The Benefits Of EB-5 Rural Projects

One of the biggest challenges for prospective EB-5 applicants is choosing a project to invest in. But this was recently made easier thanks to the newly implemented Reform and Integrity Act 2022.

Now, applicants who invest in an EB-5 project located in a rural targeted employment area (TEA) will get a range of benefits. These include priority processing of their EB-5 Visa and a reduced investment amount. These benefits mean that investing in a rural TEA project holds many advantages compared to other options that potential EB-5 applicants have.

This article explains what a rural TEA EB-5 project is, the benefits of investing in one, and what to consider before you do so.

What Is a Rural EB-5 Project?

EB-5 developments located in certain areas may qualify as targeted employment area projects. These areas are designated as TEAs by United States Citizenship and Immigration Services (USCIS) and are usually:

✔️An area with 150% of the national average unemployment rate, or
✔️A rural area.
A rural area is defined as having no more than 20,000 residents, is not located in a metropolitan statistical area (MSA), and does not border a municipality with a population of 20,000 or more people.

The Benefits of Selecting a Rural EB-5 Project

Let’s look at the benefits of investing in rural EB-5 projects.

🚀 Reduced minimum investment amount

New investors who choose targeted employment area projects—whether defined as high-unemployment, rural, or infrastructure—only have to invest $800,000 into the commercial enterprise, as opposed to the standard minimum capital investment of $1,050,000.

🚀 Reserved visas

The EB-5 Reform and Integrity Act of 2022 created another significant benefit for investors in projects located in TEAs. This far-reaching reform of EB-5 policies, signed into law on March 15, 2022, sets aside a certain amount of the yearly EB-5 visa pool for investors in certain types of projects.

The United States limits the number of visas it issues every year. Each type of visa has a different limit for each country. If the visa type or country you apply from is oversubscribed, some applicants may have to wait until the following year, or longer, to get their visa. India and China currently have an EB-5 visa backlog.

32% of EB-5 Visas are set aside for TEA investments. This means visa applications for TEA investors and their qualifying family members receive priority processing. This allows them to immigrate much faster. In effect, TEA investors and their families can effectively “skip the line” ahead of other visa applicants.

The 32% allotment of reserved visas is broken down into subcategories:

• 10% are for investments in high unemployment TEAs.
• 2% are for investments in public infrastructure TEAs.
• 20% of EB-5 Visas are reserved for investments in rural TEAs

As you can see above, smaller percentages of visas are set aside for high unemployment and public infrastructure projects. The reason for this is that these projects have historically been very popular with foreign investors, which means that the number of set-aside visas available in these categories has now been limited.

On the other hand, a large number of visas are set aside for rural TEAs. This means many rural TEA investors are expected to have their visa petitions processed relatively quickly.

This makes a TEA project in a rural area an attractive option for EB-5 investors from oversubscribed countries like China or India.

Chinese and Indian investors can potentially get their Green Cards years faster through a rural EB-5 project.

🚀Priority processing

USCIS is known for its lengthy processing times for EB-5 Visa petitions. Foreign investors need to submit Form I-526 or I-526E after an EB-5 investment has been made, but applications can take years to be processed.

However, rural project investors now qualify for priority processing. Regardless of nationality, they may get Form I-526E approval in as little as 11 months.

Considerations for Investors in Rural EB-5 Projects

Rural EB-5 projects are enticing, especially for foreign investors from countries experiencing a visa backlog. However, these projects do entail unique challenges and risks, and there are a number of factors you’ll need to consider before you begin the process.

Rural EB-5 project red flags

Rural EB-5 projects pose several inherent risks due to their location. These include:

🚩 Rural areas often have low populations and a greater need for economic growth. These circumstances usually mean that rural TEA projects are smaller in scope than other EB-5 offerings.

🚩 Every EB-5 investor is required to create at least 10 jobs. The smaller scope of rural EB-5 projects could reduce their chances of meeting this threshold.

