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EB5 immigrant investor visas are available again


EB5 immigrant visas of all types are once again available to investors who create job opportunities for American workers. The Omnibus Spending Bill signed by the president on March 23 included the extension of the US immigrant investor EB5 regional center program to the end of September 2018.

The US State Department’s April 2018 Visa Bulletin will be revised soon to show that EB5 regional center immigrant visas are immediately available for all countries of birth, except mainland China, which is expected to have the same waiting period as the EB5 non-regional center program.

Media around the world has been warning readers of the demise of the EB5 regional center program. The US Embassy at Hanoi, Vietnam, announced on March 20 that no EB5 regional center immigrant visas would be issued after March 23. Now that advisory is no longer effective and immigrant visa appointments will continue to be scheduled at US embassies and consulates.

EB5 refers to the US employment-based fifth preference immigrant visa category. EB5 allows an investor, spouse and unmarried children under the age of 21 to obtain resident status in return for creating at least 10 full-time equivalent jobs for American workers through a business investment. The EB5 non-regional center program considers only jobs for workers directly employed at the business investment, while the EB5 regional center program also counts the larger number of indirect and induced jobs created as calculated by government-approved economic models.

Both types of EB5 generally require a US$1,000,000 investment, but a US$500,000 investment can qualify if the business is located in a targeted employment area. Such areas either have an unemployment rate 150 percent above the national average or meet the legal definition of rural.

There are proposals to raise these EB5 target investment levels, which have not changed since being set in 1990. Most experts expect substantial increases, along with other changes to EB5 regulations, but no one knows when this will happen. As a result, immigrants may want to act quickly to invest and file their EB5 immigrant visa petition as soon as possible. They should especially be sure to do so before September 30, 2018, when the EB5 regional center program is next set to expire.

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EB5 immigrant investor visas are available again

US green card availability to increase beginning October 1

visa-perm

Effective October 1, 2016, green cards will become more readily available for most people immigrating to the United States on employment-based (EB) immigrant visa categories.

The US State Department announced in the October 2016 edition of its Visa Bulletin that the agency is processing requests under the EB1 category for all countries of birth, effective October 1. This category includes aliens of extraordinary ability, outstanding professors and researchers, and multinational managers and executives, regardless of place of birth. During the summer, the agency reported a lengthy backlog for EB1 immigrants born in mainland China and India.

The EB2 category—for professionals with an advanced degree and aliens of exceptional ability—is also immediately available, except for individuals born in mainland China and India, for whom the category is backlogged to February 15, 2012, and January 15, 2007, respectively.

The EB3 category—for professionals and skilled workers—has limited available for all places of birth. That said, the backlog for most places is to June 1, 2016, and it is not likely to slow the process of immigration, since the Department of Labor generally takes more than four months to grant the alien employment certification application, often referred to as PERM, longer and that is a prerequisite for EB3 immigration.

The EB5 category—for investors—is currently available for all places of birth except mainland China, which continues to be where the majority of EB5 immigrants are born. EB5 is unavailable for China-born investors in projects in Regional Centers, while EB5 is available to China-born investors in non-Regional Center projects who have I-526 immigrant petition receipt dates on or before February 22, 2014.

There is an annual limited supply of immigrant visas in all EB categories that is replenished effective October 1, the first day of the new fiscal year. In categories where the annual demand tends to be greater than the limited supply, the Visa Bulletins issued for October through April often show the most movement. There is often more movement in the dates for individuals born in mainland China and India during these months. The EB1 and EB5 dates that have improved so much since the September 2016 Visa Bulletin are likely to retrogress once again later in the fiscal year, but the State Department did not release a prediction as to when or by how much.

The full text of the October 2016 Visa Bulletin can be found here.

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US green card availability to increase beginning October 1

New Entrepreneur Immigration Program opens in British Columbia, Canada

opendooroptions

British Columbia’s Provincial Nominee Program (BC PNP) reopened its doors for business immigrants to Canada on July 2, 2015. In a landscape of unfriendly federal business immigration programs and preference for employer-driven individual immigration programs, the new BC PNP Entrepreneur Immigration program is extremely attractive for prospective business immigrants to Canada.

The appeal

  • No minimum English language skills required
  • No age restriction
  • Minimum of 33 percent business ownership only
  • Low thresholds for minimum net worth (CA$600,000) and investment (CA$200,000)
  • Low initial registration fee of CA$300

Looking closer

It may sound too good to be true, because it probably is. BC PNP is attracting as many applications as it can so it can choose the best. In fact, BC PNP will now have a Pool of applicants competing to get as many points (maximum 200) as possible—however, only 200 applicants are accepted into the Pool each month. BC PNP will then make periodic draws from the Pool to award applicants holding the highest scores with an Invitation to Apply for the Entrepreneur Immigration program. So while the bar seems to be set low, applicants will need a competitive score to be successful.

