracting capital investment from foreign investors and creating jobs for U.S. citizens. Nevertheless, the process of applying for and receiving an EB-5 visa is extremely time-consuming and paper intensive, so hiring a legal professional with the right experience and connections is an absolute must for any foreign investor who wishes to take advantage of the program. In addition, the failure rate of most EB-5 applications makes hiring an experienced professional absolutely essential.
Requirements to Obtain an EB-5 Visa
To obtain an EB-5 visa, foreign individuals must commit to invest at least $1,000,000 (or at least $500,000 if the investment is made in a Targeted Employment Area, which the Act defines as an area with high unemployment or a rural area) in the United States. Two pathways exist for an EB-5 investor, the direct EB-5 or the Regional Center EB-5. The Direct Investment Program requires the new commercial enterprise to create or preserve only direct jobs that provide employment opportunities for US workers by the commercial enterprise in which the capital has been directly invested. The Regional Center Program allows applicants to fulfill the job creation requirement not only through direct jobs, but also through jobs created indirectly. Jobs created indirectly are the job opportunities predicted to occur because of investments associated with the regional center.
Typically, Direct Investors invest in smaller projects with fewer total investors involved. Many Direct Investors are the sole investor in a particular project. Types of businesses that Direct Investors typically choose are restaurants or hotels, nursing homes, farms, and retail stores. A Direct Investment is best suited for the investors who want to own and be involved in the operation of the business, whereas regional centers are typically better for those who have adequate capital to meet the EB-5 requirements but do not want to take an active role in the EB-5 project.
This investment must also create or preserve at least 10 jobs for qualified U.S. workers excluding the investor and his or her immediate family. To apply for the EB-5 visa, the foreign applicant must fill out the I-526 form, Petition by Alien Entrepreneur. Once this form has been approved, the entrepreneur can either file a Form I-485, Application to Register Permanent Residence or Adjust Status, with the United States Customs and Immigration Service (USCIS) or else file a Form DS-230 or DS-260, Application for Immigrant Visa and Alien Registration, with the U.S. Department of State to obtain the actual visa.
Once the foreign entrepreneur has received the EB-5 visa, then the entrepreneur and his or her family are granted conditional permanent residence for a two year period. In order to permanently remain in the United States after this two year conditional period, the foreign entrepreneur must file a separate form (Form I-829, Petition by Entrepreneur to Remove Conditions) essentially showing he or she has complied with the EB-5 via program’s investment and job creation requirements. If this form is approved by the USCIS, entrepreneur and his or her family are then allowed to live and work in the United States permanently.
Criticisms of the EB-5 Program
Critics of the EB-5 program contend it is simply a means to buy a green card and an eventual path to permanent residency in the United States. Critics note that, although the purpose of the program when initially passed by the U.S. Congress in 1990 was job creation for U.S. citizens and capital investment by foreign investors, the program has simply become a means for those with money and connections to gain access to U.S. citizenship simply because they happen to have more money than other potential applicants who are forced to join a much longer line for the U.S. State Department’s annual green card lottery.
Another issue for the EB-5 program is the sheer number of petitions that are denied as well as the waiting period associated with EB-5 visas. The Most recent figures for 2016 reflected that more than 8,600 applications were received and less than 4,800 were approved. Therefore, the success rate for most EB-5 applications is no better than 55%. There is also a substantial lag between submission of an application and ultimate approval or denial. Figures from 2016 showed that 19,406 EB-5 applications were pending at the end of the third quarter of 2016. At the current rate USCIS is reviewing applications, this means that an applicant may wait three years before receiving a yes or no on his or her application.
The necessity to revisit the issue of the applicant’s status within the United States can also be a large drawback of the EB-5 program. An entrepreneur can live in the United States and then find that if he or she is not granted permanent residency at the end of those two years, then he or she wasted a lot of money as well as two years of his or her life. Thankfully, most (1,539 of 2,571) of the entrepreneurs who applied to have the conditions lifted after two years under an EB-5 visa had their conditions lifted, but that is still a significant number who did not. This has a real cost as far as the applicant’s life and the use of his or her capital for a qualifying investment.
The EB-5 program also has quotas by an investor’s nationality. For instance, the EB-5 program is capped at 10,000 per year and the annual limit was hit in August in 2015 and around the same time in 2016. This was largely the result of a flood of applications from wealthy Chinese investors. According to a CNN article, Chinese nationals accounted for 90% of the EB-5 visas issued in 2014, which was up from 13% in 2004.
Positive Aspects of the EB-5 Program
Proponents of the EB-5 visa program correctly note that it encourages investment in the United States. For example, one of the program’s specific requirements is that a qualifying investment create at least 10 jobs in the United States as a condition of a visa being issued. This is not a simple “check the box” requirement; instead officials from the USCIS review every application carefully to ensure that it meets the program’s requirements. Indeed, the I-485 application requirements extensive supporting documentation, including foreign business registration records, personal or business tax returns from the entrepreneur and his or her businesses for the past five years, as well as documents identifying the sources of the funds that will be used to make the qualifying investment. The job creation requirements are probably the most important part of any application for an EB-5 visa, as USCIS staff pay particular attention to the job creation requirements of the proposed investment when determining whether or not to grant an application for an EB-5 visa.
Hiring an Experienced Adviser to Help Navigate the EB-5 Program’s Detailed Is Absolutely Essential
The requirements for obtaining an EB-5 visa are long and complicated, as can be seen from the description above. For investors who may have the funds necessary to make an investment in the United States which meets the requirements necessary to obtain an EB-5 visa, it is well worth the savings in time and money that is spent hiring an experienced lawyer who has dealt with all of the red tape associated with EB-5 visas before instead of attempting to not only put together a project that will satisfy the requirements of the EB-5 program but also understand all of the accompanying regulations on the investor’s own without any help. The cost savings in terms of opportunity cost is immense for those who have more pressing business and personal concerns than attempting to wade through a morass of rules and regulations that define the EB-5 visa application process without expert help.
In addition, experienced advisors can also not only assist with the application process itself but also the structuring of the proposed investment, which is the most important part of the application in many respects because American government officials will spend the majority of their time and energy in evaluating an EB-5 application in evaluating the potential investment and whether it will truly create jobs. In addition, hiring an experienced legal professional who has worked on EB-5 visa applications before will also ensure you access to the right USCIS officials if you have questions regarding how to structure a potential qualifying investment. For example, if your lawyer has a contact at the USCIS that he has interacted with before on many applications, then a phone call from your lawyer may answer a question that could have held up your application for months if you had not hired a legal professional with the right connections. Therefore, hiring a legal professional with the right experience preparing EB-5 visa applications that have been successfully approved who has the right contacts can be the difference between success or failure for an EB-5 visa application submitted by a foreign entrepreneur.