For an immigrant investor hoping to obtain his or her Green Card through the EB-5 program, that path begins with choosing an investment project and then filing Form I-526, the Immigration Petition by Alien Investor.
Investment is made in a a New Commercial Enterprise
An EB-5 investor must make a capital investment in a New Commercial Enterprise (NCE). An NCE is any U.S. for-profit enterprise established after November 29, 1990 (or prior to that date, provided certain conditions were met). The business types of the NCE may include a sole proprietorship, joint venture, general or limited partnership, holding company, corporation, business trust, or other privately or publicly held entity.
When investing in the EB-5 regional center program, the NCE is the fund in which the immigrant invests. In general, that fund will take the form of either a Limited Liability Company (LLC) or Limited Partnership (LP). In the context of a direct EB-5 investment — not through a regional center — the NCE is the business wherein the immigrant invests and which will create the required jobs for U.S. workers.
EB-5 investment must be 'at risk'
The I-526 petition must show that the immigrant has invested or is in the process of investing the required capital. The required investment is $1.8 million, or $900,000 if the project is located in a Targeted Employment Area (TEA).
USCIS requires that the immigrant investor’s funds be deemed “at risk” and irrevocably committed to the NCE. The funds must be used by the NCE to create employment.
Lawful source & path of funds
The funds used by an immigrant for an EB-5 investment must be lawfully earned and follow a lawful path. Source of funds could come in the form of salary, earnings, investment or business distributions, sale or mortgage of assets or personal property owned by the immigrant investor, or gifts from third parties (provided those funds were also lawfully obtained). Funds earned or obtained by the immigrant investor while in the United States and “out of status” are not considered lawfully acquired.
Direct Investment: active management of the NCE
USCIS requires that the immigrant investor participate in the active management of the NCE. This requirement can be satisfied either through day-to-day management of the NCE or assisting in the formulation of the NCE’s business policy (i.e. having voting rights and exercising same).
Regional center investment: no day-to-day management
Investors in the Regional Center Program do not have to actively manage their business. For an EB-5 enterprise that is organized, say, as a Limited Partnership, investors generally have the same rights and duties typically accorded to any limited partner under the respective state’s Limited Partnership Act. The same holds true of the immigrant investor if the NCE was formed as a Limited Liability Company. For the purpose of the EB-5 investment, this level of involvement, i.e. as a Limited Partner in an LP or as a Member in an LLC, is deemed sufficient by USCIS.
An EB-5 investor is required to create 10 full-time U.S. jobs and this must be documented in the business plan of the I-526 petition. Credible evidence can be in the form of a third-party Economic Impact Analysis.
The types of jobs that are allowed depend on whether the investor has made a direct investment or an investment through the Regional Center Program.
For direct investments, 10 direct, full-time (not less than 35 hours per week) positions must be created by the EB-5 investor. The EB-5 investor, and his or her family and any non-immigrant alien do not qualify towards this number.
At the time of the I-526 petition, if the positions have not yet been created, the NCE’s business plan must contain a thorough description of the NCE’s hiring plan that will show the positions that would be created with that investment and when those positions would be filled.
For investors in the Regional Center Program, job creation is more flexible; the 10 full-time U.S. jobs can include direct, indirect or induced full-time positions for each EB-5 immigrant investor. The number of jobs that are estimated to be created through the EB-5 investor’s capital investment is based upon a comprehensive business plan and a detailed economic analysis.
For either direct or regional center investments, the required jobs must be created within two years after the petitioner receives their conditional permanent residency.
I-526 processing times
Historical I-526 processing trends
Historically, this number has changed quite significantly. Using the Historical National Average Processing Times as reported by USCIS we can see the fluctuations of the past five fiscal years:
2016 - 15.9 months
2017 - 18.8 months
2018 - 22.2 months
2019 19.8 months
2020 13.1 (stats to date as of July 2020)
The most recent I-526 stats present very positive news for investors. The recent improvement by USCIS makes many stakeholders wonder if the EB-5 program — one predicated on creating U.S. jobs — has been mandated to improve performance given the current economic situation when job creation is valued at a premium.
Why USCIS provides different statistics and how to read them
Potential immigrant investors should note that the agency’s “Check Case Processing” reports don’t reflect what we see in the USCIS Historical National Averages. The former offer much higher numbers that might be off-putting to someone considering the program; but these numbers don’t reflect the average reality. In the Check Case Processing numbers the first number is the time it takes to process half of the applications (the median) and the second number is the time it takes to process 93% of the cases. Thus, by definition, the Check Case Processing range reflects delayed processing cases.
USCIS has declared that they are now testing a new method to publish processing times. They claim it will be “more accurate, timely, and easier to understand.” This method will include the EB-5 investor applications I-526, I-829, and I-485.
Visa availability and I-526 processing going forward
To determine how many Green Cards will be given to investors, one should look at three key factors: Visa availability, I-526 processing, and country caps.
Almost 1,000 additional visas from other categories will “rollover” to EB-5 in 2020. This year, there will be 11,111 visas issued to the program. 7% (778 visas) can go to any single country as per EB-5’s country caps.
Promises from USCIS of more efficiency and integrity in EB-5 give many stakeholders an optimistic view of I-526 processing, especially after the lull we experienced in 2019.
Reasons for the recent processing slowdown
While I-526 processing numbers are looking greatly improved in 2020, in 2019 the processing efficiency was significantly down. In general, processing times take longer when IPO gets more petitions than it can process.
A possible reason for the recent slowdown could be the major policy change that occurred near the end of 2019. To support this idea, we can look at how in 2011/2012 a processing slowdown came just before policy changes.
Some industry pundits suggest that USCIS was publishing longer times to reduce the number of inquiries they receive; perhaps USCIS wants to avoid EB-5 visa applicants filing a writ of mandamus, a court order that would compel USCIS to process a delayed petition right away.
What to do if your case is taking too long
Keep in mind the numbers USCIS publishes are averages. But if you have filed your I-526 and your case is outside the average processing time, you should speak with your immigration lawyer. You or your lawyer could send an email inquiry to the IPO office. If your lawyer believes your case is unreasonably delayed, a writ of mandamus may be the next step.
An I-526 petition is the first application that an EB-5 investor must file and must demonstrate, with a credible business plan, that the program’s requirements will be fulfilled: capital investment; a lawful source and path of funds; required job creation; the investment will be “at risk"; etc.
While average I-526 processing increased in the recent past, 2020 has shown a significant improvement in average processing times and that's positive news for EB-5 investors.