The EB-5 Program is managed by USCIS. Under this scheme, investors are qualified to apply for a Green Card (permanent residency) along with their spouses and unmarried children under the age of 21 if they:

• Make the necessary investment in a commercial enterprise in the United States; and
• Plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers.

This program is known as EB-5 the name of the employment-based fifth preference visa that participants receive.

In order to boost the American economy through the development of jobs and capital investments by foreign investors, Congress established the EB-5 Program in 1990. The Immigrant Investor Program, also known as the Regional Center Program, was established by Congress in 1992. It reserves EB-5 visas for participants who make investments in businesses connected to regional centres that have been authorised by USCIS based on plans for fostering economic growth.

USCIS policy on EB-5 adjudications is in Volume 6, Part G of the USCIS Policy Manual.

All EB-5 investors must invest in a new commercial enterprise that was established:

• After Nov. 29, 1990; or
• On or before Nov. 29, 1990, that was:
  • Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results; or
  • Expanded through the investment, resulting in at least a 40% increase in the net worth or number of employees.

Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business, including:

• A sole proprietorship;
• Partnership (whether limited or general);
• Holding company;
• Joint venture;
• Corporation;
• Business trust; or
• Other entity, which may be publicly or privately owned.

This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, if each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.

This definition does not include noncommercial activity, such as owning and operating a personal residence.

Job Creation Requirements

An EB-5 investor must invest the required amount of capital in a new commercial enterprise that will create full-time positions for at least 10 qualifying employees.

• For a new commercial enterprise not located within a regional center, the new commercial enterprise must directly create the full-time positions to be counted. This means that the new commercial enterprise (or its wholly owned subsidiaries) must itself be the employer of the qualifying employees.
• For a new commercial enterprise located within a regional center, the new commercial enterprise can directly or indirectly create full-time positions.
  • Direct jobs establish an employer-employee relationship between the new commercial enterprise and the persons it employs.
  • Indirect jobs are held outside of the new commercial enterprise but are created as a result of the new commercial enterprise.
• In the case of a troubled business, the EB-5 investor may rely on job maintenance.
  • The investor must show that the number of existing employees is, or will be, no less than the pre-investment level for a period of at least two years.

An enterprise is considered distressed if it has been around for at least two years and had a net loss in the 12 or 24 months prior to the priority date on Form I-526 submitted by the immigrant investor. The loss for this time frame must be at least 20% of the net worth of the distressed company prior to the loss. USCIS will take successors in interest to the struggling business into account when examining whether they have been in operation for the same amount of time as the business they succeeded.

A qualifying employee is a citizen of the United States, a lawful permanent resident, or another immigrant who is permitted to work in the country. This includes conditional residents, temporary residents, asylees, refugees, and anyone whose deportation is now suspended. Investors who are foreign nationals, their spouses, children, or anybody else with a nonimmigrant visa (like an H-1B nonimmigrant) or who is not authorized to work in the United States are not included in this description.

Full-time employment is when a new commercial firm hires a qualified worker for a position that calls for a minimum of 35 hours of labor each week. Full-time employment in the context of the regional center program also refers to the use of a qualified worker in a position that has been indirectly created and that calls for a minimum of 35 hours of work per week.

If the weekly hourly criteria is satisfied, a job-sharing agreement in which two or more qualified employees split a full-time position will count as full-time employment. Even if combined, several part-time jobs that meet the weekly hourly criteria are not included in this definition.

Jobs that are infrequent, transitory, seasonal, or transient are not considered to be full-time, permanent positions. The phrase “intermittent, temporary, seasonal, or transient” does not normally apply to positions that are anticipated to continue at least two years.

Capital Investment Requirements

The indebtedness secured by assets owned by immigrant investors is referred to as capital if the immigrant investors are personally and principally liable and the assets of the new commercial enterprise on which the petition is based are not used to secure any of the debt. Capital includes cash, inventory, equipment, other tangible property, cash equivalents, and indebtedness secured by assets owned by immigrant investors. The fair market value of all capital shall be determined in US dollars. For the purposes of section 203(b)(5) of the Act, assets acquired directly or indirectly through illegal methods (such as criminal activity) will not be regarded as capital.

Note: Immigrant investors must establish that they are the legal owner of the capital invested. Capital can include their promise to pay (a promissory note) under certain circumstances.

