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Guidance Clarifying the Required EB-5 Investment Period
U.S. Citizenship and Immigration Services (USCIS) issued guidance on their interpretation of changes to the EB‐5 Immigrant Investor Program in the Immigration and Nationality Act (INA) made by the EB-5 Reform and Integrity Act of 2022 (RIA) on October 11. This guidance clarifies the required investment timeframe for EB-5 investors who file Form I-526, Immigrant Petition by Standalone Investor or Form I-526E, Immigrant Petition by Regional Center Investor, on or after enactment of the RIA (March 15, 2022), as outlined in the RIA. This guidance also clarifies their interpretation of INA 203(b)(5)(M) regarding investors who are associated with a terminated regional center. For an excellent summary and critique of this clarification, please read a recent article Dan Lundy posted, EB-5 INVESTMENTS: A TWO-YEAR SUSTAINMENT PERIOD? NOT SO FAST. It is important to note that this guidance only applies to investors who invested in EB-5 after the enactment of the RIA. There is no change for investors who filed before.
For investors seeking to remove conditions on their permanent resident status under INA 216A based on an EB‐5 immigrant visa petition filed on or after enactment of the RIA (post‐RIA investors), USCIS states that the RIA removed the requirement that the investor must sustain their investment throughout their conditional residence. Before this change, investors had to keep their funds at risk throughout that period. In other words, the clock did not start until or unless they received their conditional green card. Once they held their conditional green card for two years, 90 days before the end of the two years, they were allowed to file for the 10-year permanent green card. Only once they had the proof they were allowed to receive their capital back. Their funds had to be in the project deployed and, therefore, be at risk throughout the conditional green card period. This understanding was the definition of the sustainment period.
The new guidance changes this definition. USCIS now states that for purposes of determining the date when the two-year period required by INA 203(b)(5)(A)(i) begins, they will generally use the date that the requisite amount of qualifying investment is made to the new commercial enterprise and placed at risk under applicable requirements, including being made available to the job creating entity, as appropriate. In addition, from an immigration standpoint, investors cannot ask the regional center to pay back their capital if they have not filed their I-526 petition. Assuming they have filed the petition and the job-creating entity had the opportunity to deploy the funds into their project, USCIS will have no issue if the investor receives their capital back after a two-year JCE usage of the funds as long as the project created requisite jobs credited for the investor. Many projects create all required jobs through bridge financing early on, sometimes even before the EB-5 capital raise begins. As long as USCIS does not take an issue with EB-5 funds refinancing bridge loans responsible for creating the requisite jobs, from an immigration standpoint, investors will be allowed to demand their capital back two years after their funds are in the project. They still have to ensure that the funds are not idle at the NCE level. USCIS would not call that at-risk. The at-risk period will only start once the JCE starts usage.
Whether this policy update and clarification will have any practical impact will depend on the investment terms stated in the PPM. We believe that most strong and established project owners, regional centers, and their developer clients will insist on a minimum five-year term for the EB-5 investment with possible extension rights because large-scale construction projects require longer than 2-3 years periods and the longer investment terms stated in the PPM will rule. While cash-strapped risky projects might offer tenors that match the new guidelines, most conservative investors should stay clear from such projects not to assume undue capital repayment risk.
Will the new guidelines have any significant positive impact? We believe that the answer is yes. The redeployment of funds resulting from long processing times for adjudication of I-526 and the unavailability of appointments for green cards have been a problem of the past. Investors will most likely not have to worry anymore about the redeployment of their funds in projects they did not have a chance to vet if the PPM does not allow for the redeployment of investor funds eligible to be repaid under the new guidelines. It is too early to tell, but the industry might go in this direction.
For more information on the guidelines, please visit:
and pick the Required Investment Timeframe tab.
If you want to learn more about this update or how to invest in the EB-5 program, please do not hesitate to call us at + 1 917 355 9251 or write to us at email@example.com.
Posted by americaeb5visa on October 20, 2023