You didn’t get selected in the H-1B lottery. Now what? Consider EB-5
By: Peter Calabrese, CEO, CanAm Investor Services, & Matthew Galati, Principal, The Galati Law Firm
The H-1B lottery closed as of April 1. And in its wake, tens of thousands of individuals seeking a new life in the U.S. were either not selected or remain unsure how to move from H-1B to a more secure immigration status, perhaps because of employment uncertainty or long visa backlogs. Those are the challenges facing many. Fortunately, the EB-5 program offers an alternative, effective path to US immigration.
What is EB-5?
For the uninitiated, EB-5 is a job-creation program that enables immigrant investors to obtain US permanent residency. First enacted in 1990, EB-5 began as a program in which participants were awarded green cards in exchange for, for the most part, building small businesses that created at least ten jobs for U.S. workers. While this version of the program still exists, it’s never been very popular.
For the past 32 years, entities called “regional centers” have made it generally more straightforward for immigrant investors to obtain lawful permanent residence in the U.S. Among other functions, regional centers pool capital from many immigrant investors, with the unique ability to leverage indirect job creation to meet the program’s ten-job requirement (per investor). To illustrate why this is a powerful change, let’s use the example of a building project. EB-5 regional centers can build the structure with pooled capital while counting all jobs created indirectly through economic modeling (e.g., through calculating the economic activity of contractors, construction workers, electricians, plumbers, etc.). This eliminates the burden of standalone investors needing to build a business and then find and hire workers directly.
Currently, the minimum investment is $1.05 million. However, there is an exception to that rule. If the EB-5 project is based in a rural area or one that is experiencing high unemployment, , that investment is lowered to $800,000. It is the exception that eclipses the rule: throughout most of EB-5’s history, most immigrant investors have leveraged the lower investment amounts.
Why EB-5 as an Alternative to the H-1B and Employer sponsorship?
While much of the US immigration system is built on uncontrollable factors (perhaps the most of all being the H-1B lottery), we are of the opinion that of all the immigration categories, EB-5 gives prospective immigrants the most control over their outcomes.
Consider the benefits of EB-5 relative to the H-1B lottery:
- EB-5 is not random.
- EB-5 has no education requirements.
- EB-5 allows for self-sponsorship.
- EB-5 is not tied to specific employment criteria, however investors must demonstrate the lawful source(s) and path(s) of their investment funds.
- This requires highly detailed paperwork demonstrating exactly where the funds originated and the legal path they traveled post origination.
There are a total of approximately 10,000 visas available for the EB-5 immigrants. Beyond investors, EB-5 visas are available for their spouses and children under the age of 21. Importantly, the 2022 Reform and Integrity Act (RIA) ensures that 32% of the visas available in the EB-5 category were carved out for new investors that that are investing on or after March 14th, 2022.
What EB-5 related benefits exist for those not selected in the H-1B lottery?
The 2022 Reform and Integrity Act overhauled the EB-5 program, perhaps the biggest benefit in the statutory rewrite was to allow an immigrant investor to concurrently file their adjustment of status if visas are available. Before this, if an investor had to wait until the initial petition for conditional permanent residency) was approved before they could file an I-485 for their adjustment. Now, waiting for approval is no longer required.
Benefits arising from the change:
- Advance parole: Those who file concurrently and receive advance parole are generally able to leave the country for short to medium durations and then reenter without worry about maintaining an underlying visa or abandoning an adjustment.
- Employment authorization document (EAD): With adjustment of status, a prospective immigrant is entitled to an unrestricted employment authorization document. There are no restrictions whatsoever. One may even get a Social Security number or open a bank account with an EAD.
The great benefit of concurrent filing is it allows one to start life in the U.S. with a much more relative degree of certainty as USCIS policy allows adjustment applicants to remain in the country in an authorized stay indefinitely until adjudication.
How long does the process take?
USCIS’s adjudications of certain EB-5 petitions appear (for now) to move quicker than historical averages. For example, investors who invest in “rural area” projects are, under the RIA, given “priority processing”. While EB-5 stakeholders await regulations defining what this means exactly, current collective industry experience indicates Form I-526E adjudications in less than a year.
How do I start?
There are two important steps that any immigrant investor considering EB-5 should take before beginning the process.
- Find an EB-5 immigration attorney, as they will:
- Review, file, and prepare your source of funds information.
- File your I526-E petition.
- File your concurrent adjustment (if applicable)
- Select a reputable regional center with a strong project.
The immigration attorney will be your most important resource on all immigration issues, so you should keep the following considerations in mind when selecting your lawyer.
- Experience: you want to hire a lawyer who focuses most of his/her practice on EB-5 and/or who specifically has demonstrated EB-5 experience.
- Skills: Ensure that the lawyer has the training to review the regional center’s offering documentation and track record, confirming that the center complies with the RIA.
- Note, however, that immigration lawyers are not investment professionals are generally cannot provide guidance around the financial impacts of an underlying regional center investment. The immigration attorney’s focus will be on the legality of the funds coming from the immigrant investor, as well as whether the regional center project will create the 10 jobs (per investor) needed to fulfill the EB-5 requirement.
As a general rule, immigrant investors should focus on selecting regional centers, operators, broker dealers, and lawyers with experience. The EB-5 process can last for years, so it is imperative that they find partners and attorneys with whom they would want to share a long-term relationship.
What are some common questions from immigrant investors?
- Can the money for an EB-5 investment come as a gift from family?
- Yes, assuming the money is legally sourced and compliant with the EB-5 program requirements. The focus on the petition shifts largely to the gifter as opposed to the investor.
- Does an immigrant investor need to have the entire minimum investment amount ready to start the EB-5 process and lock in a priority date?
- No, not necessarily. While it is true that the immigrant investor will eventually need to provide the full minimum investment amount, the timing of that investment can be negotiated, so long as investors can agree with their regional center to provide the full minimum investment amount on some mutually-agreed-upon schedule.
- Are there differences between immigration attorneys?
- Yes, and sometimes those differences are significant. Ensure that your immigration attorney specifically has EB-5 experience, as not all immigration law experience is transferable.
Ultimately, EB-5 is a US job creation program that enables immigrant investors to come to the US—yet, for however straightforward its mission, EB-5 can be a complicated process
