Reauthorization of the EB-5 Program on September 30, 2021 The EB-5 program has continuously aided the U.S. economy -- its suspension will have an impact.
By Shai Zamanian •
Opinions expressed by Entrepreneur contributors are their own.
The EB-5 Regional Center Program allows for foreign investors to invest in a U.S.-approved commercial enterprise for an opportunity for the investor and their immediate family members to obtain U.S. green cards and residency. The program allows for certain U.S. businesses to have access to funds that would have a much lower interest rate than they would receive from a loan obtained from a bank and thus presents a more convincing option for developers. Since the inception of the program, particularly the Regional Center route, the investments have served as a catalyst for the growth of the U.S. economy and the U.S. labor market due to the program requirements of job creation per investor.
Holistically, the program has been a positive factor for the U.S. market and has grown in interest from foreign investors; interest that directly affects the growth of the U.S. economy. Therefore, the current suspension of the program comes with a host of ramifications for the U.S. economy, investors and the U.S. labor market. While the Regional Center route has been suspended, prospective investors have been unable to inject their $500,000 of capital into the U.S. economy, which currently is a pivotal tool to aid in its recovery following the crippling effects the pandemic has had on the global economy.
Based on calculations from a report published by the IIUSA, the suspension of the program can lead to over 486,900 U.S. jobs lost through the possibility of current investors withdrawing from the program. While the program is lapsed, the immigration portion has also been placed on hold, meaning that applicants who are currently in the program cannot proceed with their application until reauthorization is received. A worst case scenario, meaning the program does not get reauthorized, would mean a tremendous economic loss for the U.S. as all current investors would have to withdraw their investments. The ripple effects of investor withdrawal from the program will also lead to loss of U.S. jobs. For example, targeted high unemployment areas where building construction would have been will suffer, as the Regional Center would possibly have to stop construction until they replaced all the investors who had pulled out of the program.
Related: The EB-5 Immigrant Investor Program Is Suspended. What Happens ...
Will the program be reauthorized?
It is imperative that the program is reauthorized, as it is a vital tool for the U.S. economy. Since its inception, the program has continuously proven to be a positive contributor towards the country's growth, and when reauthorized, it will continue to demonstrate its importance. Based on an analysis of the program history and trends, there have been cases where the program reached its expiration date and Congress failed to reauthorize it on time but reauthorized the program at a later stage. Therefore, there is very little for current and prospective investors to be concerned about. In December 2018, the Federal government failed to pass the Omnibus spending bill, which the EB-5 program was attached to and led to a de facto lapse of the program. The program was reinstated as soon as the Federal government passed the Omnibus bill. It is anticipated that the program may be reintroduced as part of the Omnibus spending bill by September 30, 2021. Once the program is reauthorized, prospective investors will have a short window to file under the $500,000 rules.
Related: The Case That Could Change the EB-5 Immigrant Investor Program
How long will the program remain at $500,000?
It would be economically beneficial for the U.S. economy to increase the capital requirement so as to keep up with the current inflation rate. Based on previous analysis of the performance of the program under the $900,000 requirement, it might be wise for the Federal agency to introduce a staggered increment plan so that the actual targeted market can still afford to partake in the program. It is uncertain how long the program will remain under the current $500,000 rules. The previous Behring court case, along with Secretary of Homeland Security Alejandro Mayorkas' attempt at ratifying the $900,000 rules, demonstrate that it is evident that USCIS intends to increase the EB-5 capital investment requirement at some point in the near future.
Related: Federal Court Judge Leaning Towards Changing $900,000 EB-5 Rule
