Why You Should Invest In an EB-5 Targeted Employment Area Project

Investing in an EB 5 TEA project is one of the fastest and cheapest routes to U.S. permanent residency.

The EB-5 Visa Program

The EB5 Immigrant Investor Program was created in 1990 by Congress to stimulate the U.S. economy via job creation and capital investment from foreign nationals. Shortly after, in 1992, the EB-5 Regional Center Program was established to attract more investors by offering regional center capital investments alongside the original direct model. (The regional center capital investment model allows entities known as regional centers to administer EB-5 funding across various enterprises.) Through the EB-5 program, applicants can obtain a U.S. permanent resident visa—also known as a Green Card—in exchange for making a qualifying capital investment.

To begin the EB-5 process, investors file Form I-526E, which United States Citizenship and Immigration Services will use to gauge the applicant’s compliance with EB-5 Immigrant Investor Program regulations. If Form I-526E meets program requirements and the investor is approved, they can move on to the next step: adjustment of status (AOS) or consular processing.

The process depends on the investor’s place of residence at the time of I-526E approval. Those outside of the U.S. must go through consular processing, while those inside the U.S. file Form I-485 and undergo AOS.

AOS allows an investor to obtain conditional permanent resident status, which remains valid for two years. Near the end of this period, the investor then files Form I-829 to remove the conditions on their residency and receive their permanent resident status Green Card.

What Are EB-5 Targeted Employment Areas?

Targeted employment areas are typically census tracts—or strings of census tracts—that have been determined to be in particular need of economic growth and employment.

One of the most appealing aspects of the EB-5 Immigrant Investor Program is the reduced capital investment minimum for a commercial enterprise located in a targeted employment area.

While other EB-5 commercial enterprises have a minimum capital investment threshold of $1,050,000, targeted employment area capital investments require a much lower $800,000. This option provides a more affordable route to investors. Moreover, it benefits the U.S. government by creating jobs and stimulating the economy in the regions that need it the most.

Types of Targeted Employment Areas

There are two main kinds of targeted employment areas: rural and high unemployment. There are specific sets of criteria that locations must meet in order to obtain targeted employment area designation. (Additionally, certain types of infrastructure projects can qualify for the benefits of targeted employment area designation.)

Rural Areas

Rural areas cannot be located within a metropolitan statistical area as designated by the U.S. Office of Management and Budget. Furthermore, rural areas cannot have a population greater than 20,000, nor can one directly border a municipality with over 20,000 inhabitants. The population and metropolitan statistical area data must be derived from the most recent ten-year U.S. census.

High-Unemployment Targeted Employment Areas

A region must have an unemployment rate of at least 150% of the national average to be classified as a high-unemployment targeted employment area.

How Targeted Employment Areas Benefit the EB-5 Immigrant Investor Program

As mentioned before, targeted employment areas are regions in need of economic stimulation, growth, and job creation. As part of its main objectives, the EB-5 Immigrant Investor Program works to provide targeted employment areas with EB-5 investment capital and jobs.

EB-5 investors who choose targeted employment area-based commercial enterprises can enjoy a significantly reduced capital investment minimum. This makes an EB-5 capital investment much more feasible for foreign investors and incentivizes economic development.

One of the main requirements for a successful EB-5 capital investment involves job creation. Every EB5 commercial enterprise must create at least 10 jobs per investor. As a result, targeted employment area status also promotes employment across the United States.

How EB-5 Targeted Employment Areas Can Result in Faster Immigration

Not only are targeted employment areas more affordable, but they can also provide a faster route to obtaining permanent resident status through the EB-5 Immigrant Investor Program. Thanks to factors such as priority processing of Form I-526E and visa set-asides, investors can enjoy a quicker immigration process than ever before.

The EB-5 Immigrant Investor Program operates on a quota system, with a limited number of visas made available to prospective investors every fiscal year. This can create processing backlogs in high-demand countries as visa demand exhausts the available supply. After an investor files their I-526E petition, they must wait for approval to then apply for an EB5 visa. However, dwindling supply can leave an applicant waiting many months or even years for their visa. Historically high-demand countries, such as China, India, and Vietnam, have often suffered from these backlogs and extreme wait times.

