Rishi P. Oza
By Rishi P. Oza
The EB-5 Investor Creation Visa is commonly known as the “million-dollar investor” has been part of the immigration framework for decades. Wealthy foreign investors seeking a non-sponsorship route to a green card could obtain such status provided that they meet two criteria:
Investment of the required threshold amount (either $1,050,000 or $800,000), and creation of 10 full-time permanent jobs for US workers.
While the program has undergone some cosmetic changes over the years, the fundamental question for potential applicants is whether the EB-5 program, as it is currently constructed, is worth the time and money invested into the process.
The idea behind the EB-5 program was always job creation. While the public tends to focus on the high investment amount needed to qualify for the visa, the job creation element has always been the focus and main driver of the program. The statute that governs EB-5 visas is dubbed “Employment Creation” and, therefore, the government’s focus of adjudications always centers on whether the investment amount leads to the creation of 10 full-time jobs for US workers.
In determining what type of EB-5 to pursue, investors have a few decisions to make, starting with whether they want to be a hands-on business owner or are more interested in being a passive investor. A direct investment is more akin to being a traditional business owner, such as owning a franchise, restaurant or a tech start-up. Direct investors are involved in the day-to-day operations of a new business, such as hiring/firing decisions, investments and budgeting decisions.
Unlike the E-2 investor visa, which is only available for individuals from certain countries, the EB-5 direct investor can be a citizen of any country and does not need to be a majority owner in the business. As such, an EB-5 can have several additional investors into a single business venture, as long as the EB-5 investor can show that his/her investment directly lead to the creation of 10 full-time jobs for the company.
Alternatively, an individual that is not interested in being a hands-on business owner can elect to pursue a more passive role in an EB-5 Regional Center. The Regional Center approach is more common for larger projects requiring a multitude of investors whereupon the Regional Center leaders can “pool” investment dollars from many EB-5 applicants to build a large-scale project (i.e. large hotel construction or downtown revitalization plan). The largest benefit is that the job creation element is presumed and Regional Centers can count indirect and induced jobs, such as jobs in the community resulting from the project’s economic impact) for meeting the job creation requirement. However, as a passive investor, the EB-5 applicant will likely be unable to have a say in day-to-day operational decisions or macro-level judgments, which again, may be attractive depending upon an EB-5 applicant’s desire for a hands-off approach.
The amount of investment for EB-5s is dictated by the type of investment that an applicant will be pursuing. The US Citizenship and Immigration Service requires an investment of $1,050,000 for standard filings but allows for a lower $800,000 investment amount for areas that are considered rural (locations with a population of 20,000 or less) or high-unemployment zones (places that have 150% the national unemployment rate). Under the EB-5 Reform and Integrity Act of 2022 (RIA), USCIS set aside EB-5 visas for rural, high-unemployment and infrastructure projects, effectively fast-tracking these filings for approval compared to the traditional EB-5 investment project.
These “Set Asides” have been critical for Indian and Chinese investors that may have to wait years for the approval of a standard EB-5 compared to maybe months for a Set Aside filing. The set-aside visas do not come without risk, as rural and high unemployment areas often struggle with supporting new business ventures, given the lack of resources in these communities compared to more urban and developed areas.
Ultimately, the speed of the processing is often cited as a critical cog in the decision-making process with standard filings often taking years to be completely adjudicated, while Set Asides have the benefit of processing much, much faster. According to USCIS, the average processing time for a standard EB-5 filing in the month of May is 32 months. When coupled with the fact that EB-5 approvals are only valid for a period of two years after which an applicant must apply for a removal of conditions, which itself takes an additional 20 months, getting a unencumbered 10-year green card can easily take seven years to complete. By comparison, a Set Aside may take almost half of that time but again comes with the challenges of a business venture in a rural or high unemployment area.
Ultimately, the decision each EB-5 applicant must make should be a business decision first and an immigration decision thereafter. A failed business will surely lead to the denial or termination of permanent residency status, an outcome that serves no one. However, a successful business venture can not only be a smart and profitable investment but may help to secure an applicant’s residency in the United States as a green card holder: an obvious win-win outcome in a time of overall immigration uncertainty.
Opinions expressed above are those of the writer and not necessarily of the publisher or editor.
Rishi P. Oza is a Partner at Brown Immigration Law, a firm that focuses solely on immigration law; he practices in Durham. Contact: roza@rbrownllc.com.
