EB-5 Program Suspended, What’s Next?’

The United States EB-5 Immigrant Investor program reached its sunset date on June 30, 2021. The national immigrant investor program that has been a pivotal tool for the U.S. economy and labour market has failed to be reauthorized by Congress. This means that as of 1 July, 2021, the United States Citizenship and Immigration Services (USCIS) cannot accept new investor petitions into the EB-5 Regional Center Program. It must be noted that only the Regional Center investment option has not been reauthorized and if investors wish to undergo what is called a direct investment, they can still participate with an investment requirement of $1 million. However, as most individuals invest in the EB-5 Immigrant Investor Regional Center program there is growing concern on the future of the program.

Recent changes to the EB-5 program

June 22, 2021 the EB-5 industry witnessed a monumental structural change in the program policy. The U.S. Federal Courts vacated the EB-5 Modernization rule of November 2019 and allowed for the program to reverse several changes which were made by USCIS. One of the major changes was to increase the investment capital requirement from $500,000 to $900,000. The reason behind the increase of the required capital was due to inflation and ensuring the program keeps with the current inflation rate. Financially, increasing the program to keep up with inflation rate makes sense. The program has remained at $500,000 for over three decades, which is longer than other national immigration programs and at some point it will need to be increased for it to continue to be beneficial to the U.S. economy.

Reauthorization of the EB-5 program

As an EB-5 specialist, who has been working in this industry for over 10 years, myself and other industry leaders strongly believe that the program will be reauthorized and will continue to operate. The question is rather when will it be reauthorized and if the $500,000 rules would still be in effect after reauthorization. Based on many discussions with various industry leaders we envision that the program will be reauthorized by September 2021. Once Congress has reauthorized the program, USCIS will then be able to advise on whether the program will continue at $500,000 or stay at $900,000.

There are strong arguments for both options. Under $900,000 rules the program keeps up with inflation and as such injects sufficient capital into the U.S. economy that will assist the country’s recovery from the impacts of the global pandemic. However, staying at $900,000 makes the program unreachable for the middle class families, and as such leads to greater economic impact as there are less investors injecting funds into the economy.

Can investors still capitalize on $500,000?

There is still a short window of opportunity for those that missed the June 30 government deadline. The time between Congress reauthorization and USCIS making their final decision will afford prospective investors a short window to capture the $500,000 rules. This does mean that prospective investors must act fast by ensuring that their documents are collated and ready for submission, their investment funds are ready for sending to the Regional Center’s Escrow account, and they must have completed their project selection due diligence.

Contributed by the American Legal Center of Dubai. www.america.ae