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The EB-5 Immigrant Investor Program is one of the fastest and easiest ways for foreign nationals to permanently immigrate to the United States. The program issues U.S. green cards to applicants in exchange for a qualifying investment in an EB-5 project. As long as the applicant invests a minimum of $1.8 million, or $900,000 if the project is in a targeted employment area (TEA), and can prove that their investment led to the creation of 10 new full-time jobs for U.S. workers, they can be eligible to receive permanent resident status in the United States.
Those who choose to make an EB-5 investment can opt to invest directly in a new commercial enterprise (NCE) or through an approved EB-5 regional center. The regional center route is a much more popular choice because it offers a few advantages. If an investor chooses to invest through a regional center, they are not required to manage the day-to-day operations of the NCE, which is appealing to those without previous managerial experience. Choosing to invest through an EB-5 regional center also relaxes the job creation requirement.
Although these benefits could potentially make it easier to meet the EB-5 program requirements and receive a U.S. green card, there are some potential risks that prospective investors should consider. The primary concern is that the EB-5 Regional Center Program is not permanent. Historically, it has been continuously extended by the government for periods of one year or shorter. It is highly unlikely that the program will be terminated anytime in the near future, but it is a possibility. Additionally, United States Citizenship and Immigration Services (USCIS) can terminate individual regional centers if they do not have a consistent pipeline of investors, and throughout 2019 and 2020, USCIS has terminated regional centers at an unprecedented rate.
Regional Center Terminations Data
In 2018, the EB-5 Regional Center Program had roughly 800 approved regional centers throughout the United States. Then, the new Modernization Rule took effect in November 2019 and began to shake things up. This rule increased the minimum investment amount to $1.8 million and changed the rules for TEA designation. These changes resulted in a decrease in interest from prospective investors, which resulted in fewer investments through the regional centers.
By March 2020, the number of approved regional centers was down to 772. After the COVID-19 pandemic and the economic fallback that it caused, another 44 regional centers were terminated. In August 2020, the United States began to slowly open back up, but the number of EB-5 regional centers was down to 692. As of October 2020, the number of approved regional centers is down to only 678 across the United States. The good news is that the pace of the terminations is slowing down, but it appears that regional centers will continue to be terminated through the rest of 2020.
The Importance of High-Quality Regional Centers
This sudden increase in regional center terminations has caused complications for many foreign nationals involved in an EB5 investment. To avoid jeopardizing their future in the United States, prospective EB-5 investors should make sure to conduct thorough research to ensure they choose a high-quality EB-5 regional center with a low chance of being terminated.
Those planning to make an EB-5 investment through a regional center should carefully examine the history of their chosen regional center’s success rate. Prospective investors should take into account how many investors have used the regional center in the past, the type of projects the regional center previously managed, the success rate of previous projects, and the ratio of approved petitions from applicants who have worked with the regional center. Additionally, EB-5 investors should also thoroughly research the project developer they plan to work with. It is always advised that potential EB-5 applicants consult an experienced immigration attorney to discuss all of their options and obtain the highest chance of success on their EB-5 journey.