🚩 A TEA project in a rural area may rely on tourism for their success. As the COVID-19 pandemic has shown, tourism can be extremely volatile, and projects that depend on this industry may be less safe options.

Regardless of which industry an EB-5 new commercial enterprise operates in, investors should carry out thorough research on the project’s:

🔍 Management
🔍 Regional center sponsor (if any)
🔍 Capital structure

If a project’s business plan is well structured and the capital stack does not rely heavily on EB-5 funding for its successful completion, EB-5 applicants can invest with more confidence.

Direct or regional center investment

The first step to identify a suitable EB-5 investment project—including a business in a rural TEA—is to decide between the program’s two investment options: the direct model and the EB 5 regional center program.

💸 Direct investment project: A foreign national invests directly into the business with no third-party intermediaries involved. Moreover, a direct project’s job creation must be made up of full-time positions that appear on the company’s payroll.

💸 Regional center investment: The EB-5 applicant’s investment capital is managed by a regional center. Regional center investments have more relaxed job creation requirements. Investors can count indirect and induced employment alongside direct jobs (standard full-time positions) toward their quota.

Indirect and induced jobs are a result of a project’s overall economic impact, and the ability to count these jobs makes it easier for EB 5 regional center program investors to create at least 10 new job positions.

Financial risk

Regardless of which investment type a foreign national chooses, they will have to do careful research on available new commercial enterprises to minimize financial and immigration risk.

EB-5 investors typically face a considerable degree of financial risk. USCIS structured the EB-5 Immigrant Investor Program in such a way that no investor has a contractual right to repayment or similar guarantees. Realistically, all EB-5 applicants should acknowledge the possibility of financial loss, as with any business.

Immigrant investors can mitigate their financial risk by identifying each project’s risk factors and performing due diligence. Projects whose managers have ample experience in the EB-5 industry and have already helped several other investors obtain green cards are the safest options.

Immigration risk

Immigration risk is usually an equally important consideration for EB-5 investors. This hinges on two factors—the project’s job creation potential and its capital structure.

When examining a potential project, investors should study its business plan. Signs that a project has low immigration risk include:

✔️ Ample job creation potential.
✔️ The project aims to create more than 10 jobs per investor to increase the chances of their job creation quotas being met.
✔️ It is not overly reliant on EB-5 funding.
✔️ Its developer has committed a significant proportion of the capital.
✔️ A senior bank loan helps fund the project.

Documentation Required to Apply for an EB-5 Rural TEA Visa

Once a foreign national has invested in a commercial enterprise located in a rural TEA, he or she can file Form I-526. This submission must include:

✔️Proof that an investment has been made in a qualifying project.
✔️Proof the investor used legally sourced funds.
✔️A detailed description of the EB-5 project that explains how the required jobs will be created.
✔️Proof that the project is located in a rural TEA.

Once an investor has received Form I-526 approval, he or she will be eligible to apply for two-year temporary green cards. A conditional green card permits someone to live and work anywhere in the United States.

At the end of this two-year period, the investor must submit Form I-829, which proves that the EB-5 funding was kept at risk and that at least 10 jobs were created by the EB-5 investment. Approval of the I-829 petition grants investors permanent residency..

Rural EB-5 Projects and the Future of the EB-5 Program

EB-5 investment in rural EB-5 projects offers a streamlined path to U.S. permanent resident status with reduced delays and a minimum qualifying investment amount.

Investing in a TEA via a regional center offers many benefits, including:

✔️The opportunity to pool your funds with other investors. This enables bigger, more effective projects that are more likely to meet job creation requirements.
✔️Less hassle for EB-5 investors who don’t want to manage their own business.
✔️Expert guidance and advice on the EB-5 process.
✔️The ability to choose from projects created specifically for the needs of EB-5 investors.

Do you want to gain permanent residency in the United States by investing in a TEA project via a regional center? If so, book a free consultation with EB5AN.

We’re a USCIS-authorized EB-5 regional center operator, consulting firm, and global investment fund manager. We have a 100% USCIS approval rate and many of our investors are already living in the United States under this program.