Our last article shared an accurate status of the EB-5 Immigrant Investment Visa, explaining that, while much of the news reported about the program sounds bad, that is not entirely the case. Sometimes, wrong stories just get more press. Our previous article focused on the realities of pending EB-5 legislation. Be sure to read it and understand that bills pending bills in Congress does not mean that any changes will happen.

Let’s deal with the “what is” instead of the “what ifs.”

#1 - Direct Investment

The direct investment option was and still is the fundamental underpinning of the EB-5 visa program. The direct investment option puts the investor in much closer relationship to his investment. With the direct investment option, the investor may:

• Create his own new business.
• Invest in an existing business.
• Invest in an existing, troubled business to help it recover and save jobs.
• Purchase a franchise.

If an EB-5 petitioner is willing to fund a project in a rural location or a Targeted Employment Area that is based solely on its existing high unemployment rate, the investor:

• Is not dependent upon political redistricting to create a previously non-existent TEA to substantiate a multi-million-dollar project.
• Is not dependent on the actions of a multitude of individuals and factions over which he has little or no influence or control.

A Direct Investor puts some skin in the game. Although the investment must still be “at risk,” the investor may put himself (or herself) in a position to be able to mitigate the risk by participation in the actual management of the venture.

The Direct Investor must still create (or, in the case of a struggling business, save) 10 jobs for American workers, but they do not have to be created until a year and a half after their I-526 application has been approved.

#2 – Alternative Entry Options

We have mentioned these in previous articles, but a summary here is worthwhile.

The interested immigrant may pursue a different visa status. Some Chinese and Russian candidate may be eligible to enter the U.S. through the EB-1C, EB-2, EB-3, and L-1 Visas options. Please click on the links to read the articles for more in-depth information to help determine if any of these paths are potential options for you and your family.

And remember, the United States is not anti-immigration. America is a country built on immigration and built by immigrants. The current administration is focused on growing the U.S. economy. They know that cannot be done by keeping immigrants out, but by attracting the right immigrants so that they, too, can prosper and enjoy the land of the free and the home of the brave.

Sometimes it seems all news about the EB-5 Immigrant Investment Visa is bad.

The good news is that not all the bad news is completely accurate. For instance,

News: If Congress fails to pass impending spending legislation, the EB-5 program will no longer be available.

Not true.

Fact. If Congress fails to pass impending spending legislation, it will more like pass yet another Continuing Resolution that funds government programs in question just as they are currently funded and have been for the past several years.

Fact: Only the continuation of the EB-5 Regional Center program might be at risk. If Congress passes a Continuing Resolution, the program will continue.

Fact: The EB-5 Direct Investment program will continue regardless.

News: Congress is considering revisions to the EB-5 program.

True, but not entirely factual.

Fact: There have been and are several Bills submitted for Congressional consideration and approval.

• Senate Bill S.232 was introduced by California Senator Diane Feinstein on January 24, 2017. This bill proposes the termination of the EB-5 program and reallocating the 10,000 visas set aside for EB-5 to other EB (employment-base) visa classifications. The bill was read twice in the Senate Committee on the Judiciary on January 24^th. No other action has been taken.
• House Bill H.R.1502 was introduced by Iowa Senator Steve King on March 10, 2017. This bill proposes the termination of the EB-5 program. The bill referred to the House Committee on the Judiciary on March 10th, then referred to the Subcommittee on Immigration and Border Security. No other action has been taken.

Fact: On average, more than 10,000 bills are introduced during every Congressional term. Only 4% (400) of all bills introduced ever become law. It has been rightly said that most bills introduced in Congress are dead on arrival when they are submitted to a committee.

Fact: Conversely, over 90% of all bills that are introduced fail.

Fact: Expert analysis currently gives S.232 a 15% chance of becoming law.

Fact: Expert analysis currently gives H.R.1502 a 21% chance of becoming law.

While others may be alarmists, often with the possible motive to gain clients, American Corporate Services, Inc. is committed to integrity. Part of that commitment is providing clarity when others are saying that the sky is falling.

Granted, the EB-5 program has its problems, but they are not fatal to the program. We will continue to provide additional clarity in our next article. Specifically, that article will address options available for EB-5 applicants, particularly with respect to quicker processing.

