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The new EB-5 investment level could be as high as $1.35 million.July 16, 2019

By Matt Hogan

Indians wishing to apply for the EB-5 immigrant investor visa program could soon be facing a new hurdle as the US government moves to more-than double the cost of an application. This follows quickly on from the announcement that Indian EB-5 applicants face multi-year “retrogression” delays before they can receive their Green Card.

Last month, the United States Citizenship and Immigration Services (USCIS), started operating a wait list for Indian EB-5 applicants. Each country is limited to 700 EB-5 visas in any given year, and India hit this cap three months before the end of the visa year. Now, the US authorities have announced their intention to increase the price of an application from the current minimum investment level of $500,000.

RELATED: EB-5 visas: Here’s everything you need to know about immigrant investor visa program (April 18, 2019)

The new investment level could be as high as $1.35 million, a figure designed to account for inflation since the program’s inception in the 1990s. That would represent a significant increase on the current minimum level and would have a major impact on the program. Industry leaders and organizations have been presenting arguments for a more practical increase and it is not yet clear what the final minimum investment amount will be. Nevertheless, we expect it to go up significantly.

Once details of the new rules are announced, there may be a brief grace period before the new investment levels take effect. Anyone seeking to lock in at the lower investment level should consider applying as soon as possible. Mark Davies, chairman of Davies & Associates immigration law firm, cautions that the biggest hurdle to Indian investors pursuing EB-5, is proving the source of the funds they would use to pay for the program. This can take time, and with an expected upsurge in applications during the grace period, it is vital to start this process as soon as possible.

The new regulations are also expected to tighten the restrictions of where the EB-5 investment can be made to qualify for the minimum rate. Currently, investors place their money with a Regional Center, which uses the funds for the construction of real estate projects across the United States. Only projects located in areas of high unemployment, so-called Targeted Employment Areas (TEA) or rural areas, qualify for the lower investment level of $500,000. Outside of these TEA areas, the investment requirement is currently $1 million which will most likely increase to $1.8 million under the new regulations. Loose interpretation of what constitutes a Targeted Employment Area has meant some Regional Centers have been able to manipulate data to allow for EB-5 projects to be funded at the minimum investment threshold in some of the wealthiest parts of the USA. The changes would cause projects located in these areas to have to raise EB-5 investment capital at the higher level.

The final language in the regulations is still unknown and so it important to stay in contact with a Regional Center or attorney as more information becomes available. While it is not yet clear what will happen, it is clear that change is coming and it is advisable start preparing now and to be prepared for anything. Ultimately, the only way to be assured that you may move forward under the current investment amounts and under the current rules and regulations is to apply as soon as possible, prior to the regulations taking effect.

(Matt Hogan is CMB Regional Centers Vice President of Project Development. Mr. Hogan oversees CMB’s team responsible for the identification, due diligence and underwriting of the projects receiving loans from each of CMB’s EB-5 partnerships and development of each of CMB’s EB-5 partnerships.)
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