All About The EB-5 Investment Program

Investment Research
Investment Research

The EB-5 investment program is actually a visa investment program designed to bring in an infusion of fresh cash into the US economy by the issuing green cards to foreigners who invest in the country, especially the lower-income areas.While the underlying principle is simple, there is still some difficulty understanding how the program actually works and how it is being implemented.
Very briefly, however, the EB-5 investor program requires interested applicants to invest at least $1 million in an existing US business, use at least $500,000 to stimulate the economy of a poverty-ridden area, or make or preserve at least ten jobs. Once an applicant meets any of the requirements, he or she is granted permanent residency or issued a green card.

The money coming from the EB-5 program is managed by the different regional centers. These regional centers are authorized by the US immigration service to pool the money and develop projects. You will be surprised to know that these regional centers are run by private organizations, although some are run by local government.

In areas where there is a high unemployment rate, the minimum investment amount is reduced to $500,000. These areas are designated at Targeted Employment Areas or TEAs. A local area can only be considered a TEA if its unemployment rate is at least 150% higher than the national average.

The number of new immigrants that come to the US through the EB-5 investor visa is actually small – less than one percent of green card holders every year. There are around 10,000 visas that are available every year to investors and their immediately family member. However, the highest number of admissions was in 2013, for 7,000 visas.

Despite its noble intent, some quarters have been quick to point out the high-profile cases of fraud involving EB-5 immigrants as well as the program’s innate vulnerabilities. However, nobody can ever deny that the program could potentially benefit local communities and the country overall, both in the long term and short term. To date, financing from the EB-5 program has been funneled largely to fund commercial-property development projects, building assisted-living facilities, and building manufacturing plants.

How difficult is it for an investor to get an EB-5 visa? It’s rather difficult especially when you consider that there is a complex network of intermediaries, which enjoy little regulatory oversight. In other words, accountability for how the money is spent is rather questionable.

Aside from this, the immigrant has to bear the burden of complying with the program’s requirements, even though they may know nothing and have little control over the investment process.

This situation is exacerbated by the lack of coordination between the local Economic Development Agencies or EDAs and the regional centers that manage EB-5 investment money. The lack of coordination means that interested applicants in the investor visa program have a dearth of information on which areas in the United States they can enter in as an immigrant. In other words, they don’t know what choices they have.