Recently we have published articles discussing the potential of using EB-1C and E-2 visas to expedite investor immigration into the U.S. Both avenues have the advantage of shorter processing times and significantly less up-front investment.

This article provides a comparison of the EB-1C and E-2 visa programs to help our clients and readers understand which approach may be the best for them and their families.

Review

Benefits

The following table offers a bit more insight into how these two visa’s compare.

Basics

This information is a very simple overview to help potential applicants determine which path, if either, might be preferable to pursue. Please understand that each path is complicated and detailed and should not be pursued without expert legal advice.

No one can rightly say how fast news travels. One thing is for sure, however. That is that “fake news” travels faster than the truth. The digital age has dramatically disrupted the reporting of news. Nearly anyone on the planet can post comments on the internet and appear to have factual information. “News” of the demise of the EB-5 Investment Visa program is a prime example. People from Indianapolis to India and from Beijing to Birmingham have been misled into believing that the EB-5 program is about to end.

The EB-5 program is not over nor will it end soon.

As is typical with programs that broaden their scope over time, the definition of the EB-5 program has expanded with it. Both the original EB-5 Direct Investment program and the later EB-5 Indirect Investment program have become collectively known as EB-5, with little differentiation between the two aspects of the program.

Any current mention of the potential end of the EB-5 program should refer exclusively to the Indirect Investment component otherwise known as the Regional Center program. It is additionally essential to understand that the major issue with the Regional Center program is the continuing uncertainty of its existence.

The original EB-5 program

EB-5 entrepreneurial visa was introduced in 1990 for the express purpose of stimulating the U.S. economy by using private foreign investments as capital expenditures to create jobs. Interested investors needed to:

• Invest USD 1 million that was proven to be lawfully sourced.
• Or, alternatively, invest USD 500,000 in a lawfully designated Target Employment Area (TEA). A TEA was defined primarily as a rural area or an existing area where the jobless rate was 50% higher than the national average.
• Create 10 full-time jobs in a new commercial enterprise.
• Have their funds entirely at risk (just as any business owner would).
• Be involved in the management of the enterprise.

Note: We shall explain some of the preceding terms in more detail in a future article.

The 1993 “EB-5 Regional Center” program

The EB-5 program was expanded by Congress in 1993 in an attempt to make it more attractive to potential investors. What is now known as the Regional Center program was introduced as the “Pilot Immigration Program.” This new part of the program allowed for the creation of a new commercial enterprise to fund the building of a USCIS-approved project. Although the investment amounts and risked remained the same, entities functioning as Regional Centers could aggregate investments to fund major, multi-million-dollar investments and the investors did not have to participate directly in the management of the project. That responsibility was now on the Regional Center.

It is the Regional Center program that has been and is, in jeopardy. It is the Regional Center program that some people consider as “flawed” primarily because of proven cases of fraud and gerrymandering of areas to create new TEAs. Multiple efforts to revise the program have met with failure in Congress, typically dying in committee in the draconian process of legislation.

The actual status of the Regional Center program

The EB-5 Regional Center program is currently funded under a Continuing Resolution (CR) that temporarily extends 2017 spending programs through December 8, 2017. At or before that date both houses of Congress will have to pass a permanent spending measure to fund the government for 2018.

The Regional Center program is not alone. All other non-essential government-supported programs, such as the National Institutes for Health (NIH), are at stake.

No one knows to a certainty what the Congress will do. We have to wait and see. In the meantime, those who wish to utilize the EB-5 Investment Visa program – and not worry – may want to consider doing so as a Direct Investor.

If you have questions, we have answers. Contact us. We are here to help you.

The EB-5 Immigrant Investor Visa program and the Regional Center program will remain in effect and unchanged until December 8, 2017.

On Friday, September 8, 2017, the White House announced that the President signed into law:

Readers will notice that there is no mention of the EB-5 Visa program in the White House press release because it is included in Division D as part of the short-term continuing resolution that essentially keeps extends funding for all covered government activities. The continuing resolution is popularly referred to as avoiding a government shutdown.

Congress will have to act on the EB-5 program once again by December 8th at the latest. Look for our next article which will explain the options that Congress will have.

Little Known Facts About EB-5

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