When Should EB-5 Investors Expect Backlogs in the Set-Aside Visa Categories?

The EB-5 Reform and Integrity Act of 2022 (RIA) was a historic legislation that brought in much-awaited reforms and many innovative provisions in the popular EB-5 program, making it even more attractive for global investors.

A significant addition to the program was the creation of new reserved visa categories within the total EB-5 visa quota. The RIA set aside 32% of the annual EB-5 visa allocation for investments made in designated targeted employment areas (TEAs), reserving 20% of the visas for rural area projects, 10% for high-unemployment area projects, and 2% for specific infrastructure projects.

The new set-aside visas have proved to be a game-changer for EB-5 investors, especially those with significantly backlogged Green Card queues. Restricted by a 7% per-country cap on visa issuance, investors from the two highest-demand countries—China and India—often had to wait several years for visa availability before they could receive their Green Cards. The set-aside visa quota provided an invaluable opportunity for such investors to skip years of waiting in the long pre-RIA queues.

Understandably, after the RIA came into effect, many investors took advantage of this provision by investing in projects eligible for set-aside visas, with many receiving their Green Cards within a few months. However, the reserved visas are limited in number, and it is feared that the reserved category may also become backlogged sometime soon due to the increasing volume of TEA petitions.

In this article, we will explore the availability of EB-5 reserved visas and understand why investors must review the advancing backlogs in these categories before investing.

An Overview of Set-Aside Visa Categories

The primary objective of the EB-5 Immigrant Investor Program is to stimulate the U.S. economy through foreign investment. The program offers permanent resident status to foreign investors and their dependent family members (the spouse and unmarried children under 21) in exchange for making a minimum investment in a new commercial enterprise (NCE) that creates at least 10 full-time jobs for qualified U.S. workers.

In order to encourage investments in projects that promote economic growth in underserved regions, the program offers several incentives to TEA investors. For such investors, the threshold investment requirement is only $800,000, as compared with the $1,050,000 minimum investment requirement for non-TEA investors.

As mentioned earlier, these investors are also eligible for the set-aside visa quota that can potentially shorten their EB-5 journey by years. The RIA particularly incentivizes rural area investments with the added advantage of priority processing, which means that rural TEA investors’ petitions will be adjudicated faster than other petitions.

With so many benefits, TEA investments saw a huge surge post-RIA. Among the three reserved sub-categories, rural and high-unemployment projects have mainly piqued the interest of investors and project developers. The infrastructure category is still new, and not too many projects qualify for the classification.

In the initial months following the RIA enactment, high-unemployment urban TEA projects were the most sought-after by investors due to their familiarity and easy availability in the market. Moreover, such investments are typically considered less risky as they are often fully capitalized and have significant job creation.

However, with a larger share of reserved visa quota (20%) and the added advantage of priority processing, the demand for rural TEA projects has gradually gained momentum. Since some of the fastest post-RIA approvals have been for rural investment petitions, many investors are now opting for low-risk rural TEA projects for fast-track Green Card processing.

Demand and Visa Availability for Rural and Urban TEA Investments

Recently released data shows that as of July 2024, nearly 53% of the total I-526E petitions filed post-RIA are for the high-unemployment urban category and 35% for the rural category. In absolute figures, the numbers are 3,435 and 2,294, respectively. Considering an average of 2.5 visas required per investment (for the family of the primary investor), the estimated demand amounts to about 8,500 visas for the urban category and 5,700 visas for the rural category.

In the upcoming FY2025, the EB-5 program is expected to receive 2000+ high-unemployment category visas and 4000+ rural category visas, including unused carryover reserved visas from FY2024 and the regular annual reserved visa allocation. So, if we compare this estimated visa availability with the corresponding demand, it is evident that visa shortage in the urban category is far more severe than in the rural category.

Consequently, new urban TEA investors from China and India will likely face extensive backlogs due to the high volume of applications from these countries and limited visa availability per country. In comparison, rural investors may have a very short backlog, if at all. That said, there are several factors that can impact the actual waiting time, and it is difficult to predict how much the backlog will be when a category becomes retrogressed.

Will Any EB-5 Reserved Category Become Retrogressed Soon?

Obtaining a Green Card through the EB-5 process involves two main stages: first, I-526E petition filing and approval, and second, immigrant visa application through consular processing (for investors applying from abroad) or through adjustment of status (for investors already in the United States on a nonimmigrant visa). While any number of applicants can file the I-526E petition, they can proceed to the next stage of filing the immigrant visa application only when visas become available for issuance. Due to limited annual visa availability and a 7% per-country cap, backlogs develop when more applicants reach the visa application stage than the number of visas available.

The November 2024 Visa Bulletin released by the U.S. Department of State shows that all EB-5 reserved categories are still “current” for all countries, which means there is no retrogression (cut-off dates for visa availability) yet in any of these categories.

For retrogression to set in, the number of EB-5 applicants reaching the visa application stage after I-526E approval must exceed the annual visa availability in that category. If that happens, applicants in the particular category will face backlogging.

As the high-unemployment category applications have significantly exceeded the estimated visa availability, projecting a shortage of 6,500 visas, retrogression in this category may occur very soon. Particularly, Chinese and Indian urban TEA investors could be facing a multi-year wait for visas due to the excess demand, but the actual waiting time will depend on how fast USCIS approves I-526E petitions.

In contrast, the rural category has a potential shortage of about 1,700 visas. This could lead to a brief backlog for rural investors, depending on petition processing times, visa issuances, and rollover visas. Even if a backlog happens, it would most likely not be more than a few months long due to faster processing of rural petitions.

Suitability of Rural and Urban Investments for Different Investors

Notwithstanding the backlog scenario, both urban and rural investments have unique advantages. There are excellent offerings in the market in both urban and rural TEAs, and investors must invest carefully after analyzing the pros and cons of each category.

By comparing the demand and supply of reserved visas, it can be estimated that investors from China and India could face at least a five-year backlog if they invest in the urban category. For such investors, the rural category is undoubtedly the better option. Not only is the backlog in this category expected to occur much later, but it may also not be very long.

Priority processing for rural TEA petitions is another definite advantage for investors seeking a Green Card in the shortest possible time.

Investors already in the United States on a valid nonimmigrant visa can benefit from the EB-5 concurrent filing provision that allows them to file their adjustment of status petition (Form I-485) simultaneously with their EB-5 petition (Form I-526E). Once they have filed both petitions, they can continue to stay in the United States as immigrant investors on “pending” status even if their temporary visa becomes invalid.

They also become eligible to apply for employment authorization documents (EAD) and travel permits, which are generally approved within a few weeks. This way, these investors can start enjoying Green Card benefits even if their immigrant visa application is delayed.

For investors who are not nationals of India or China, the benefits of an urban TEA investment may outweigh the waiting time for their Green Cards.

EB5AN Can Help You Make the Ideal Investment for Your Needs

With the introduction of set-aside categories, the EB-5 program offered new advantages to investors of TEA projects. As a result, both urban and rural categories have attracted investor interest, and the demand has surpassed the estimated supply of reserved visas. While backlogging in these categories seems inevitable, investors must assess the benefits of each type of investment to make the best choice for their immigration goals.

As a leading regional center operator, EB5AN can help you understand the trends in the EB-5 market so that you can make a well-informed decision.

EB5AN has helped more than 2,300 families from 60 countries relocate to the United States as lawful permanent residents. Our expert team has more than a decade of experience and offers some of the best urban high-unemployment and rural EB-5 regional center projects with a 100% USCIS project approval rate to date.

If you’d like to know more about TEA investments, book a free call with our team today.