By 
In June 2021, two events had a significant impact on the EB-5 investment industry. The first, on June 22, was the repeal of the EB-5 Modernization Rule. As a result, the minimum investment thresholds for EB-5 investments were reduced. The minimum investment for targeted employment area (TEA) projects, which had previously been $900,000, was reduced to $500,000. For projects outside of TEAs, the minimum threshold dropped from $1,800,000 to $1,000,000.
This news was well-received by the EB-5 industry, as it made the program accessible to a greater number of foreign nationals and increased the funding opportunities for U.S. businesses. However, it is not possible to predict how long these reduced investment thresholds will last: the Department of Homeland Security (DHS) or United States Citizenship and Immigration Services (USCIS) could take action to increase these investment amounts at any time.
The second change occurred on June 30, when the popular regional center program expired. The program is subject to periodic reauthorization by Congress, and when this failed to occur, it was suspended. Following this event, USCIS announced that it is no longer processing visa petitions related to regional center EB-5 investments.
As a result of these two events, foreign nationals interested in participating in the EB-5 investment program are presented with a unique window of opportunity to pursue the EB-5 visa: making a direct EB-5 investment of only $500,000. Investors should act quickly to take advantage of this situation while being careful to evaluate and reduce the potential financial and immigration risks.
Reducing Financial Risk
As with any financial commitment, it is vital for investors to evaluate the financial risk of their EB5 investment. Moreover, USCIS dictates that an investor’s capital must remain “at risk”—there can be no guarantee that the investor will receive returns on their investment, or even that they will recoup their initial capital.
However, certain projects carry a lower financial risk than others. An investor should carefully evaluate each potential project for its feasibility and likelihood of success. Furthermore, the operating agreement between the investor and the EB-5 project will outline how and when the invested funds will be released to the investor at the project’s conclusion.
Reducing Immigration Risk
In the EB5 investment process, immigration risk relates to the chances that an investor may not receive U.S. permanent resident status. Generally, this means that either the investment or the project has not fulfilled USCIS criteria.
USCIS is particularly strict regarding the source-of-funds requirement. Investors must demonstrate that the funds used are of lawful origin. Foreign nationals may use salaries, loans, gifts, inheritances, cryptocurrencies, and many other sources for their EB-5 capital.
However, for each source of funds, the investor must be able to document its legality. The exact evidence required depends on the source. For loaned funds, investors should provide the loan agreement, with details of the loan and any personal assets used to secure it, along with a capital source statement. If the funds were acquired as a gift, investors must provide details of the person who gave the gift and how they originally acquired the funds.
Despite the potential risks, the EB5 investment program has successfully provided thousands of foreign nationals with U.S. permanent resident status and potential eligibility for U.S. citizenship. Prospective investors interested in making an investment at the reduced amounts should discuss their circumstances with an EB-5 immigration attorney and identify direct EB-5 investment projects.
