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U.S. EB-5 Program

Top Three EB-5 Program Myths: Fact vs. Fiction

16 May 2017

Top Three EB-5 Program Myths: Fact vs. Fiction
In recent headlines, the U.S. EB-5 Immigrant Investor Program caught the attention from industry advocates and critics alike when the sister of Jared Kushner visited China to promote the program to foreign investors—specifically those willing to invest a minimum of USD $500,000 to fund American businesses and job creation. Many assumed Kushner’s pitch was a means to “sell citizenship” to the highest bidders, and naturally this raised concern across partisan lines in the United States.

On the surface, it’s easy to assume that the U.S. EB-5 Program is in fact “selling” a chance to enter the U.S. for a price. This, in fact, is an erroneous claim. There are many misconceptions and misunderstandings about the U.S. EB-5 Program itself, and this blog will attempt to debunk the most common myths associated with it.

Myth 1: The EB-5 Immigrant Investor Program is Selling Citizenship

First and foremost, the U.S. EB-5 Program does not offer investors U.S. citizenship, but a U.S. Green Card (permanent residency visa)* to qualified investors and their immediate family members. A U.S. Green Card is granted by U.S. Citizenship and Immigration Services (USCIS) which allows the holder to live and work in the United States on a permanent basis. There are several ways to obtain a U.S. Green Card, and the U.S. EB-5 Program remains the only legal route for foreign investors to obtain a permanent residency visa since the program was launched in 1990.

While the U.S. EB-5 Program offers a route to U.S. citizenship later on, it takes a minimum of 5 years of physical residency to even apply, and if all eligibility requirements are met by the applicant. For non-U.S. citizens, this includes preparing your N-400 Form, or Application for Naturalization. This is in addition to the extensive list of supplementary documents needed by U.S. Citizenship and Immigration Services (USCIS). Obtaining citizenship in the United States takes time and effort, and it is in no way guaranteed by the U.S. EB-5 Program.

*Even though the U.S. EB-5 Program does not provide a direct path to citizenship, it’s important to keep in mind that the EB-5 application requires thorough proof of investment in a qualified project. It also requires evidence of an investment of USD $500,000 and the creation of 10 jobs for U.S. workers.  The applicant’s application is screened and, if approved, only a “conditional Green Card” is granted. The same in-depth review of the project and the applicant's background are conducted 2 years after conditional status is granted to ensure the individual’s continued eligibility for the U.S. EB-5 Immigrant Investor Program. Only after the 2-year period can the individual apply for the conditional residency status to be removed.

Myth 2: U.S. EB-5 Investments do not Help the American Economy

When it comes to U.S. EB-5 Program myths, this is probably one of the most inaccurate (or blatantly false) claims by EB-5 Program naysayers. Since the initial launch of the U.S. EB-5 Program in 1990, foreign investment through the program has peaked at billions of dollars. It’s important to keep in mind that the U.S. EB-5 Program has sustained through several presidencies, including two Bush administrations, as well as the Clinton, Obama, and now Trump administration. Under each presidency, the U.S. EB-5 Program has consistently fueled the American economy and job market through development projects across the nation—and without adding a penny to the annual budget deficit. Even throughout the financial crisis of 2008, the U.S. EB-5 Program remained one of the few avenues to generate capital that helped sustain the American economy.

Today, the U.S. EB-5 Program is still an integral job-creating machine that comes at very little cost (if any) to U.S. taxpayers. In January 2017, the Department of Commerce and Economics and Statistics Administration (ESA) released an economic impact assessment of the U.S. EB-5 Program for the fiscal years 2012 to 2013, which stated the program had generated more than USD $5 billion in foreign investments while creating over 170,000 jobs nationwide (about 4.3% job growth for those years). Taken as a whole, job creation estimates as a result of the U.S. EB-5 Program will likely top 800,000 (or approximately 8% growth) for American workers for between 2012 and 2016.

Myth 3: Reforming U.S. EB-5 Regulations will End the Program

As of May 5, 2017, U.S. Congress granted another continuing resolution for the U.S. EB-5 Program until September 30, 2017. Despite the last-minute extension, the program has continued as-is without any reform to investment amounts or regulations.

Currently, the minimum investment amount for the U.S. EB-5 Program is USD $500,000, a number that has remained the same since its inception. However, the U.S. government released an EB-5 Immigrant Investor Program Modernization proposal in January, which would substantially increase the minimum investment between USD $1.35 million and USD $1.8 million, depending on the location of the EB-5 project. Although some immigration experts and insiders have indicated the increase will deter potential investors from applying, the termination of the U.S. EB-5 Program is an improbable result of the proposed reform measure.

While the investment amount increase is part and partial to economic inflation, the U.S. EB-5 Program remains one of the most competitive Residency by Investment Programs by comparison to Canada and Europe—and for several reasons.

For many hopeful immigrants, the United States is still regarded as the premier destination for foreign nationals who want to enter the “Land of Opportunity.” In terms of success, immigrants from all over the world have flocked to the U.S., building multi-billion dollar corporations in the process through their successes in business innovation and entrepreneurship. For this reason, it’s fair to argue the “American Dream” is invaluable to individuals determined to achieve it.

In economic terms, the U.S. continually ranks as the world’s strongest economy, with a projected GDP growth of over USD $20 trillion by the years 2020. For business-minded individuals, entrepreneurs, and investors, the U.S. EB-5 Program offers applicants the opportunity to enter this dynamic economy through business ventures that include purchasing or expanding commercial enterprises or investing in Regional Centers. Certainly, some investors may not see this as a large enough incentive to apply to the U.S. EB-5 Program, but for those striving for the “American Dream,” it is.

Finally, as with all issues surrounding immigration, there is debate. The U.S. EB-5 Visa Program, whose aim is to bring foreign investment and create jobs to American workers, is no exception. For years, the program has been accused of “selling Green Cards to wealthy people” and being more vulnerable to fraud than other programs. Those myths are hardly supported in reality, and what is typically missed is the constructive impact the U.S. EB-5 Program has made. The main goals of the U.S. EB-5 Program are to create new jobs for the nation and support financial development. With a track record of over 30 U.S. EB-5-related projects—from providing defensible job projections to assessing the feasibility of an EB-5 application—we have witnessed the critical impact the program has made across the U.S. In Florida alone, there have been great returns.

For more information on the U.S. EB-5 Immigrant Investor Program, please click here.

For more information on U.S. EB-5 Projects in Florida, please click here.

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