The U.S. designed the EB-5 Immigrant Investor Program to help investors start a new life in the United States while boosting the U.S. economy. Since 1990, the EB-5 program has pumped billions of dollars into the U.S. economy and has created more than 100,000 jobs for U.S. workers. While critics of the EB-5 program have deemed it a “pay-for-residency scheme,” there are actually rigorous job creation requirements and antifraud measures in place to prevent such schemes.
The United States is not the only nation looking to draw in bright-minded foreign investors through an investment visa program, and with the increasing processing times for an EB-5 investment visa, foreign investors may look to seek an investment visa from other nations, such as Canada or Australia. However, there are two notable benefits of the EB-5 program that most foreign investors cannot resist.
Green Card Eligibility Extends to Dependents
Many potential EB-5 investors want to relocate to the United States with their family. Part of what makes an EB-5 investment so enticing is that green card eligibility extends to immediate family members. If an investor receives approval on their I-526 petition and is eligible for a U.S. green card, their spouse and unmarried children under 21 are also eligible to permanently reside in the United States.
With a green card, an EB-5 investor’s children has access to the invaluable educational opportunities in the United States. Green card holders can avail themselves to the U.S. public education system at all levels. Then, getting into a top-tier U.S. university is no small feat, but students applying as permanent residents have a higher chance of being accepted than international students. Permanent residents are also eligible to apply for financial aid and, depending on their college, may qualify for in-state tuition. Finally, without the employment restrictions of an F-1 student visa, permanent residents studying at U.S. universities can freely take up jobs to support their studies.
The Opportunity for Passive Income
The other major appeal for foreign investors to choose the EB-5 program is that the investment can be passive. Investors can invest through an EB-5 regional center, which pools the EB5 investment capital of numerous investors and manages the collective investment. Investors simply sign on as limited partners and vote on pertinent business decisions, a task that can be done remotely, whereas direct investors have to oversee the managerial duties at the new commercial enterprise (NCE).
Of course, an investor must take certain precautions, regardless of how passive their EB-5 investment is. When an investor makes an EB-5 investment, the investment capital must be “at risk” for the duration of the investment. This investment requirement is meant to prevent foreign investors from simply buying a U.S. green card—investors must be willing to put their capital at risk to obtain a green card.
EB-5 regional centers facilitate the visa process for investors. When making an EB5 investment through a regional center, investors do not have to reside in the same region as their investment. This opens up the possibilities for EB-5 investors—for example, they can invest in a top-quality EB-5 project in Georgia while settling down in Seattle.
With the Modernization Rule of 2019 raising the minimum investment amount for EB-5 investment projects, fewer foreign nationals are able to undertake an EB-5 investment. However, this isn’t all bad news—those who can make an investment under the new $1.8 million threshold (or $900,000, for projects in a targeted employment area, or TEA) may see higher interest rates. With the COVID-19 pandemic similarly wreaking havoc on the economy, the U.S. government may increase interest rates, and EB5 investments may suddenly become much more profitable.
