Unleashing the economic and job creation benefit of EB-5
May 7, 2020 19 Comments
Washington has been busy considering how to use immigration policy as a tool in midst of the current COVID-19 crisis. The flurry of immigration-related activity includes:
- a report that a coronavirus stimulus bill could include EB-5 visa relief (the report was contradicted, but not before spurring negative press)
- President Trump’s first executive order “Suspending Entry of Immigrants Who Present Risk to the U.S. Labor Market During the Economic Recovery” (with EB-5, the job-creating EB category, naturally among the exceptions)
- the proposed Healthcare Workforce Resilience Act to recapture previously unused visas and disregard the per-country cap specifically for healthcare workers
- a letter from senators including Senator Grassley calling on Donald Trump to extend the COVID-excused immigration crackdown to include guest workers, student trainees, and EB-5
So far EB-5 has not been harmed, except by threats. EB-5 might benefit indirectly next year from measures that prevent visas from being issued in other categories this year. But EB-5 has not yet been targeted for any benefit. Why? Our administration and legislators are tinkering with immigration policy for the express purpose of protecting jobs for U.S. workers and promoting economic growth. The EB-5 category exists “to stimulate the U.S. economy through job creation and capital investment.” Surely EB-5 is exactly what we need to encourage now?
EB-5 could and should be a potent tool to support our recovery, but faces political and administrative challenges.
The U.S economy and labor markets obviously benefit from a program that incentivizes foreign investors to invest in capital-starved U.S. business that will create jobs for U.S. workers. But politicians get more short-term benefit from talking points than from facts. Immigrant investment does not fit Republican rhetoric, which currently depends on painting immigration as an economic and social threat – the visible scapegoat needed to distract from the frustratingly invisible real foe of COVID-19. Immigrant investment does not fit Democratic rhetoric, which avoids being seen to side with business interests and wants to be seen supporting the most vulnerable first. Who wants to talk about immigrants who do not take jobs but create them, who aren’t to be seen limping across the border but shopping at Nordstrom, who come from success, who support business and developers, and who arrive flush with tax dollars to give? EB-5 investors are a practical help to everyone and politically awkward for all sides.
The EB-5 program would get more recognition and support if people realized what it is and does. American entrepreneurs get capital to enable them to open businesses and complete projects. The foreign investors get visas only if those ventures create jobs for U.S. workers. Most American entrepreneurs are honest. Many EB-5 projects involve small businesses and most employ vulnerable workers. EB-5 investors come from around the world, and tend to be upper middle class professionals. EB-5 uses a tiny percentage of total visas. The visas cannot be bought at any price, only granted in exchange for job creation. But who knows this? One headline out of a hundred tells that story. Most headlines instead shriek these words: fraud, scandal, buy-a-visa, pay-to-play, super-rich, Manhattan, China. Out of many thousands of EB-5 projects, the 20 with salacious features get covered. Where headlines lead, our government representatives follow. EB-5 can only thrive if the industry gets much better at education and public relations, showing a true picture of the program that legislators can afford to come out and support.
To achieve Congressional intent, the EB-5 program needs to be administered in a way that promotes job creation and capital investment. The regional center program needs to be available in geographies around the country, especially rural and distressed urban areas with naturally low investment activity. Applications for new projects need to be vetted promptly, to create opportunity for new projects to raise capital and discourage misuse. Investor petitions need predictable and timely treatment, so foreign investors will trust the program. At the moment, the Investor Program Office at USCIS is doing precisely the opposite at every point. IPO is busy eliminating opportunity for rural and distressed areas by making robust investment pipeline and frequent activity the bar for regional center designation. IPO posts a 4-6 year processing time to vet new regional center projects, and has been taking nearly 3 years to get around to reviewing investor petitions. Such administration is obviously not conducive to attracting capital investment to good projects, creating new jobs, or facilitating timely contribution to the country’s urgent economic needs. EB-5 can only thrive if USCIS remembers that it’s administering an investment-based program that involves the fate of U.S. business and jobs, not simply an immigration program.
