Finally! The New EB-5 Regulations are here.

So the anticipated day has arrived — today, November 21, 2019 — for those who are interested in utilizing an investment in the United States for an immigrant visa.

The new EB-5 regulations are in effect today!

There was a massive rush to get everything filed for foreign investors prior to today to take advantage of the old rules for investors.  Now that we all have had a chance to catch our breath, here are the changes forthwith:

The two most relevant highlights of the new regulations are:

1. Increase in the minimum investments amounts:  The current investment amount has been raised to $900,000 for the Targeted Employment Area (TEA)* from the original $500,000.  And for all other areas in the United States, the minimum amount investment is $1.8 million US (raised from $1 million).
2. TEA Designations are now to be handled by the Department of Homeland Security.  Previously, the states determined what was a TEA.

There are a few new regulations others dealing with derivatives and management participation and they can be found here on the USCIS website : EB-5 Immigrant Investor Program. 

* Targeted Employment Area is a designated census tracts that have an unemployment rate of 150% of the national unemployment rate.* This seems appropriate given that the EB-5 is based on the hiring of US workers and this will “on paper” funnel more EB-5 investment funds into actual areas that have high unemployment areas.  There has been criticisms (legitimate criticism, in my opinion) about how the TEAs have been carved up — please refer to this: NYC’s Hudson Yards & TEA.  There are a number of other news reports about the use of gerrymandering TEA tracts from the New York Times and the Wall Street Journal, but the above link doesn’t have a paywall.

So What’s Going to Happen Now:

In my opinion, I think the new regulations will probably mean the contraction of the EB-5 Regional Centers operating and of course the EB-5 program in general.  As I try to do, I always make the point that there are two variations of the EB-5 program (this post clarifies the distinction.)

The increased investment amounts — almost double — will probably depress demand for a while (along with the ever increasing visa waitlist for Chinese investors).  EB-5 Regional Centers that aren’t on a strong financial footing will probably start to fail.  The infrastructure that has developed over the years (administrative staff, sales people and attorneys) will also shrink too.

So if you are interested in the EB-5 program, you should probably wait a few months to see how some of these programs are doing before doing down the Regional Center path.  And if you are going to go at it alone, it’s probably more important than ever to find a viable quality long term business that you will be able to start in the United States.

 

 

“IT’S A TRAP!”: EB-6, Parole for International Entrepreneurs

 

Our office has gotten some calls about the “EB-6” visa that was announced last year and has been implemented at the start of 2018.  I put “EB-6” in quotes, because that’s not the official designation and it’s not permanent residence visa (i.e., green card).

The official designation is the International Entrepreneur Rule.  Essentially, if an entrepreneur qualifies, he or she qualifies for “parole” which is to grant a period of authorized stay.  The period of authorized stay allows you to stay in the United States but it is not green card or even a nonimmigrant visa.

The details of the International Entrepreneur Rule (the putative EB-6) can be accessed below:

Short Version

Long Version

Essentially, one can apply as an entrepreneur by fulfilling the following requirements:

• The applicant possesses a substantial ownership interest in a start-up entity created within the past five years in the United States that has substantial potential for rapid growth and job creation.
• The applicant has a central and active role in the start-up entity such that the applicant is well-positioned to substantially assist with the growth and success of the business.
• The applicant can prove that his or her stay will provide a significant public benefit to the United States based on the applicant’s role as an entrepreneur of the start-up entity by:
  • Showing that the start-up entity has received a significant investment of capital from certain qualified U.S. investors with established records of successful investments;
  • Showing that the start-up entity has received significant awards or grants for economic development, research and development, or job creation (or other types of grants or awards typically given to start-up entities) from federal, state or local government entities that regularly provide such awards or grants to start-up entities; or
  • Showing that they partially meet either or both of the previous two requirements and providing additional reliable and compelling evidence of the start-up entity’s substantial potential for rapid growth and job creation.

THE WARNING

While the International Entrepreneur Rule may be useful for those who can’t qualify for an E-2 or an EB-5 or need some time to grow their company until they can qualify for another category, there is a huge caveat.

In one of the government’s press releases concerning the International Entrepreneur Rule (referred to as the IER, they specifically state (emphasis all mine):

“While DHS implements the IER, DHS will also proceed with issuing a notice of proposed rulemaking (NPRM) seeking to remove the Jan. 17, 2017, IER. DHS is in the final stages of drafting the NPRM.”

You can actually read the release here in its entirety.

So there you go.  While they are announcing that the IER is going to be available, they are telling us that they intend to kill it as soon as they can.

It’s disheartening and disingenuous at its best.  It’s a trap for those whose options are limited at its worst.