The United States introduced the EB-5 visa in 1990 to stimulate the economy through job creation and capital investment, allowing foreign investors to become permanent residents and green card holders.
If the EB-5 investment project is located within a Designated Targeted Employment Area (TEA) the investment is currently $500,000 but new changes to the programme mean that amount will increase later this year.
Under the new rules, the EB-5 will require a minimum investment of $900,000 instead of the current $500,000. That minimum amount will be for investments in businesses in rural areas or regions of high unemployment. For investments in other areas, the minimum will be $1.8 million, compared to the current $1 million.
What does this mean for prospective EB-5 investors in the GCC? How long does the entire process take? What should an investor consider before applying?
Stuart Ferguson, CEO, American Dream gives his insights:
What are the benefits of US citizenship by investment (EB-5 programme) for investors in the Gulf compared to other citizenship by investment programmes e.g. Europe and the Caribbean?
Multiple citizenship in general is attractive for a lot of businesspeople in the Gulf who see the benefit of becoming a “global citizen”. They might find it hard to travel with their native passport, they worry about political instability or wish to expand their business on an international scale.
The United States is considered to be the world’s most popular second citizenship destination because it offers the same benefits as other programmes, e.g. freedom of movement, convenient travel, financial incentives, and personal security, plus the ability to live and work in the country that comes with a Green Card. Not all other options grant immediate residency, some don’t give a second passport, and there are various limitations imposed on what an applicant can invest in.
The EB-5 investment visa is the only way for nationals and immigrants in the GCC to fast-track US citizenship and obtain a Green Card and, under the current EB-5 regulations, there is no sponsor required, no special language, education or business experience requirements.
How long does it take for citizenship to be granted/what is the process?
Applicants are recommended to approach an immigration investment professional who will facilitate the process on their behalf. In summary, it takes maximum approx. 2 years to receive the initial green card.
Then, after five years of permanent residency, applicants and their immediate family are eligible to qualify for U.S. citizenship.
1. The first step is to make the investment after which the immigration attorney will file the I-526 application with USCIS. The I-526 application demonstrates that you have made the necessary investment with a qualifying entity, which not only satisfies all EB-5 criteria, but also creates the required job opportunities. The application also demonstrates that the investor’s funds are from a lawful source.
2. Once the I-526 has been approved, an appointment will be made for the investor at the nearest US Consulate for background checks and a non-invasive medical test.
3. The investor and his immediate relatives will receive their 2-year conditional green card and make their first entry into the US to activate their visas. At this point in time, the investor has full working and living rights in the USA and can elect to either stay in the USA or return to their home country.
4. 3 to 6 months before the expiry of the conditional green card, the immigration attorney will file for the removal of the conditions on your green card, demonstrating that the funds remained in the investment for a period of two years, while simultaneously creating the sufficient number of jobs.
5. Permanent Green Card is received without conditions and the investor can start contemplating citizenship.
What are some of the things an investor should consider/what due diligence should they do?
The benefit of working with an immigration attorney is they can do the necessary due diligence on an applicant’s behalf and confirm the likelihood of being approved. Specific considerations depend on the investment pathway (see below).
How are the two pathways to EB-5 investment different i.e. what are the benefits of investing through a regional center as opposed to direct investment and is one more suitable than the other for different kinds of investors?
There are two ways of pursuing visa residency by investment in the US; either by investing through a Regional Center or direct investment.
An EB-5 Regional Center is an organization that has been approved by USCIS to sponsor capital investment projects for investment by EB-5 investors. They act as a service agent and this approach is usually recommended for people who don’t wish to manage their investment directly. Providing it is part of a TEA, the Regional Center model allows you to invest at $500,000 and they are responsible for the job creation and investment success.
In comparison, direct investment currently requires $1 million dollars and the investor is responsible for job creation and the investment themselves.
Whilst it’s generally viewed as more straight-forward, if you’re thinking about investing through a Regional Center you still need to ask some important questions, for example: if problems arise will the Regional Center still be able to fulfill the number of jobs required? When will you get your money back/what is the exit strategy? What is their project history?
What changes are being made to the programme?
Changes to the programme have been in the pipeline for some time and new regulations were discussed during the end of Obama’s administration. The final changes have now been approved and as of 21st November 2019, the minimum investment amount will increase from $500,000 to $900,000.
What’s more, the current TEAs are being re-assessed to make sure that investments are going to help the areas most in need of development. If a project falls outside one of the newly classified TEAs, the investment amount will be $1.8 million.
What does this mean for people who want to apply for EB-5? Can they still expect to get their applications filed if there is a rush to meet the deadline?
This means that anyone applying after 21 November will be subject to the new rules. Investors need to be subscribed (invested) and have their application filed with immigration before this date to qualify under the current legislation and take advantage of the $500,000 investment amount. There is still time to invest and file the application but applicants should move as quickly as possible to start the process.
Stuart Ferguson, Chief Executive Officer, American Dream
In 2009 Stuart was approached by the managing members of a Regional Center in the US to assist with the raising of equity for their US interests. Stuart is currently responsible for securing EB-5 investments from South Africa, GCC & India.
Stuart began his career in finance with Syfretts Private Bank. In the early 90s this was the largest banking institution in South Africa offering local investors participation bonds. Stuart joined their property division and worked for RMS Syfretts (now Colliers International) for 10 years.
He was then appointed as a Director of KRG Key Projects, a large South African property development firm with a number of iconic commercial and residential developments under its belt. Stuart was then head hunted by RCI South Africa (a division of the Wyndham Corporation) where he was appointed VP, New Business Development for Africa & the Middle East.