A competitive score can come from increasing individual points as much as possible for each category:

Points category Points
Experience 24
Net Worth 12
Personal Investment 30
Jobs 36
Adaptability 18
Business Concept 80
Total 200

 

This could mean having greater management experience, higher net worth, significant investments, English language skills or even choosing a better business. For instance, an eligible business for the Business Concept must, at minimum, contribute to the province’s economic growth. However, there is also a list of business types that offer significant economic benefits and those would presumably be more valuable on the points system.

Other requirements for the program, like its predecessor, include:

  • Business or management experience;
  • Active management of a new or improved existing business located in British Columbia;
  • Intention to reside in British Columbia; and
  • Introduction of at least one full-time job for a Canadian or permanent resident.

Undoubtedly, the BC PNP Entrepreneur Immigration program will reopen doors of opportunity for prospective business immigrants to Canada.

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New Entrepreneur Immigration Program opens in British Columbia, Canada

EB-5 China backlog

Now later

The United States State Department announced in the May 2015 Visa Bulletin that conditional resident status based on the EB-5 immigrant investor visa is currently available only to individuals born in China whose I-526 immigrant petitions were received on or before May 1, 2013.  EB-5 remains immediately available to immigrants born in all other countries.  Further, this backlog does not impact pending I-526 and I-829 petitions, regardless of country of birth.

The fiscal year begins on October 1.  According to the State Department’s Visa Control and Reporting Division Chief, 2,525 EB-5 visas remain available this fiscal year to people born in all countries other than China.  China has already used 6,819  or 88.56% of the EB-5 allotment for this fiscal year.  Vietnam is the second largest user this year, with a mere 244 EB-5 visas, followed by Taiwan, India and South Korea.  The State Department anticipates that the other countries will not use up all of the remaining EB-5 visas and estimates about 1,000 more EB-5 visas will be released to immigrants from China before the current fiscal year ends on September 30, 2015.

EB-5 immigrants from all countries can continue to file and obtain approval of I-526 immigrant petitions.  In fact, filing the I-526 as early as possible is more important than ever, since it is the I-526 receipt, also known as the priority date, that is ultimately used for quota purposes.  Approximately 10,000 new EB-5 visas will become available on October 1, 2015, when the new fiscal year begins.

For more information, check out the May 2015 Visa Bulletin.

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EB-5 China backlog

EB5 immigrant investors: Comparison of Traditional and Pilot Programs

EB5 Puzzle

Investors, their spouses and unmarried children under 21 can become US permanent residents by creating (or saving) jobs for US workers through investment. This is the employment-based fifth preference immigrant visa (EB5), of which there are two types.

The first type of EB5 was created by Congress in 1990, has no expiration, and is called the “Traditional” or “Basic Program.”

The second type was created in 1992 and is commonly referred to as the “Pilot Program” or “Regional Center.” The Pilot Program, as the name suggests, is only a temporary law that  expires. It has been regularly renewed every few years.  The current Pilot Program expires in 2015.

While some of the requirements for the Traditional and Pilot Program EB5 are the same, there are very important differences. The choice of what type is best often varies depending on the needs of the individual investor and the investment project.

Here is a comparison of the two EB5 programs:

Expiration.  The Pilot Program EB5 expires; Traditional EB5 does not. This is an advantage of the Traditional EB5.

In 2012, the Pilot Program was extended for three years. Since it became law in 1992, Congress has regularly extended the Pilot Program. Sometimes the extension becomes law before the Pilot Program expires and sometimes after. The 2012 extension happened almost on the expiration date.

The temporary nature of the Pilot Program is a concern for the government-designated regional centers authorized by the Pilot Program. Investors are often concerned by the uncertain nature of the Pilot Program as a temporary law. This concern is especially acute every time that the Pilot Program nears expiration. Unless the EB5 immigrant petition is granted before the Pilot Program expires, it will be denied and the chance to immigrate through the investment lost.

Many ask if Congress will permanently authorize the Pilot Program.  Although this proposal is often discussed, there is no pending proposal before Congress at this time to make the Pilot Program permanent. In contrast, the Traditional EB5 does not expire. Individual investor immigrant petitions can continue to be processed at all times.

Job creation.  EB5 is the employment creation visa, not the investment visa. Creating jobs is key to approval of the EB5, regardless of whether the investment realizes profit or loss. Both Traditional and Pilot Program EB5 require the creation (or preservation) of at least ten full-time equivalent jobs for US workers.

