Last Updated on April 22, 2024 by Anda Malescu
Is the EB5 visa risky? The answer is yes, the EB5 visa is risky and carries both immigration and financial risks. This article discusses the EB5 visa program and the risks associated with it.
The EB5 visa is one of the most elusive types of visas for the United States. Many people have heard stories about other people losing a significant amount of money trying to secure a green card for themselves and their family members through the EB5 program, only to end up years later without a green card and without the money. Yet, there have also been successful EB-5 visa investors who have obtained their green cards and money back.
However, the passage of the EB-5 Reform and Integrity Act (RIA) in 2022 has aimed to reduce processing times and the uncertainties and risks associated with the EB-5 visa program, making the EB-5 visa more attractive than it has ever been for investors and other individuals seeking a green card through this program.
With the passage of RIA, there has never been a better time to invest in EB5 projects. Currently, EB5 visa processing time for investing in rural area projects is 3 to 6 months. This means that investors applying for green card through the EB5 Regional Center program with investments in rural project can obtain their green cards in as little as 3 months.
Before we discuss the current EB5 risks, we provide an overview of the EB5 investor program.
What is EB-5 visa?
The EB-5 visa is an immigrant visa that allows foreign investors and entrepreneurs to obtain permanent residency (a green card) in exchange for making a significant investment in the United States.
To qualify for an EB-5 visa, you must:
- Invest $1,050,000 in a US business or Regional Center located in an urban or low unemployment area, or $800,000 in a US business or Regional Center located in a Targeted Employment Area (TEA), rural or high unemployment, and
- Create or preserve 10 full-time jobs for US citizens, lawful permanent residents, or other immigrant workers.
There are two ways you can make the required minimum investment of $1,050,000 or $800,000 for the EB-5 visa:
- Direct EB-5 investment: You can invest directly in a qualifying US business that you own and manage. This option requires you to be actively involved in the management and development of the business.
- EB-5 Regional Center investment: You can invest in a project associated with a USCIS-designated Regional Center. A regional center is an investment company that pools funds from multiple EB-5 investors to finance business projects. A regional center deploys the capital, manages the investment funds, oversees the development of the projects and creates 10 qualifying EB5 jobs per investor. With a regional center investment, you are a passive investor in the project and in exchange receive a green card and a small return on your investment.
To learn more, visit our complete guide on EB-5 visa and EB-5 visa for Canadians.
How risky is EB5 visa?
First, the EB-5 visa is inherently risky because EB-5 investors must invest a significant amount of money into a qualifying project with no guarantee of getting their money back.
The EB-5 visa requires you to place your capital at risk in order to qualify. This means that there must be potential for both financial gain and loss from the get-go. In practice, you cannot apply for EB-5 visa without first investing your money in a qualifying business, either directly or through a Regional Center project.
Now that it is clear that you cannot obtain a green card through EB-5 visa without taking on some financial risk, it is important to understand that there are other risks associated with the EB-5 visa, such as:
- Time risk. The USCIS processing times are long, and it can take five years for EB-5 investors to receive their conditional green cards.
- Immigration risk. The EB-5 legislation has been inadequate and the guidelines and policies from USCIS unclear, leaving EB-5 investors with no guarantees that their green card applications will be approved.
- EB-5 project risk. The success of an EB-5 visa application depends on the feasibility of the Regional Center project or direct investment. If the project turns out unfeasible, the EB-5 visa application may be denied and the investment capital may be lost. It is therefore important to engage an experienced team to assess the feasibility of the projects and help you understand the risks involved. However, feasibility is less of a risk when the business has already been developed on an E-2, L-1 or other nonimmigrant visa and converted to an EB-5.
The EB-5 Reform and Integrity Act of 2022 (RIA) was passed to reduce some of the risks associated with the EB-5 visa program. The RIA prioritizes EB-5 projects located in rural or high-unemployment areas, as well as infrastructure projects. This has significantly reduced USCIS processing times for regional center projects.
By reducing the risks associated with the EB-5 visa program, the RIA has made it possible for EB-5 investors to obtain their green cards with less risk than before, especially when investing in an EB-5 Regional Center project in a rural or targeted employment area (TEA) region, or in an infrastructure project. Investors have seen their EB-5 visas approved in as little as 6 months for regional center projects in rural areas, and in 14 to 16 months for TEA project regional centers.
However, if you pursue an EB-5 visa, you are always going to be exposed to financial and feasibility risks associated with the EB-5 projects, especially if you invest through a Regional Center. Our team can help mitigate these risks by assessing the feasibility of the projects, evaluating the project’s business plan, financial projections, and management team to determine whether it is likely to succeed, helping you understand the risks involved, and selecting a project that is right for you.
Contact our EB-5 lawyers in Miami, Florida USA or schedule a consultation for your immigration case. We serve investors, businesses and entrepreneurs across all 50 states, the District of Columbia and Puerto Rico.
Malescu Law P.A. – Business & Immigration Lawyers
