Congress created the EB-5 Program (the “Program”) in 1990 to benefit the U.S. economy by attracting investments from qualified foreign investors. Under the Program, each investor is required to demonstrate that at least 10 new jobs were created or saved as a result of the EB-5 investment, which must be a minimum of $1.8 million, or $900,000 if the funds are invested in certain high-unemployment or rural areas.
In 1992, Congress enhanced the economic impact of the EB-5 program by permitting the designation of Regional Centers to pool EB-5 capital from multiple foreign investors for investment in economic development projects approved by U.S. Citizenship and Immigration Services (USCIS) within a defined geographic region. Today, 95% of all EB-5 capital is raised and invested by Regional Centers.
Since the 2008 financial crisis, access to capital has been constricted and municipal budgets continue to face significant shortfalls. EB-5 investments have filled the funding gap, providing a new, vital source of capital for local economic development projects that revitalize communities, create and support jobs, infrastructure and services.
Additionally, the Congressional Budget Office (CBO) scored the program as revenue neutral, with administrative costs paid for by applicant fees.
More than 25 countries, including Australia and the United Kingdom, use similar programs to attract foreign investments. The American program is more stringent than many others, requiring substantial risk for investors in terms of both their financial investment and immigration status.
- Investments made through the U.S. EB-5 program must be “at risk” in the same way that investments in stocks or equity funds carry an inherent risk. There is no guaranteed financial return.
- If their application is approved by USCIS, EB-5 investors receive a conditional visa that is valid for two years. In order to receive a permanent visa, these investors must demonstrate that the legally required economic benefits flowing from their investments have been achieved.
Annually, the EB-5 Program accounts for less than 1% of the visas issued by the U.S. Throughout the process, EB-5 investors are subject to the same background checks and national security screenings as applicants in any other visa category, and their ability to eventually apply for citizenship is subject to the same criteria as other visa holders. Additionally, EB-5 investors must be able to demonstrate a lawful source and path of the funds to be invested, adding a layer of security that is not required by any other category of visa petitioners. Like any other investment vehicle, EB-5 investment funds are subject to U.S. securities and anti-fraud laws and regulations.