Direct jobs. Both the traditional and Pilot Program EB5 count direct employment with the company in which the EB5 investment is made. The government looks to the payroll tax W-2 records and other evidence of direct employment.

Indirect and induced jobs. Only the Pilot Program EB5 counts indirect and induced jobs at other companies that are considered to be created as a result of the investment.

A typical example of indirect or induced jobs are the construction jobs created as a result of an investment in a company developing residential property. The construction company is their employer. The EB5 investor invests in the company that hires the construction company, which in turn hires the construction workers.

There are many types of indirect and induced jobs. The possibility to include these in counting the job creation can result in much higher job creation numbers. This allows for more investors to be involved in a common project, which in turn means there is more investor money available to fund larger, more expensive projects.  These are the types of investment opportunities that benefit from the Pilot Program.

But it is harder to count indirect and induced jobs. The normal payroll record approach is not an option.

Pilot Programs must apply to the government to be designated for the specific types of jobs that they plan to create to obtain government permission to count indirect and induced jobs. Additional rules apply to constructions jobs, which the government considers to be temporary and not counted except where the construction work will last for at least two years. This prevents the count of any (direct, indirect or induced) construction jobs for any shorter construction projects. Traditional EB5 does not require any government preapproval for specific types of job creation. Pilot Programs must submit detailed business plans that provide a detailed explanation of how and when the jobs will be created. The government reviews business plans carefully. Requests for Further Evidence or Notices of Intent to Deny are not uncommon if the government believes the business plan is insufficiently detailed or unsupported with sufficient backup documentation. Industry expert opinion statements may be required to substantiate claims about revenue projections, occupancy levels, etc. Traditional EB5 also requires business plans, except if all of the jobs are created prior to filing the immigrant petition.

Pilot Programs must obtain an economic analysis that uses one of the government approved economic models to forecast indirect and induced job creation. There are a number of private economists working with Pilot Programs. The process to obtain the economic analysis can be expensive and slow. The government recently hired its own economists to review the privately prepared economic analysis. The government economists have raised new questions in areas seemingly long resolved by the government. Some of their work has resulted in much lower job count, which means less EB5 investment money to fund projects. This has detrimentally impacted many Pilot Programs. Traditional EB5 does not require economic analysis.

Finishing quickly.  EB5 projects involving a single investor or a very small group of investors generally move through the immigration process faster than projects that involve large or very large groups of investors.

This is because most projects need a specific amount of investment from EB5 immigrants in order to hire all of the US workers and do business, including construction, if any. Until the project receives enough investors to proceed, the success of the project is in jeopardy. Big projects that require large numbers of investors can be under intense pressure to attract a sufficient number of investors quickly enough too proceed with the project. Small projects that require only a single or small number of investors are more likely to be able to immediately proceed.

Even EB5 investors granted two-year conditional residence status remain at risk until the required number of jobs are created and the conditional basis of their residence can be removed. Job creation and business operations must be scheduled so that all investors have their funds committed to the project. Even after individual investors have the conditions removed from their resident status, the investment and business operations are likely to need to continue until the last investor’s conditions are removed.

Traditional EB5 projects usually involve an individual or a very small group of investors. Pilot Program EB5 projects usually involve large or very large groups of investors. Because of this, traditional EEB5 projects tend to start and end more quickly than Pilot Program projects.

Annual reporting. Pilot Programs are required to file annual reports with the government. Traditional EB5 does not.

Pilot Programs report annually on their amount of investment and job creation.  This information is also allocated by industry category and each investment opportunity at the designated Pilot Program. Pilot Programs also report on the status of immigrant investor petitions and removal of conditional resident petitions. These reports are filled with the government, not individual investors.

The time and money involved to prepare the annual reports depend on the complexity and number of ongoing projects within the Pilot Program. Failure to timely file can result in lose of the regional center designation required for the Pilot Program and the denial of all pending individual investor petitions. No equivalent annual reporting requirement is imposed on Traditional EB5.

Investment amount.  A $500,000 investment can qualify for both Traditional and Pilot Program EB5.  In general, all types of EB5 require a minimum $1,0000,000 investment. To encourage job creation in targeted employment areas ( TEA), Congress lowered the investment requirement to $500,000.  TEAs are generally either areas with higher than normal rates of unemployment or areas defined by the government as rural.

Both traditional and Pilot Program EB5s can be located in TEAs.

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EB5 immigrant investors: Comparison of Traditional and Pilot Programs

Tier 1 (Investor) category changes

Change Ahead sign

The Tier 1 (Investor) category caters for high net worth individuals making a substantial financial investment to the UK.