To create economic benefit for America, EB-5 needs to be used. To be used, it needs to be attractive. Currently the U.S. investor visa has less availability with more trouble and expense than alternative visas in other countries. This makes it a tough sell for U.S. entrepreneurs trying to find investors to help launch and save businesses. EB-5 could become more attractive if Congress made more visas available to EB-5, walked back the regulatory change to triple the investment threshold, and forced USCIS to start administering the program with integrity and efficiency. Congress could take steps to do all this if they felt the need – just as they’re now proposing immigration interventions, including visa recapture and processing improvements, to help retain foreign health care workers. Congress realizes that America needs health care workers for COVID recovery. When will it realize that America could use investment and job creation for economic recovery, and treat EB-5 accordingly? Probably, when we finally successfully convey that that is, in fact, what EB-5 can offer. This story must be urgently told, by everyone who can tell it. Otherwise, EB-5 may get folded into the blind effort to scapegoat employment-based immigration in general.
UPDATES:
- EB5 Investors Magazine is launching a special feature to showcase how the EB-5 visa program has provided a positive impact. Please share how your completed EB-5 projects have had a beneficial effect.
- IIUSA invites EB-5 users to add signatures to this support letter to Congress, and to submit op-eds with stories of EB-5 success.
In other news, the latest IIUSA Regional Center Business Journal is worth the effort to read, with substantial and timely content. I particularly appreciated the articles on TEAs, EB-5 visa numbers, I-526 processing order, and installment investments.
EB-5 Updates 
The EB5 program offers jobs to Americans
Where does Washington think equity capital will
Come from
EB5 investors create equity that lenders will embrace in their desire to reduce risk
Is the political environment so blind they cannot understand and support 101 economics
Logic seems to often be left behind it is time we
contact everyone we can in Washington that EB5 is part of the solution I hope good common sense shows up soon as we as Americans will need economic stimulus from programs like EB5 to help
Us thru this crisis
Time to get with the reality, tax revenues jobs ,will not come from movie theaters and 25% occupancy in Restuarants Cory Miner EB5 Solutions Houston Texas cjjminer @icloud.com
Hi Suzanne, I have been listening to your comments, and reading your reviews close to 1 year. I haven’t learnt more about Eb-5, through my law professor, than I have learnt through your blogs and articles. So thank you once again. I chose not to go for Eb5 primarily due to delays, and too much hassle. Thankfully, it was a right decision as India went into retrogression. Do you really think, the way congress works, its near possibility that congress genuinely will be thinking of attempting to improvise Eb5 reform and make USCIS work genuinely, especially till next elections dust settles. Rather, taking another country citizenship, and coming on E-2 is much easier, than Eb-5 route. What do you think, especially from Indian Standpoint?
I see no possibility of positive action as of this moment, but trying with this article to help contribute to an environment/mindset in which positive action could be possible. I hope that others will join me in the attempt. EB-5 could be a good route, if only….
Taking Grenada or Turkey citizenship still doesn’t guarantee that you’d get your temporary green card in less than 7 years. The smarter option is to do the “L1A + EB-1c” route, which helps Indians get their PERMANENT green cards in less than 5 years.
Hi Suzanne
Thank you for your valuable insight and information. In one of your old post there is this link
Click to access I-526_Approvals_Denials_and_Receipts_for_Q1_of_FY19.pdf
The above list shows the i526 applications and the dates received with the status of acceptance, denial and received . All the applications were listed as (B)(6) under Receipt Number But none with (B)(5) Receipt Number .
. What happens to the applications with (B)(5) Receipt Number ?? Would like to know as mine fall under that category….
Thank you and appreciate your hard work in advance!!
In truth I did not pay attention to the receipt number column in that file since all the entries were identical. I do not know what (B)(6) refers to. Maybe you can educate me on this?
https://www.uscis.gov/laws/admin-decisions
Thanks for the reply Suzanne .
