EB-5 Visa Program Faces an Early Demise
The increasingly popular EB-5 visa program is in the spotlight once again – not only because it is due for renewal in December 2015, but also because a prominent Democratic senator has called for an end to the investment visa program. Also known as the immigrant investor visa program, the EB-5 program allows foreign investors to essentially buy a U.S green card and eventually obtain citizenship. However, If it is not renewed by Congress in December, it will permanently expire.
Senator Dianne Feinstein (D-Calif.) has recently become a vocal opponent against the renewal of the immigration program. In an op-ed, she has written that “the program gives unfair advantage to wealthy applicants over others who do not have the capital to invest in the US. According to the Senator, the program sends a terrible message to the millions of immigrants patiently waiting their turn to enter the United States legally. It says that American citizenship is for sale, and that’s not what America stands for”.
Another reason she is against the renewal of the program is its susceptibility to fraud and abuse. She has cited a recent Government Accountability Office report which has found that the program has not been providing the economic benefits that it was suppose to create. She writes that “the report confirms difficulty of substantiating sources of investors’ funds, which may come from illegal activities in their home countries”.
Since the EB-5 visa program was started as a pilot program in 1992, it has become very popular with foreign investors. It is the most flexible and expedient path for the wealthy foreigners to obtain the green card and eventually US citizenship; there are many investing options, no quotas and no waiting lists. Essentially, applicants need only to have a feasible, eb5 business plan and proof of eligibility, in addition to the funds needed for investment. Since its inception in the early 1990s, thousands of wealthy people have used the program to obtain green cards and citizenship in the U.S.
To be eligible for the program, a foreign investor is required to invest a minimum of U.S $1 million in a legitimate business in the U.S. In Targeted Employment Areas, the minimum investment required is reduced by half ($500,000). The investment can be in the form of cash, inventory, equipment or any tangible property. The capital must be obtained from legal sources and it cannot be money that is borrowed from banks or other financial institutions.
A Targeted Employment Area (TEA) is a high unemployment area, where the unemployment rate is at least 150% of the national average. These areas are usually a rural area. To be designated a Targeted Employment Area, a rural area must not be within a metropolitan area or in the outskirt of a town or city that has a population of 20,000 or more residents.
Also, in order to qualify for residence, the investment must be seen to be at risk. In other words, the USCIS, which handles all visa and immigration applications, must be convinced that the applicant has invested in a risky venture and that there is no guarantee that he or she will ever see profit.
However, despite Senator Feinstein’s objection, there is no reason for would-be applicants to panic just yet. There are many who believe that the EB-5 visa program has made significant contributions to the growth of the US economy by attracting foreign investment. Come December and the program is likely to survive the ‘no’ votes and remain available for those interested in pursuing it as a path to US immigration.