Future adjustments will be tied to inflation (per the Consumer Price Index for All Urban Consumers, or CPI-U) and occur every five years.

A targeted employment area can be, at the time of investment, either:

• A rural area; or
• An area that has experienced high unemployment (defined as at least 150% of the national average unemployment rate).

A rural area is any area other than an area within a 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 according to the most recent decennial census of the United States.

A high-unemployment area may be any of the following areas, if that area is where the new commercial enterprise is principally doing business and the area has experienced an average unemployment rate of at least 150% of the national average unemployment rate:

• An MSA;
• A specific county in an MSA;
• A county in which a city or town with a population of 20,000 or more is located; or
• A city or town with a population of 20,000 or more outside of an MSA.

A high-unemployment area may also consist of the census tract or contiguous census tracts in which the new commercial enterprise is principally doing business, which may include any or all directly adjacent census tracts, if the weighted average unemployment for the specified area based on the labor force employment measure for each tract is 150% of the national unemployment average.

The EB-5 Reform and Integrity Act of 2022 (the “Integrity Act”), which was included in the FY 2022 Consolidated Appropriations Bill, was approved by the Senate on March 10, 2022. Last night, the House approved the same bill. As of June 30, 2021, the EB-5 Regional Center Pilot Program was no longer in effect. President Biden received the bill and signed it on March 15, 2022.

Through September 2027, the EB-5 Regional Center Program is renewed thanks to the Integrity Act. It is the EB-5 Regional Center Program’s first extended reauthorization since 2015. The program is altered in a number of ways by the Act, including the imposition of certain oversight requirements.

Oversight-related provisions include requiring each center to (1) notify the Department of Homeland Security (DHS) of proposed changes to the center’s structure, (2) maintain certain records and make such records available to DHS for audits, (3) obtain approval for each particular investment offering, and (4) annually report to DHS. More importantly, the Act provides various enforcement authority to DHS and U.S. Citizenship and Immigration Services, including the ability to permanently bar an individual from participating in the regional center program. It also establishes the EB-5 Integrity Fund to fund program enforcement activities.

The EB-5 Regional Center Program enables federally approved “Regional Centers” to combine the investments of EB-5 visa applicants to significantly boost local and regional economies in the United States and preserve or create thousands of American jobs. EB-5 visas grant eligible foreign investors the status of permanent residents. The Integrity Act includes integrity measures to improve transparency and safeguard foreign investors, among other advantageous reforms.

The Integrity Act includes the following important reforms to the EB-5 program:

• A five-year reauthorization of the EB-5 regional center program through September 30, 2027.
• A new section authorizing the grandfathering of any petitions on file in the event the program was to lapse again in the future.
• The new minimum investment amount will be $1,050,000, which is reduced to $800,000 if the EB-5 project is located in a Targeted Employment Area (TEA) or is an infrastructure project. A TEA includes an area of high unemployment or a rural area and must qualify under the same requirements as the previous EB-5 regulations that were introduced in 2019. An infrastructure project is a public works project in which a governmental entity is a job-creating entity that receives the EB-5 capital from the new commercial enterprise.
• Specific visa set-asides for rural, high-unemployment, and infrastructure projects.
• Language to prioritize the processing and adjudication of rural petitions.
• Language eliminating geographic limitations on investor capital redeployment.
• Language allows investors to count both indirect and direct positions for job creation purposes.
• The Act includes numerous stringent new requirements for regional centers in relation to securities compliance, record keeping, ownership, and administration.
• All regional centers will undergo a USCIS audit at least once every 5 years.
• Additionally, a new integrity fund has been created in which regional centers must contribute $10,000-$20,000 annually (depending on the size of the regional center) to allow the USCIS to investigate and monitor the all of the parties within the EB-5 industry to ensure compliance.

Although the Integrity Act reauthorized the EB-5 Regional Center Program that had lapsed last year, the Act also puts the Direct EB-5 and Regional Center programs on the same footing, and therefore, both Regional Centers and Direct EB-5 companies will have to reorganize and rethink their business plans to deal with the new rigorous oversight and audit requirements of the new law.

The Integrity Act included in the Consolidated Appropriations Act has major implications for existing and future foreign investors, Regional Centers, developers, and promoters of the EB-5 Program.