Potential Improvements to the EB-5 Investment Industry

Many members of the EB-5 investment industry agree on the need for reform. Despite the program’s success at securing foreign capital for U.S. businesses, many of its regulations are either outdated or counterproductive for investors and U.S. business owners. Moreover, the yearly visa limit imposed on the EB-5 program by United States Citizenship and Immigration Services (USCIS) and the Department of Homeland Security (DHS) is often seen as restrictive given the remarkable demand for EB-5 investment projects, especially from countries such as China, India, Vietnam, and Brazil.

Perhaps the most notable recent change in the industry was the June 2021 suspension of the EB-5 Regional Center Program, which was the most popular EB-5 investment model for several years. As a result, numerous investors who subscribed to regional center-sponsored projects are now in processing limbo—USCIS is no longer processing their I-526 visa applications.

Historically, it has been difficult to reach an internal consensus within the EB-5 industry as to how the program should be reformed, and passing EB-5-related legislation in Congress is especially challenging. Still, making improvements to the EB-5 program is crucial; doing so will not only continue to promote immigration but will also ensure that billions of dollars of funding continue to reach U.S. businesses in need.

“Grandfathering In” Regional Center Visa Applicants

As mentioned previously, foreign nationals who invested in regional center-sponsored projects but did not receive approval for their I-526 petitions before the June 2021 expiration cannot move forward in the EB-5 process. This situation is clearly unfair to these investors—in good faith, they followed USCIS regulations and made qualifying investments. Congress’s failure to reauthorize regional center investment should not prevent these foreign nationals from pursuing the EB-5 visa. In addition, their patience may be growing thin—as of January 2022, it has been more than six months since the regional center program expired, and reauthorization is not guaranteed. The earliest the program could be revalidated is February 2022.

USCIS should enact a provision for regional center investors with pending I-526 petitions. Such an arrangement would enable them to move on with the process and potentially avoid widespread litigation against EB-5 projects—if it becomes clear that USCIS will reject pending I-526 petitions, these investors may feel forced to take legal action.

Avoiding EB-5 Visa Backlogs

Countries such as China and Vietnam have been subject to EB-5 visa backlogs, forcing investors to wait unreasonably long amounts of time to apply for and receive their two-year conditional permanent resident status. To the surprise of many industry members, the DHS cleared the backlog for China’s direct investors in the December 2021 Visa Bulletin. However, many countries may potentially face backlogs once more, especially if the regional center program is revalidated and applicant numbers surge. To solve this issue, many EB-5 industry members have recommended counting entire EB-5 applicant families—an investor, their spouse, and dependent children—as one visa. In this way, the approximately 10,000 visas allocated to the EB-5 program annually will be able to accommodate many more applicants, thereby reducing the backlogs.

Improving USCIS Processing Times

USCIS is known for its notoriously slow processing times for EB-5 visa applications. During the lapse of the regional center program, direct investors may be able to have their I-526 petitions adjudicated more quickly than usual, but the agency still needs to allocate more internal resources toward processing EB-5 visa applications. Some investors have even filed lawsuits against USCIS due to the long processing times.

Ur Jaddou, the current director of USCIS as of July 2021, has said she will work to shorten the EB-5 processing periods. Doing so will improve the EB-5 program’s reputation and perhaps motivate more foreign nationals to participate.

The EB5 investment industry certainly needs improvements, but these changes will only increase its success. Thousands of businesses across the United States are benefitting from timely EB-5 funding and staying afloat during these economically challenging times.