The Immigrant Investor Program: A Pipe Dream?
February 17, 2010
The Immigrant Investor Program, also known as “EB-5” was created by Congress in 1990 in an effort to stimulate the U.S. economy through job creation and capital investment by alien investors. The EB-5 category allowed alien investors the opportunity to obtain a green card for themselves, their spouses and their minor children by making a certain level of capital investments and associated job creation or preservation. The next ten years saw the greatest economic expansion in U.S. history. However, as many alien investors have recently found out, obtaining a green card through the EB-5 program has been a relatively thorny process. As the U.S. economy continues to stumble its way out of recession, Congress should direct the Department of Homeland Security to ease their scrutiny on alien investors and open the flood gates to the EB-5 program.
As a brief overview of the Immigrant Investor EB-5 Program, alien investors may obtain lawful permanent residency (a green card) by making a capital investment of either $500,000 or $1 million (the lower amount is for investments in rural areas with very high unemployment) in a new commercial enterprise located within the U.S. The new commercial enterprise must create 10 full-time jobs for qualifying U.S. workers within two years of the alien investor’s admission to the United States. Sounds simple, right? Not so fast my friends.
Congress allocates approximately 10,000 immigrant visas per year to the EB-5 category (this includes visas for spouses and minor children of investors). However, less than 1,000 visas are issued annually. This is due to a number of factors, including program instability, the changing economic environment, and more inviting immigrant investor programs offered by other countries. This program was designed to infuse new capital into the United States, yet it has been highly underutilized.
One subgroup of alien entrepreneurs have been particularly stranded by Congress. Those EB-5 investors whose Forms I-526 (Immigrant Petition by Alien Entrepreneur) were filed and/or approved between January 1, 1995, and before August 31, 1998 have had their cases put on the shelf because final regulations to implement the 2002 EB-5 legislation have yet to be promulgated. These alien investors have had to file suit against the U.S. government to no avail. Until the regulations are promulgated, they will continue to wait in limbo. In light of the current economic downturn, Congress has the opportunity to finalize the regulations and allow these companies to operate in the U.S. As it stands, many such investors are turning away from the U.S. and bringing their business back to their home countries, abandoning the “American Dream.”
Competition with other country’s Immigrant Investor Programs (especially Canada and Australia) has also caused a lack of interest in the EB-5 program. From 1998 until 2007 the U.S. never issued more than 1,000 EB-5 visas. During the same time, Canada has never gone below 3,000 and almost reached the 10,000 cap in 2005. Unlike the EB-5 program, Canadian Immigrant Investor Program is a passive program: a qualifying investor is not required to open a business, or hire and manage employees. Rather, the investment itself is assumed to spur significant economic activity and create jobs. The 1998 AAO precedent decisions further restricted the EB-5 category. This clearly affected alien investors’ attitudes on their decision to invest in the U.S. as opposed to other countries.
In 2005, USCIS announced its intention to re-invigorate the EB-5 program. This increased the visa applications and attracted new attention that the EB-5 program may be on the mend. There are still delays in EB-5 processing times. USCIS must establish a regulatory and administrative environment to promote investor confidence that the program can be relied upon.
The Law Firm of Shihab & Associates, Co., LPA has been successful in obtaining EB-5 Investor Green Cards for clients. If you are interested in establishing a business in the U.S., contact the Law Firm of Shihab & Associates, Co., LPA office near you or call their toll free number: 1-877-479-4USA.