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EB-5: Not Moving At the Speed of Business

by Don Slowik, Attorney and ImmigRanter at Slowik & Robinson, LLC

eb5In 1990, Congress had a great idea. As part of the Immigration Act of 1990, a fifth category of employment-based visas was created. Known as EB-5 or the employment-creation visa, the idea was to encourage foreign investment in the United States. The payoff for investors is reduced waiting time for legal permanent residency in the United States.

To get in line, “alien entrepreneurs” plunk down $1 million into a new commercial enterprise (or $500,000 in locations where unemployment is high). They get a conditional green card good for two years at the start. Then, upon demonstrating that at least 10 full-time jobs have been created as a result of their investment, they get a full green card and can stay. The jobs can’t be for their family or friends, but for U.S. citizens, green card holders, and others authorized to work indefinitely in the U.S.

EB-5 hasn’t been as successful as everyone had envisioned.

In reality, it’s a sluggish piece of already antiquated machinery. A full green card requires a two-part petition process spreading over two years, giving the INS, now USCIS, multiple chances to muck things up for the foreign investor who’s put their money at risk. And the USCIS hasn’t always done a good job of managing and verifying that the program is living up to its original goals.

EB-5 also has a cap — only 10,000 visas can be granted each year – and that’s inclusive of the family members who come with investors. One would think the rolls would be bursting at the seams, but they’re not. In fact, interest seems to be waning, by USCIS’s own numbers. Applications for the initial conditional visa appear to be going down. And there are plenty of rejected applications.

The Rant

The major problem is the program is not plugged into the needs of business. If foreign investors have the money and ideas, or they are pooling resources to bring development to the United States, why should they have to wait the inordinate time required to get through the EB-5 bureaucracy? Business imperatives require they be able to compete in the marketplace. That means they have to mobilize their resources, hire people, create products and get them to market — fast. But EB-5 investors and the companies they invest in have to wait a minimum of eight or nine months just to get them in the country – and then in just a “conditional” status. Who has that kind of time, not to mention risk tolerance?

Sure, there are discussions, proposed rule changes to take a bite out of the wait. There’s the possibility of expedite requests, for example. But criteria have yet to be nailed down. Even the potential to lose substantial amounts of money doesn’t bump up an investor’s priority, because as the agency says, it would be overwhelmed with expedite requests if they were granted solely on the basis of financial arrangements. We know how this story goes, though, right?

Plus, they haven’t settled yet on the premium processing or extortion fee to be used for the EB-5 petition. With all the good that the job-creation visa can do, for some reason, the government is being very slow to initiate what should be a major priority.

Considering the state of the U.S. economy, EB-5 is one of those ideas that was ahead of its time. It requires a substantial monetary investment into a U.S. business and promises jobs in places where they are sorely needed. Yet, it still takes up to a year to have a conditional green card petition approved after the investor has already put everything put into place. It takes another two years before the investor can qualify to have the “condition” removed from their green card. That’s clearly not working at the speed of business. No wonder no one’s interested in it.

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