Like every other U.S. immigration program, the EB-5 Immigrant Investor Program has had its share of criticism since its introduction in 1990. While some of these stem from genuine concerns, most are based on myths and misconceptions about the EB-5 visa.
The EB-5 Reform and Integrity Act of 2022 (RIA) addressed the genuine concerns of critics and created more transparency in the EB-5 process. However, while EB-5 knowledge has significantly improved in the last few years, certain misconceptions persist.
In this article, we’ll separate myths from facts and correct some common misconceptions about the EB-5 visa.
Myth #1: “You Need to Have a Million Dollars in Cash in Your Bank Account.”
Myth #2: “You Can Simply Buy an Existing Business and Use It as Your NCE.”
Myth #3: “You Need to Be a Business-Savvy Entrepreneur.”
Myth #4: “You Personally Have to Do a Lot of Paperwork.”
Myth #5: “It Takes Many Years to Get a Green Card Due to Long Backlogs.”
Myth #6: “You’ll Be Stuck in Immigration Limbo in the U.S. While Processing Your EB-5 Visa.”
Myth #7: “It’s Mainly Targeted at Chinese and Indian Nationals.”
Myth #8: “It’s a Dead Investment Where You Simply Pay for a Green Card.”
Myth #9: “It’s Difficult to Meet the Job Creation Requirements.”
Myth #10: “Redeployment Is a Dead End.”
Contact EB5AN to Learn About the EB-5 Process
Myth #1: “You Need to Have a Million Dollars in Cash in Your Bank Account.”
This misconception is understandable given the substantial amount required for an EB-5 investment. Foreign investors must make a minimum investment of $1,050,000 in a new commercial enterprise, or $800,000 if the NCE is located within a targeted employment area.
However, you do not need to have a million dollars in cash in your bank account to qualify as an EB-5 investor. The EB-5 program allows prospective investors to combine capital from primary earnings, savings, inheritance, gifted funds, property sales, loans, and sales of market investments. However, you must provide documentation that proves the legality of all sources of investment funds.
You can also make a partial investment and commit to completing it within a set time frame. It complies with the criteria that the investment must be made or in progress at the time of filing the initial EB-5 petition. It is a great option for investors who need more time to liquidate assets at favorable rates.
Myth #2: “You Can Simply Buy an Existing Business and Use It as Your NCE.”
While the EB-5 program allows direct investments in existing or troubled businesses, you can’t simply buy an existing business and use it as your NCE.
If you purchase an existing business, you must make substantial material changes to the business structure and net worth. The business must also create at least 10 new full-time jobs in addition to existing ones.
In a case where you’re investing in a troubled business, the business must have existed for at least two years and turned in losses in the last two years. You must also show that your investment will make the business profitable and save at least ten full-time jobs.
Direct investments also come with other limitations, which is why more than 95% of all EB-5 investors do not opt for this model.
Myth #3: “You Need to Be a Business-Savvy Entrepreneur.”
You do not need a business background or experience to qualify as an EB-5 investor, especially if you’re investing through a regional center. With regional center investments, the regional center serves as the managing partner of the NCE and oversees its activities.
You’re coming in as a limited partner and have no active role in the day-to-day operations of the NCE. It is only a passive investment and you need no business background.
The EB-5 visa also has no nationality, educational background, or language proficiency requirements.
Myth #4: “You Personally Have to Do a Lot of Paperwork.”
The EB-5 program does require a lot of paperwork, but you don’t have to do it yourself. With a good immigration attorney and an experienced regional center, you won’t have to do much personally as they’ll handle the majority of the paperwork.
Your immigration attorney will prepare the paperwork involving the immigration aspects of the EB-5 program. This includes filing petitions such as your Form I-526E and I-485, employment authorization documentation, and advance parole. They’ll also help you obtain the required legal source of funds documentation.
The regional center will provide the relevant documents proving your investment in an approved EB-5 project. This includes a Private Placement Memorandum, EB-5 project financial records, subscription agreement, and job creation documentation, among many others.
