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Investors Overcome New Challenges In U.S. EB-5 Program

By News Creatives Authors , in Business , at July 31, 2021

Three key developments affecting the EB-5 investor immigration program have had a far-reaching impact on investors and for the program as a whole. These recent changes included the reversal of the amounts required to be invested, the expiry of the regional center program and new terms for investors to qualify. Let’s look at each one of these areas.

Reversal of the amount needed to invest to qualify under the program

Earlier this year in the Behring Regional Center v. Wolf case, the Behring Regional Center and the Greenberg Traurig law firm were able to get the courts to disallow the implementation of the EB-5 Modernization Rule. Among other changes to the EB-5 program decision reversed the required investment amount from $900,000 back to $500,000. The court found that then acting secretary of the Department of Homeland Security, Kevin McAleenan, was improperly appointed under the Succession Act and therefore lacked the authority to make changes to the EB-5 program. The required investment amount is expected to stay at $500,000 for some time, until the matter can be addressed again. The speculation is that it will remain so until late this year.

 The expiry of the EB-5 regional center investment program

Over 90 percent of the cases in the EB-5 program involved regional centers. For this reason, the expiry of the program could have had far-reaching consequences for investors as well as for the American economy by halting this robust source of new capital coming into the United States from abroad.

But instead the focus of EB-5 shifted to the direct investor program as the only game in town. Interest in this method of investor immigration at the moment remains high, particularly because of the ruling in the Behring case.

Until the regional center program is reinstated, likely not earlier than late this year when Congress can deal with the matter, direct investment projects will be the focus of the EB5 industry. To get a green card, direct investment is structured as a $500,000 equity investment, while regional centers were structured as $500,000 loans to projects for five years.

Necessity is the mother of invention as they say.

A Loan as a Source of Funds Is OK

In another case, Zhang v. USCIS, the courts addressed a policy change that the United States Citizenship and Immigration Service (USCIS) announced and instituted in 2015. The USCIS was denying all petitions that had unsecured loans as a source of investment. The USCIS’s position was that cash proceeds from an unsecured loan were not cash, but indebtedness. In Zhang, the petitioners took out a private loan to fund their EB-5 investment. The USCIS required them to prove that they owned assets or collateral to support the loan. So, the petitioners filed a lawsuit. 

On appeal, the courts confirmed that unsecured loans can indeed be a legitimate source of funds for EB-5 and ruled that USCIS’ interpretation violated the plain meaning of the EB-5 regulations. The courts stated, “Cash is fungible and it passes from buyer to seller, without imposing on the seller any of the buyer’s obligations to his own creditors. The buyer’s source of cash, whether paycheck, gift or loan makes no legal or practical differences.” Loan proceeds therefore count as cash, thus qualifying as capital within the EB-5 regulations. The USCIS has not appealed this decision to the Supreme Court.     

Even if the USCIS accepts an unsecured loan as a source of funds, they will still verify the genuineness of the loan, where the funds came from, and potentially how the lender earned those funds.


The upshot of these developments is that for the time being at least, we are in a brave new world of EB-5 foreign investment. American ingenuity is circumventing legislative and regulatory roadblocks to make sense of a program that still remains the lifeblood of economic immigration to the United States.


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