Over the years, the EB-5 visa, which stands for employment-based fifth preference visa, has proven to be a viable and straightforward route for foreign nationals to get permanent resident status in the United States.
While the EB-5 Immigrant Investor Program offers several benefits to foreign nationals seeking U.S. permanent resident status and allows them the freedom to live, work, study, and retire in the United States, it also bolsters the U.S. economy by generating capital, creating jobs, and improving regional productivity.
What is the EB-5 Program?
The EB-5 program, administered by United States Citizenship and Immigration Services (USCIS), was introduced by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by immigrant investors. The program enables foreign nationals and their dependent family members to apply for lawful permanent residency, also known as the Green Card. Investors qualify by making the necessary investment in a commercial enterprise in the United States and creating 10 permanent full-time jobs for qualified U.S. workers.
In 1992, the EB-5 Regional Center Program was established, which increased the efficiency of the EB-5 program by encouraging investments in commercial enterprises associated with regional centers approved by USCIS.
Why Has EB-5 Visa Demand Surged Exponentially?
After a nine-month suspension and much anticipation, the EB-5 Regional Center Program was reauthorized for another five years through September 30, 2027, by the EB-5 Reform and Integrity Act of 2022 (RIA) enactment on March 15, 2022. The new legislation also introduced substantial reforms in the program offering more stability and security to investors.
With the passing of the RIA, the number of applications for the EB-5 visa has seen a sharp rise, especially from Indian nationals. Increased transparency and accountability measures in the EB-5 program have renewed the confidence of investors who are increasingly viewing the EB-5 visa as a fast-track and direct route to permanent residency in the United States as opposed to other popular visas, such as F1 student visa and H-1B work visa, which only offer a temporary resident status.
Reports suggest that demand for the EB-5 visa from Indian citizens increased by 400% between 2016 and 2019, reaching 1,381 in 2022 — the highest number of applications in any year. Some of the reasons for this surge are explained below.
To be eligible for the EB-5 visa, the applicant must invest a minimum capital amount of $1,050,000 for standard investments. However, the threshold amount for investment in a targeted employment area (TEA) or in a regional center-associated infrastructure project is considerably lower at $800,000.
Since the minimum required capital may eventually increase to adjust for inflation, many investors are filing their applications early to benefit from the existing lower threshold. Due to the grandfathering provision of the RIA, investors who have already filed their petitions will not be affected by any later increase in the minimum capital requirement.
Set-Aside Visas, H-1B Workers, and Indian Overseas Tax Hikes
Further, as an incentive to investors, the RIA created a new category of set-aside visas within the annual visa quota for the EB-5 program, reserving 10% for investments in high-unemployment areas, 20% for investments in rural areas, and 2% for investments in qualifying infrastructure projects.
As these set-aside visas will have less processing time, applicants are proceeding to file their petitions quickly before the limited supply under this category runs out.
This is an invaluable opportunity for Indian investors to avoid years-long processing delays
Another major reason for the increased demand for EB-5 visas is the recent spate of layoffs in the U.S. tech sector, which is mainly dominated by Indian H-1B visa holders. Facing a bleak job scenario and risk of deportation, Indian immigrants with sufficient capital are increasingly considering the EB-5 program as a more reassuring route to U.S. residency.
EB-5 transactions by Indian investors have also seen a surge in a bid to avoid an increase in Tax Collection at Source (TCS) announced by the Indian government on overseas remittances — from 5% to 20% — expected to come into effect from July 1, 2023.
As a result of the huge influx of EB-5 visa applications and enhanced regulations post-RIA, the EB-5 investment industry is evolving rapidly to witness unprecedented growth and provide valuable funding to U.S. businesses.
For further information on beginning the EB-5 process as an Indian national or raising EB-5 funding, schedule a free consultation with EB5AN.