Myth #5: “It Takes Many Years to Get a Green Card Due to Long Backlogs.”
Before RIA 2022, investors from visa-retrogressed countries such as China and India had to wait for several years to get a Green Card. But that’s no longer the case.
EB-5 investors can receive their Green Cards in less than 12 months with rural EB-5 investments. RIA sets aside 20% of the annual EB-5 allocation for rural investments and mandates USCIS to prioritize their processing.
Two of our clients who invested in our rural Twin Lakes project recently got their conditional Green Cards. You can read about their experience here.
Myth #6: “You’ll Be Stuck in Immigration Limbo in the U.S. While Processing Your EB-5 Visa.”
You won’t be stuck in immigration limbo even if your current visa is set to expire before you receive an EB-5 Green Card. Thanks to the concurrent filing option, eligible investors who are already in the U.S. on valid nonimmigrant visas can apply for adjustment of status, employment authorization documentation (EAD), and advance parole (AP) at the same time as their EB-5 petition.
You can get your EAD and AP within about 60 days of filing and start enjoying the benefits of a Green Card before receiving one.
Myth #7: “It’s Mainly Targeted at Chinese and Indian Nationals.”
This misconception stems from the fact that Chinese and Indian nationals constitute the largest percentage of EB-5 applicants since its inception. However, it’s not true.
The EB-5 visa is open to all and is a popular choice for many other nationalities. EB5AN has helped investors from over 60 nationalities obtain legal permanent resident status through the EB-5 program, including investors from Canada, Turkey, and the Philippines.
Myth #8: “It’s a Dead Investment Where You Simply Pay for a Green Card.”
While the EB-5 program guidelines stipulate that the investment must remain “at risk” for at least two years, that does not mean you’ll lose the investment funds. You can get your money back in full and even earn interest in a successful EB-5 investment.
However, your ability to recover your investment funds depends greatly on your choice of regional center and EB-5 project. Therefore, you must conduct a thorough EB-5 project risk assessment and regional center due diligence before deciding which to work with.
Myth #9: “It’s Difficult to Meet the Job Creation Requirements.”
While meeting the job creation requirement can be challenging for direct EB-5 investments, investing through a regional center makes it easier. Only full-time employees of the NCE count as qualifying job creation in direct investments, whereas direct, indirect, and induced jobs are counted in regional center investments.
EB-5 investors can meet the job creation requirement more easily by investing in an EB-5 regional center project that is in later stages of construction and has already created several jobs.
Myth #10: “Redeployment Is a Dead End.”
Although redeployment is a risk in an EB-5 investment, it is certainly not a dead end if you invest with the right regional center. If a project is successfully completed and you have not fulfilled the required investment sustainment period, your funds must be redeployed into a similar project to maintain your Green Card eligibility.
Most investors fear that regional centers may redeploy their funds without informing them or conducting proper risk assessments. While some regional centers do this, EB5AN takes a responsible approach to the redeployment of funds.
We inform clients and find similar low-risk projects with similar investment returns within the same geographical area. EB5AN has successfully redeployed several investor funds in the past, and our investors got their Green Cards. However, if you want to eliminate the likelihood of redeployment, it’s best to invest in a medium-duration rural TEA project with at least a five-year loan.
Contact EB5AN to Learn About the EB-5 Process
Thousands of foreign investors from various nationalities have benefited from the EB-5 program since its inception. Still, many prospective applicants may be hesitant to participate because of the numerous misconceptions and myths about the program.
If you’re considering participating in the EB-5 program, it’s best to consult EB-5 professionals like EB5AN for accurate information about the EB-5 visa. EB5AN has helped more than 2,300 families from over 60 nationalities relocate to the U.S. as legal permanent residents. We offer our clients first-rate, low-risk EB-5 regional center projects with a 100% USCIS approval rating to date.
To learn more about the EB-5 process, schedule a one-on-one call with our expert team today.