The EB5 Reform and Integrity Act introduced new regulations for EB5 visas, with 32% of the annual allotment of visas now reserved for EB 5 targeted employment area and infrastructure commercial enterprises. Of this portion, 20% is set aside for rural areas, 10% for high-unemployment targeted employment areas, and 2% for infrastructure projects.

With these new regulations on visa set-asides, investors who qualify for targeted employment area status can also qualify for a set-aside EB-5 visa and priority processing of Form I-526E. Once an investor sees I-526E approval, they can receive their visa regardless of their country’s demand or availability.

An EB5 investor in a targeted employment area project can “skip the waiting line” and obtain a U.S. Green Card much faster than they would otherwise.

How an EB-5 Commercial Enterprise Can Obtain Targeted Employment Area Designation

An investor must provide sufficient evidence in their I-526E petition that their commercial enterprise is located in a targeted employment area. Moreover, demonstrating a project’s targeted employment area status can be complex.

United States Citizenship and Immigration Services sets a high evidentiary standard, and requires all data to be up-to-date, verifiable, and consistent. It can be time-consuming for investors to find the right statistics and verify complete accuracy. If the provided evidence does not meet United States Citizenship and Immigration Services standards at the time of filing the I-526E petition, the investor will not be eligible for targeted employment area status or the reduced capital investment threshold.

In this section, we will cover the evidence required by United States Citizenship and Immigration Services to prove targeted employment area status and the various methods investors can use for this purpose.

What Kind of Evidence is Needed?

Proving rural area status to United States Citizenship and Immigration Services is relatively straightforward.

As mentioned before, a rural area must be outside of a metropolitan statistical area, house less than 20,000 people, and not border a town with a population over 20,000. Investors simply need to provide metropolitan statistical area information from the Office of Management and Budget and population data from the most recent 10-year U.S. census.

Proving targeted employment area status based on a high unemployment rate can be more complex.

According to United States Citizenship and Immigration Services, the evidence needed to prove an area’s high unemployment rate includes the following:

  • The location of the EB-5 commercial enterprise.
  • A map that clearly shows the census tract or tracts included in the proposed targeted employment area.
  • Statistics demonstrating the average unemployment rate of the targeted employment area and the national average.
  • The sources of all statistics used to demonstrate the national average and local unemployment rates.

High-unemployment targeted employment area designation requires data on both the area’s unemployment rate and the national unemployment average. Therefore, both statistics must be derived from the same source and cover the same time period.

High-Unemployment Targeted Employment Area Calculation Methods

While United States Citizenship and Immigration Services does not specify one particular calculation method for demonstrating targeted employment area eligibility, there are certain data sources that investors typically use. The first is American Community Survey (ACS) data, which are calculated at the census-tract level and released every five years.

The second data source for unemployment rates comes from the Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics (LAUS). This data is calculated at the county level. BLS and ACS data can be used concurrently to obtain an accurate estimate of unemployment levels.

BLS unemployment rate data is released on a monthly basis, but its annual statistics are typically used in targeted employment area status calculations. As the calculations must be made with the most up-to-date data at the time of I-526E petition filing, using annual data is more practical because it is valid for a longer period.

As mentioned above, unemployment rate data for an EB5 project’s area and the national average must come from the same source. Because the five-year ACS data focuses on census tracts, investors can solely use ACS data in their calculations for the national average and their commercial enterprise location.

Alternatively, if the above method does not indicate targeted employment area eligibility for the commercial enterprise, investors can instead use the census-share method, which combines the ACS data with BLS data to yield a more current estimate of national average and local unemployment levels. By comparing the census-level ACS unemployment data to the more current county-based BLS data, investors can estimate a more recent unemployment rate for the proposed targeted employment area.

The Importance of EB-5 Targeted Employment Areas

As regions in need of economic stimulation, targeted employment areas greatly benefit from EB-5 capital investment funding. New jobs are created, and the local economy benefits from the influx of capital into each EB-5 commercial enterprise. Moreover, targeted employment areas are also beneficial to EB5 investors. They offer a quicker pathway to U.S. immigration for a much lower price.

Overall, targeted employment areas are invaluable to the EB-5 Immigrant Investor Program, and are a great option to consider when pursuing U.S. residency or citizenship.

As a leader in the EB5 capital investment industry, EB5AN has helped thousands of investors secure U.S. residency. Foreign nationals interested in the program can take the next step by booking a call with EB5AN to learn more.