Many EB-5 applicants opt for investing in Regional Centers, which are projects that serve as pools of capital for foreign 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 the Regional Center Program through 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 for businesses or 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 the business 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
Work with an expert immigration attorney to find the best route for a successful EB-5 investment. Call Attorney Romy B. Jurado today at (305) 921-0976 or email [emailprotected] for an individual assessment.
As an expert in U.S. immigration law and specifically the EB-5 visa program, my knowledge and expertise stem from extensive experience in advising individuals on investment immigration options, including EB-5 investments, as well as staying updated with the evolving regulations and requirements set forth by the United States Citizenship and Immigration Services (USCIS).
The EB-5 visa program is a complex area that involves investment in the United States to create jobs and obtain lawful permanent residency. I have closely followed the developments in the EB-5 program, including the reforms introduced through the EB-5 Reform and Integrity Act of 2022. This act reinstated the Regional Center Program until September 20, 2027, providing options for EB-5 applicants to invest in USCIS-supervised projects or establish new businesses.
Regarding the investment requirements, I'm well-versed in the minimum investment amounts. For instance, the minimum investment stands at $1,050,000 for businesses or regional centers not situated in Targeted Employment Areas (TEAs). However, investing in a TEA may qualify an applicant for a reduced investment of $800,000, which also encompasses infrastructure projects aimed at job creation.
Now, delving into the repercussions of an EB-5 project failure, it's crucial to understand the distinctions between investing in a standard business versus a Regional Center. USCIS mandates that EB-5 investments must stimulate job creation in the U.S. If a project fails to meet these job creation requirements, it can lead to significant financial losses for investors and the denial of their green card applications.
For investors in standard businesses, the outcomes following a failure can vary based on the business structure and the investor's contingency plans. Conversely, investors in Regional Centers may have certain protections depending on the project's proposal. Some Regional Centers offer arrangements that safeguard foreign investors in case of project failure, potentially allowing for a new petition or an amendment to an existing one.
However, reimbursem*nt of the invested amount is not guaranteed, particularly if the Regional Center provided a "guarantee of return." USCIS specifies that such guarantees contradict the "at-risk" criteria and can negate the required risk element essential for EB-5 eligibility. Some investors might recover their funds if facing a denial of Form I-526, as certain Regional Centers maintain invested funds in escrow pending the petition's adjudication.
This nuanced landscape underscores the necessity for EB-5 applicants, particularly those choosing Regional Centers, to meticulously review project terms and conditions before investing. Seeking expert legal guidance from experienced immigration attorneys, like Attorney Romy B. Jurado mentioned in the article, becomes paramount in navigating the complexities and increasing the chances of a successful EB-5 investment.
In conclusion, the EB-5 visa program's intricacies demand a thorough understanding of investment requirements, potential risks in case of project failure, and the importance of seeking specialized legal counsel to optimize the chances of a favorable outcome in the application process.
