Filing EB-5 Application Under $500,000 Rules

The time has come for investors that are interested in the U.S. EB-5 investment migration program to collect their documents, consult an experienced EB-5 expert and have everything ready for immediate submission in September. Currently the popular U.S. permanent residency program has been placed on hold until the U.S. Congress reauthorizes the continuation of the program. It must be noted that the program in its entirety has not been suspended, it is only the Regional Center route that has been placed on hold. This means that investors that want to participate in the program under the Regional Center route must wait until the program has been reauthorized. Based on the industry trends and statistics the Regional Center route is the most popular route for investors as it provides a more stable investment option and ensures that their immigration meets all the government requirements.

The U.S. EB-5 Immigrant Investor program allows for an investor, his/her spouse and unmarried children under the age of 21 years to obtain U.S. residency and Green Card. After residing in the U.S. for a few years the family will be eligible to apply for their U.S. passport. For families that missed the June deadline there is a short window of opportunity to file under the $500,000 rules this September.

How to get your application ready?

The first step for prospective investors is to ensure that they consult with a qualified EB-5 consultant. It is pertinent for the success of their applications to obtain quality advice that will help steer the application towards the right direction. The EB-5 consultant will inform the investor on the required documents needed to complete their file, provide the investor with project options to invest in, and be the intermediary between the immigration attorney and the investor.

Once the prospective investor has an experienced EB-5 consultant they must go through the available projects and conduct their own due diligence. While the EB-5 consultant would have vetted the projects they present, the onerous is on the investor to ensure that the project is right for them and their family. Additionally, the EB-5 consultant is by law not allowed to choose a project for the investor. For it to be a true investment the investor must conclude on their own merit.

The last stage is preparing a detailed source of funds declaration for the United States Citizenship and Immigration Services (“USCIS”). The source of funds declaration is a statement to USCIS that explains the origins of the capital investment amount and how the investor acquired the funds. Under the program the investor must prove that the funds were obtained legally and that they rightfully belong to him/her. It is thus a cumulative effort between the investor and the EB-5 consultant to ensure that the documents submitted reflect truthfully the investors path of funds.

Source of funds

The USCIS provides a clear directive as to how capital investment will be qualified as legal under the EB-5 program.

Gift – The investor can use funds obtained from a friend or family member as a gift. The funds will have to be tracked and traced that they legally belonged to the friend or family member prior to them gifting the investor. The gift will also be an irrevocable gift and both the investor and gifter would need to complete and sign a gift affidavit which expressly lists the terms and conditions of the gift.

Unsecured loan – The case of Huashan Zhang v. United States Citizenship and Immigration Services, No. 19-5021 (D.C. Cir. 2020) provided the precedent that unsecured loans are an acceptable source of funds. This means that an investor can obtain a personal loan based on their existing assets as collateral and use the funds to pay for their EB-5 investment.

Salary Savings – The prospective investor can use salary earnings as a source of funds. They would need to provide salary certificates, employment contracts and bonus letters if applicable.

Business dividends or earnings – Business owners can use funds obtained from the business or shareholder dividends as a source of funds.

Investment dissolution – Investments in stock, cryptocurrency, real estate can be used as a source of funds so long as the prospective investor can accurately account for where they obtained the original funds used to start the investment portfolio.

September 2021 application rush

There is a short window of opportunity for prospective investors that missed the June 30 deadline. According to industry thought leader Shahriar Zamanian (known as Shai Zamanian) the EB-5 Regional Center program will be reauthorized by September 30, 2021. After the reauthorization families will have a very short window to capture the $500,000 window before USCIS makes a final decision as to the future of the capital investment amount. It is thus imperative for prospective investors to act quickly before the program is reauthorized so that they have sufficient time to collect the documents, choose the right project and ensure that their capital investment is ready for immediate transfer.

Contributed by the American Legal Center www.america.ae