Created in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors, the EB-5 Immigrant Investor Program has long been a popular pathway for foreign investors seeking permanent residency in the United States.
The program’s appeal went up a notch after the EB-5 Reform and Integrity Act of 2022 announced extensive reforms in the program and several new incentives for investors considering an EB-5 investment. In particular, the new legislation introduced provisions to encourage rural investments and expand the reach of the EB-5 program in areas that need it the most.
RIA Focus on Rural Areas
Lower Minimum Investment Amount Requirement
20% Set-Aside Visa Quota
Priority Processing for Rural Area Projects
Importance of Due Diligence
RIA Focus on Rural Areas
The EB-5 Reform and Integrity Act, also known as the RIA, was signed into law by the U.S. Congress in March 2022. The EB-5 program saw many welcome changes that breathed new life into the EB-5 industry. Primarily, it reauthorized the expired EB-5 Regional Center Program for another five years through September 2027 and implemented substantial reforms to make the EB-5 program more transparent, safe, and efficient.
A major goal of the new EB-5 law is to develop areas of low economic activity by redirecting EB-5 capital away from big cities and toward rural and high-unemployment areas—known as targeted employment areas (TEAs). The infusion of foreign investment in such areas can immensely benefit communities through job creation and improved infrastructure, enhancing their overall quality of life.
To draw investors’ interest toward such areas, the RIA offers certain advantages to investors, such as lower minimum investment amount, set-aside visas, and priority processing for rural area investments. In this article, we will explore these provisions of the RIA and understand how investors can make an informed decision on their EB-5 investment.
Lower Minimum Investment Amount Requirement
As per the USCIS website, “A rural area is any area other than an area within a standard metropolitan statistical area (MSA) (as designated by the Office of Management and Budget) or within the outer boundary of any city or town having a population of 20,000 or more based on the most recent decennial census of the United States.”
At the outset, the RIA offers the primary advantage of a lower minimum investment amount required for investing in a rural EB-5 project. While a standard investment requires a minimum capital of $1,050,000, both rural and high-unemployment TEA proejcts ahve a much lower threshold of $800,000. This reduced capital requirement makes it easier for investors to consider making an EB-5 investment in a rural area.
20% Set-Aside Visa Quota
In a significant move to diversify EB-5 investments, the RIA allocated 32% of the total EB-5 visa quota as set-aside visas, reserving 20% visas for rural areas, 10% for high-unemployment areas, and 2% for developmental infrastructure projects.
This reserved category of visas can be a game-changer for EB-5 investors from high-demand countries, such as China and India, who often face long delays in receiving their Green Cards due to heavy backlogging.
Chinese and Indian nationals investing in projects that qualify for set-aside EB-5 visas will not need to queue up in the unreserved category with long waiting times. So long as the set-aside quota is available, applicants who invest in rural areas can potentially obtain an EB-5 visa after their I-526 petition is approved, cutting short the waiting time by years.
Chinese and Indian investors can bypass the backlog by utilizing the 20% set-aside visa quota for rural investments before it is depleted.
Priority Processing for Rural Area Projects
As an added benefit, the RIA stipulates that investors who choose to invest in projects located in rural areas are eligible for priority processing of their EB-5 applications. The new law aims to expedite the adjudication of petitions for rural projects by prioritizing them over other petitions.
The priority processing clause will ensure that the petitions of rural investors will be processed significnatly faster. Many recent rural TEA investors have received Form I-526E approval in as little as 11 months.
This incentive has piqued the interest of potential EB-5 applicants, and it is advisable for Chinese and Indian investors to apply early to avoid any eventual backlog in this category as well.
Importance of Due Diligence
Although the RIA has incentivized rural investments for EB-5 visa applicants that can boost rural economies and help project developers raise funds, investors must exercise caution and conduct due diligence before selecting a project.
Rural projects may present unique challenges and risk factors such as financial viability, job creation potential, and logistical challenges during construction that must be deliberated upon before committing to an investment. The project developer’s credentials must also be investigated carefully.
By making an informed decision, investors can confidently navigate the EB-5 rural investment option with all its benefits.
