EB-5 program has emerged as a viable alternative for channeling much-needed foreign investment into projects throughout the United States.
By Brennan Sim
Faster processing, the ability to skip the visa backlog, and other new benefits implemented in the previously suffering EB-5 program have brought investor attention back to the United States of America.
Since 1990, the EB-5 program has been a vehicle to create hundreds of thousands of jobs and provide low-cost foreign investment to development projects in Targeted Employment Areas (TEAs) around the United States. Initially, few knew about the program, but it was only a matter of time until US developers began to realize the opportunities this program provided.
As construction capital became harder and harder to come by in the wake of the 2008-2009 financial crisis, the EB-5 program quickly emerged as a viable alternative channeling much-needed foreign investment into projects throughout the United States.
As with any rapidly growing initiative, the program wasn’t without its challenges. By the early 2018, backlogs, particularly from high-demand countries like India and China, began to cast a shadow over the program’s future. Investors from these countries found themselves in a quagmire, with wait times stretching 10-15 years. This led to growing frustrations, reduced participation, and skepticism about the program’s viability.
Enter the changes to the EB-5 Reform and Integrity Act (RIA) signed on March 15th, 2022. In just a span of 18 months this act has revolutionized the landscape of the program and infused new life into it. Here’s how these shifts have impacted the industry and reshaped the trajectory of the EB-5 program.
One of the most significant triumphs of the EB-5 RIA has been its addressing of the backlogs plaguing investors from India and China. With the intentions set by US Senators Grassley and Leahy, the US Congress implemented procedures in the RIA that would set aside 20% of all EB-5 visas for “Rural Area” projects in the program, and 10% for a more clearly defined “Urban Distressed Area” projects. Any Indian or Chinese investor who invests in a TEA project can now obtain a US Green Card as quickly as an EB-5 investor from any other country by receiving a set-aside visa.
The most transformative shift in the program’s trajectory has been its focus on rural investments. While urban megaprojects were traditionally the more attractive bait for foreign investors, the RIA swung the pendulum towards rural projects as investors are now offered “Priority Processing” for projects located in rural areas.
This not only incentivized investors with the prospect of expedited Green Card processing but also sparked a renewed interest in the development of rural America. Communities that once grappled with limited growth avenues suddenly find themselves lifted by an influx of foreign capital and attention.
The most impactful change for new EB-5 investors who reside in the United States on a valid visa is the RIA’s implementation of “Concurrent Filing”. This allows investors to file their I-526E petition for a Green Card and their Change of Status application at the same time.
By Concurrent Filing, investors will also receive an EAD Work Authorization and Advanced Parole Travel Permit. This allows investors to work and travel while living United States as they await approval of their Green Card. The industry is seeing most EAD applications approved in 3-5 months and Travel Permits issued in 7-9 months.
Now, 18 months post-reform, the EB-5 industry showcases a vigor that had been missing for years. Developers, previously wary due to prolonged processing times and uncertainties, now eagerly embrace the program. Foreign investors have regained confidence in the program’s potential and its promise of a smoother pathway to U.S. residency. The program once again ties the aspirations of foreign investors with the developmental needs of the United States. While challenges may still arise in the future, the recent trajectory suggests a promising road ahead.