Many EB-5 applicants opt for investing in Regional Centers, which are projects that serve as pools of capital forforeign investments. The United States Citizenship and Immigration Services (USCIS) provides that the amount required must be placed “at risk” in a US enterprise.
What happens if an EB-5 project fails? Read on to find out.
EB-5 Investment Requirements – The Basics
Effective March 15, 2022, the EB-5 Reform and Integrity Act authorized the re-introduction of theRegional Center Programthrough September 20, 2027. Currently, EB-5 petitioners have the option to form a new business or invest in an USCIS-supervised project to generate jobs.
The minimum amount of investment eligible for an EB-5 application is $1,050,000 forbusinessesor regional centers not located in Targeted Employment Areas (TEAs). Applicants opting for investing in a TEA may qualify for a reduced investment of $800,000, which also includes infrastructure projects.
What Happens If EB-5 Project Fails? – In Detail
The primary element to determine what happens after an EB-5 project fails is whether the applicant invested in a standard business or opted for investing in a Regional Center. USCIS expressly provides that EB-5 investments must boost job creation in the United States.
If an EB-5 project fails to meet the job creation requirements, it will likely result in exponential losses in capital and a green card denial. The next question is whether investors can have the invested amount reimbursed. The likelihood of reimbursem*nt depends on the investment option.
When an investor uses the amount to form or purchase a standard business, the answer varies according to thebusiness structure, the investor’s arrangements to react to an eventual failure, etc.
However, those opting for investing in Regional Center heavily depend on the proposal of each project. Some Regional Centers have arrangements that protect foreign investors in the case of an eventual failure, allowing investors to file a new petition or amend an existing petition.
While these terms help investors to get a new chance in the program, the reimbursem*nt of the amount invested is not guaranteed. As provided by 8 C.F.R. §204.6(j)(2), an EB-5 applicant must provide “evidence that has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk.”
If a Regional Center offered a “guarantee of return,” it would fail to meet the “at-risk” criteria established by USCIS. The agency has published memorandums with language stating that the “promise to return any portion of the immigrant investor’s minimum required capital negates the required element of risk.”
Please note that some EB-5 investors can recoup the amount lost after facing a denial of Form I-526 (Immigrant Petition by Standalone Investor). Some Regional Centers maintain the funds invested in escrow while Form I-526 is pending.
Depending on the terms of the escrow agreement, applicants may be reimbursed in the event of a denial of the petition. Ultimately, EB-5 applicants opting for Regional Centers must assess each proposal and thoroughly review the terms and conditions of each project.
Do You Want to Increase Your Chances When Applying for an EB-5 Visa? – Immediately Seek Expert Legal Guidance
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FAQs
If a project fails before the I-526E petition is approved, the investors will most likely be unable to meet the EB-5 program's requirements, particularly the need to maintain the investment during the conditional residence period and create 10 or more jobs.
What happens when an EB-5 project fails? ›
In general, however, both the financial and the immigration consequences of an EB-5 project failure can be grim. If a project fails, part or all of an investor's funds can be lost. The failure of an EB-5 project can also mean that the investor's U.S. immigration journey has come to an end.
What is the success rate of EB-5 projects? ›
Immigrant investors file either Form I-526 or Form I-526E to demonstrate to USCIS their compliance with all tenets and laws of the EB 5 visa program. The approval rate for I-526 petitions generally ranges from about 75% to above 80%.
Can EB-5 visa be rejected? ›
The EB-5 immigrant investor program is a popular pathway to obtaining a green card in the United States. However, its application process can be complex and lengthy, and rejection is always possible.
What are the risks of EB-5? ›
Every EB-5 investment carries inherent risks. These risks vary across different project types but can generally be categorized under two groups: immigration risk and financial risk. These two risk categories align with the primary motivations for EB-5 investors.
Does EB-5 guarantee green card? ›
Yes, the investor, their spouse, and unmarried children under 21 can obtain green cards through the EB-5 investment.
Do EB-5 investors get their money back? ›
EB-5 Investment Repayment
While loan terms can vary from project to project, EB-5 investors can usually hope to receive repayment back within a five-to-seven-year period. The investment must remain “at risk” throughout the loan period, and therefore cannot be guaranteed to be returned.
Is EB-5 worth it? ›
Balancing High Returns with Associated Risks
EB-5 investments generally yield lower returns as the program prioritizes immigration benefits over financial profits. Projects within the EB-5 category offering high ROI, often exceeding average returns, may come with heightened risks.
What is the approval rate for EB-5? ›
Generally speaking, the approval rate for an I-526 petition is from about 75% to over 80%. Because it is assumed that an EB-5 Investor who receives approval for the I-526 petition, will apply for conditional permanent resident status, the approval rate for the I-829 petition is around 90% and above.
What is the denial rate for EB-5? ›
This represents a three-fold increase in new applicants compared to 2021 and 2022, when 814 and 829 petitions were submitted, respectively. The denial rate is down from 58.3% in 2022 to 39.5% in 2023, which is still uncharacteristically high for the EB-5 program.
The standard capital investment requirement for an EB-5 investor is $1 million. in a Targeted Employment Area (TEA) which is either in a high unemployment area, (calculated as an area with an unemployment rate that is at least 150% of the national average), or a Rural Area (RA) is $500,000.
What is the ROI of EB-5? ›
EB-5 visa: possible Direct Return on Investment
The reason why the standard of investment is so low, which is just the preservation of capital, is that the true return on investment for EB-5 investors is typically between 0.25% to 1%, or a maximum of 1.5%.
What happens if EB-5 project fails? ›
The failure of an EB-5 project can have unfavorable consequences for everyone involved. Investors risk losing their investments and being unable to obtain residency permits. So, before investing in an EB-5 project, investors must conduct thorough due diligence and seek professional advice to reduce their risk exposure.
Is EB-5 guaranteed? ›
The answer is no, because the EB-5 program requires that the investor make an “at risk” investment, in which the investor cannot receive any guarantees of repayment or any redemption rights, and there must be a risk of loss and a chance for gain.
Can EB-5 invest in real estate? ›
On the other hand, an EB-5 candidate cannot simply buy real estate in the United States to qualify for the program. USCIS requires that the investment capital be placed at risk, such as through the creation of an enterprise, and funds must result in the creation of ten fulltime jobs per investor.
Will EB-5 program be renewed? ›
The program will be in effect through Sept. 30, 2027. USCIS will continue to provide additional information on the EB-5 Reform and Integrity Act of 2022, including Questions and Answers related to new filings, as necessary.
What happens after i526 approval? ›
Once your I-526 petition is approved, you and your family members may take either "consular processing" at the United States Embassy located in your country of residence, or, if you are already legally residing in the United States, you may file I-485 adjustment application for conditional green cards.