Following a review by the Migration Advisory Committee, the following changes come into affect from today, 6 November 2014:

  • The minimum investment threshold is raised from £1 million to £2 million.
  • The provision which permitted the investment sum to be sourced as a loan is removed.
  • It is no longer sufficient for 75% of the investment sum to be invested in the prescribed forms of investment.  The full investment sum must be invested in the prescribed forms of investment, i.e. share or loan capital in active and trading UK companies, or UK Government Bonds.

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Tier 1 (Investor) category changes

EB5 Escrow FAQ

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The employment-based, fifth preference immigrant visa (EB5) is an increasingly popular way for foreign nationals to immigrate to the United States by making a business investment that creates jobs for American workers.  EB5 is also an important source of business investment for local governments and entrepreneurs in search of funding for business development.  Lengthy processing times by US government agencies and the types of escrow terms used on many projects have delayed the creation of jobs for American workers, and increased the likelihood of denial of the EB5.  Now is the time to better understand and re-evaluate the EB5 escrow.

Here is a list of frequently asked questions regarding EB5 escrow intended to help Regional Centers, developers, and foreign investors to better understand how use of an escrow can hurt the chances of getting conditional residence and getting the condition removed two years later for the permanent residence.

Frequently Asked Questions – EB5 Escrow

What are escrow provisions for EB5?

For those EB5 projects that have escrow provisions, the escrow typically works as follows:

First, each immigrant’s funds are held by a financial institution and are not directly received by the new commercial enterprise (NCE) in which the immigrant invested.  The funds remain there and cannot be accessed by the NCE to create the jobs for American investors required for EB5.

Second, the immigrant’s investment funds are released to the NCE only after the US Citizenship and Immigration Services agency (USCIS) finally completes its long, slow process to make a final decision on the Form I-526 immigrant petition.

This process is repeated for each individual immigrant.  The result is that funds trickle into the NCE slowly.  USCIS processing times vary, but are always very slow. The USCIS web site reports an average processing time of 13.4 months as of June 30, 2014, but that only reflects how long it takes before the agency begins to work on a petition.  The USCIS also reports that investor petitions awaiting adjudication are at an all-time high.  Requests for Further Evidence (RFE) are very common and the time it takes for the agency to prepare the RFE, for the immigrant to prepare a response to the RFE, and for the USCIS to then make a final decision often means the I-526 approval often takes 2 years.  If funds are held in escrow during that time, then the funds are unavailable to create the jobs and the project is delayed for all investors.

There are many reasons why an RFE may be issued, but one of the most common is because the USCIS wants further documentation to show how the funds will be used to create the required jobs.  In cases where the funds are immediately available and job creation starts sooner, it is easier to minimize the risk of an RFE and to successfully respond to an RFE by showing how the funds are already being used to create jobs.  In contrast, the USCIS has delayed/denied I-526s where a business plan timeline is substantially delayed, even though the delay is a result of funds being held in escrow longer than intended due to slow USCIS processing times.

Does US law require escrow provisions for EB5?

No.

The USCIS regulation 8 Code of Federal Regulations Section 204.6(j)(2) requires documentation that the required amount of capital be placed at risk and actually committed to the NCE.  There is no endorsement or requirement of escrow provisions in the statute or regulations.

Can escrow provisions hurt the chances of obtaining approval of the conditional or permanent green card?

Yes.

Escrow provisions delay the release of funds that NCEs need to create the jobs for American workers that are required for EB5 success.  Ten new, full-time equivalent jobs for American workers are generally required to be created for each immigrant.

These jobs must be created before (or reasonably soon thereafter) the USCIS will grant the Form I-829 petition for the removal of the conditional residence and approve permanent residence.  If all ten jobs are already created before the I-829 is filed, then the petition is much easier and faster for the USCIS to approve.  If a delayed release of funds slows the required job creation, then the USCIS is more likely to deny the I-829 and then resident status can be lost.

Can escrow provisions be waived?

Yes.

An immigrant can waive escrow provisions and authorize the escrow agent to release funds to the NCE at any time. The NCE can then apply the funds to the required job creation activities and issue documentation faster.  The documentation can then be submitted in support of the I-526 when it is filed, used to supplement an I-526 already pending and/or used to better respond to an RFE.

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EB5 Escrow FAQ

Immigrant investors find Canada’s door is closed

Canadian Work Visa

The Canadian government has decided to permanently cancel the federal investor program and wipe out the backlog of 65,000 applications currently in the queue in favour of more efficient and effective investment programs such as the Start-Up Visa program.

For more information, check out these good summaries from the Globe and Mail and the Canadian government.

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Immigrant investors find Canada’s door is closed