We are now only a few months away from 21 November 2019, when the changes to the EB-5 Investor Visa application process will enter in force.
First of all, it will become more expensive to participate in the EB-5 visa program. It was possible for persons to invest in business entities in low employment and distressed areas, providing that their investment creates at least 10 jobs directly (or indirectly), through an investment of $500,000.
However, the recent changes mean that from November 21 onwards, the minimum EB-5 investment amount will be a minimum of $900,000. Where investment is made outside of a targeted employment area (‘TEA’) the starting investment amount for the EB-5 program needed will increase to $1.8 million.
For investors who were considering pursuing the EB-5 visa, questions have now been raised as to its affordability and whether alternative destinations would be preferable. Given the deep implications it is not surprising that applicants and professionals navigating the EB-5 framework are seeking clear answers.
As mentioned, the amendments to the EB-5 rules will affect the way that TEA locations are determined. To date, states have had the authority to determine their own tracts for the purposes of attracting foreign investment.
However, the new regulations place such decision-making authority with the USCIS. This shift towards centralization in practice means that it will probably much harder for an urban area to be deemed a TEA.
According to senior staff at the USCIS such as Ken Cuccinelli, the new rules are aimed at reducing fraud and gerrymandering so that the discounted investment quantum is reserved for locations in high needs of job creation.
There is still a couple of months before the laws take effect, and investors can take advantage of applying while the minimum investment amount is still $500,000.