I wish I knew the answer.
Excellent observations! Thank you for sharing. The US is becoming more complicated and polarized, between gateway cities and heartland countryside, between rich, middle class, and poor, between Wall Street and Main Street, between large corporate and small mom and pop. Consequently, consensus is harder to reach: health insurance, environmental standard, and we all know very well – EB5.
How do we let the system generate rules that are fair, well thought for long term benefits, and quickly? It is challenging
First, like you said, information transfer can be very difficult. The EB-5 program is complicated and it is a lot of effort to educate the decision makers of this giant society.
Second, accurate and efficient transfer of information is comprised by politics and money. You did an excellent analysis on this one already.
Third, different groups and different parts of the country have different goals. It is hard to come up with something that everybody likes.
It is very hard to fix #1 and #2 unless we fundamentally alter our federal political system. It is just a reality. I just hope, as the immigration reform takes place in the future, EB-5 will receive its fair evaluations.
For #3, maybe we can create something similar to the Canadian system and issue regional based “investment based residency and work permit”? I would image areas in rusty belt they would welcome such a program, which brings in population and investment that they have been losing for decades? In big cities where homeless, house affordability, government deficit are issues, they can create something that would encourage capital flow to fill these gaps, and etc.
Thank you for this excellent comment! I wish your thoughts could be published more prominently.
Dear Suzanne,
Is there a way to let congress know, that they have committed a disaster by increasing the Eb-5 limits, as is evident from dropping I-526 filings, besides forgetting the fact that source of funds is impossible for 9,00,000 or 1.8 mil limits, especially when at lawyer level we are looking for tax paid amounts, which is almost impossible in almost all the developing countries, if we look in realistic terms. Thirdly, For example countries like India have close to 8% interest rate benefit if they keep money in back account, and on the other hand putting that money at risk, is becoming totally useless offer for them, besides retrogression. All these issues are making America, devoid of any investment whatsoever.
If you are living in the US, you could try the old-fashioned method of contacting your Congressional representative. In fact USCIS, not Congress, increased the investment amount (and USCIS received a lot of industry feedback when they did this) but Congress has power to reverse the change.
I’d argue with Chinese investors stuck in queue for decades, increasing the limit is the fair thing since it gives them a chance to get their green cards in a reasonable timeframe. Once the queue has been flushed, I agree the amount should be adjusted upwards or downwards to match the 10000 visa annual limit.
We agree!
At this time, we think 2020 quota would be wasted, Would these quota be transfered to 2021 fiscal year?
Unused EB5 this year goes to EB1 for next year. Unused Family Based visas this year (of which there will be a large amount), will go to EB1 through EB5.
EB-1c doesn’t require source of funds documentation and costs half as much and takes less than half the time as EB-5. The INR usually drops at least 7-9% every year, so don’t forget to factor that in when speaking about interest rates.
We may have to start over with a new program. Too many people are unhappy and it is difficult to ascertain what the objective of the program really is at this point.
Hi Suzanne,
My application just got an RFE request. I’m from India and my i526 was pending for more than 2.5 years. While I’m happy to finally see some movement, any stats or thoughts on number of petitions that were served an RFE that were ultimately approved? I still don’t know the contents of the RFE in terms of whether it is project related or source of funds related as we are awaiting the formal mail.
Frustrating to say the least.
Thank you in advance!
Hi Thengai,
USCIS publishes statistics about denial rates, but not about I-526 RFEs. Anecdotally, it appears that since Sarah Kendall took over as chief at IPO, the majority of I-526 have received an RFE before approval — especially if the I-526 had been pending for a year or more. I personally have seen multiple RFEs that did not even raise any problems, but basically just requested an update on the status of the project and job creation. Also a number of RFEs that asked an incredible number of incredibly minor questions. So the fact that you’d get an RFE is no surprise, at least, and does not place you in a minority. It may be a pain, however, based on what I’ve seen. Best of luck as you and your lawyer figure out your response!