4 ways to address the big problem of the EB-5 backlog

  • Posted on March 25, 2020 | Updated on March 26, 2020 | 5 min read

With Congress having had multiple recent EB-5 bills introduced, one aspect of the program stands out as a major issue: the backlog caused by oversubscribed countries. NES Financial writes about four solutions to this issue: the Modernization regulation may help retrogressed investors; fulfill the original Congressional mandate of giving visas to 10,000 to investor families each year; take unused visas from past years; reallocate visas from other categories.

Some Chinese EB-5 investors are now waiting up to 16 years for their Green Card; Vietnamese and Indian investors are also oversubscribed; in the future, the EB5 news could be that South Korean, Taiwanese, and Brazilian investors join the group of backlogged countries.

Early exits caused by the backlog

EB-5 investors in long lines don’t always make it to the end. Some exit early as their children become susceptible to “aging out” and no longer qualifying under program rules to be issued EB5 Green Cards along with the principal applicants. Other investors who have been waiting for years leave the program due to the immigration uncertainty or because of the financial anxiety that redeployment, placing their capital in new investments, can bring.

Besides being a bane to the investors from impacted countries, the EB-5 backlog is a major detriment to EB5 regional centers and developers as well as they fear that without visa relief, the program lacks long-term stability.

Even a small EB-5 visa increase can make big differences

So what can be done to address the backlog and make the program more attractive to EB 5 immigration investors and stakeholders alike? Suzanne Lazicki, a business plan writer and EB-5 expert, has calculated that even a minor adjustment of EB-5 visa numbers can have a noticeable impact on wait times. She has determined that reallocating 1,500 visas from another category, for example, could lessen wait times by up to 15%.

And besides that benefit to retrogressed investors, such a minor increase in EB-5 visa numbers could make a substantial difference in creating U.S. jobs, the primary mandate of the program. Reid Thomas, and EVP of NES Financial, a firm that handles EB-5 funds administration, states that an increase of just 1,500 visas would mean about 8,000 permanent jobs in the U.S.

NES has written about four potential ways to alleviate the EB-5 backlog

1. The recent Modernization Rule could lessen demand, thus giving more visas to retrogressed countries

The new regulations came into effect November 21, 2019, most notably, increasing investment amounts: Targeted Employment Area (TEA) investments increased to from $500,000 to $900,000; standard investments similarly increased 80% from $1,000,000 to $1,8 million. The dramatic rise in the Green Card by investment cost has no doubt left some would-be investors out of contention as they simply cannot produce that amount of capital, and even those who can afford the increase may be pausing before committing.

Unused EB-5 visas from “current” countries, those without a backlog, become available for investors from retrogressed countries. Thus, while not ideal for overall program growth, the new regulations may actually help investors from China, Vietnam, and India.

2. Only counting principal investors toward the annual quota

EB-5 stakeholders firmly believe it was the original intent of Congress when it first implemented the EB-5 program to bring in 10,000 EB5 investments per year — and thus create 100,00 fulltime U.S. jobs. However, U.S. Citizenship and Immigration Services (USCIS) has been counting derivatives, or family members of the principal investor, against the annual cap. As each I-526 petition usually results in about three visas for each family, only about a 3,000 investor families are eligible for visas each year. Not counting derivative family members would go a long way to alleviating the line-ups caused by oversubscription.

3. Bring back unused visas from previous years

Prior to 2014, a significant number of EB-5 visas were not used. Reallocating such visas could be another significant way to address the backlog, without having to add new numbers.

4. Reallocate visas from other categories

One possibility could be to reshuffle the total visa numbers and to give the EB-5 program numbers from other categories, for example, the lottery-based diversity category, or underused employment-based categories. It is noteworthy that Congress has done this historically; in 1989 unused family visas were redistributed to employment-based categories.

Resolving the backlog is better for America

A partner at multinational law firm Seyfarth Shaw, Leon Rodriguez, who is also a former director of USCIS, offers strong words as to the vital need to address the EB 5 immigration backlog:

“It is clear that there is strong demand for permanent residency in the United States, and unlike other visa categories, EB-5 is directly linked to job creation for American workers. It is in America’s own interest to resolve the backlog.”

Read the NES article Moving the Needle on the EB-5 Backlog