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In the second half of 2021, the direct EB-5 investment model has come to the fore of the EB-5 industry. Direct EB-5 projects have enjoyed an unprecedented surge in popularity. Interestingly, even though the direct EB-5 model has always been a part of the EB-5 program, regional center-sponsored projects had generally been far more popular—until recently.
The EB-5 Regional Center Program, which was instituted two years after the EB-5 program itself was created in 1990, expired on June 30, 2021. U.S. Congress was unable to reach a consensus on reforms for the EB-5 investment industry, and a bill that would have extended the regional center program was blocked. United States Citizenship and Immigration Services (USCIS) has since announced that it will no longer accept I-526 petitions from regional center investors or continue processing pending I-526 petitions associated with regional centers. As a result, all EB-5 investments must be direct for the time being.
It is unclear when Congress might revalidate the regional center program. Many industry stakeholders expected the regional center model to return as part of an appropriations bill in December 2021, but it now seems unlikely that the program will be reauthorized until February 2022, at the earliest.
Many EB-5 investors had chosen regional center-sponsored projects because of their flexible job criteria: regional center investors can count direct, indirect, and induced jobs toward satisfying USCIS’s job creation requirement. While direct jobs are standard full-time positions that appear on the company’s payroll, induced and indirect employment is created by an EB-5 project’s positive economic impact on its area.
Still, the EB-5 industry as a whole has become aware of the many benefits of the direct EB-5 investment model.
No Expiration Date
Unlike the regional center program, which is temporary and dependent on government renewal, direct EB-5 investment is an integral part of the EB-5 industry; it will never expire. Many foreign nationals who made USCIS-compliant investments in regional center projects now find themselves unable to continue with the EB-5 process. Direct EB-5 investors will never find themselves in such a scenario.
Advantages for Investors
Direct EB-5 projects are usually smaller in scope than regional center projects and take on fewer investors. As a result, direct investors may gain higher returns. Moreover, regional center investors typically have very limited managerial responsibilities, but direct projects frequently grant their investors an active role in day-to-day operations. Direct EB-5 applicants can thus gain more control over how the EB5 investment capital is put to use.
The EB-5 industry currently offers many promising direct projects. Interested foreign nationals would do well to find a competent immigration attorney and start searching for direct investment opportunities.
