With the coronavirus challenging the U.S. economy, Trump is said to be thinking about major EB-5 visa changes that would make the Immigrant Investor program EB-5 more enticing to investors and developers alike: possibly increasing the program’s annual visa limit from 10,000 to 75,000, as well as halving the Targeted Employment Area (TEA) investment amount from $900,000 to $450,000.
EB-5 became a factor in the last recession as a source of inexpensive capital for real estate developers. Now that the U.S. faces another financial crisis, the program is said to be a topic of discussion in the White House. If the program were to be revised to make it more attractive to investors, by simply multiplying its scale, it could potentially bring billions of development dollars into U.S. economy.
The program’s regulatory changes, implemented in late November of 2019, have been said to be the reason for decreased investor interest after the amounts of EB-5 investments increased by 80%, from $500,000 to $900,000 for TEA projects and from $1,000,000 to $1.8 million for standard projects. In addition, new TEA regulations making such designation much harder in urban areas have resulted in less developer interest.
Both EB5 regional centers and developers would be excited about the possibility of new EB-5 visa changes to the program that would likely skyrocket participation in the program. A Florida developer who has used EB-5, Bernardo Rieber, says that such a change would give him the green light on new projects: “It will allow me to launch one or two other construction projects, and each project employs 1,000 people. It’s only positive.”
Major developers who have relied on EB5 investment capital for their projects support such a dramatic increase in visas: big-market developers would be favorable to new proposals that would increase liquidity. Many of them believe that such a change in the EB5 Green Card program could bring the industry back to its heyday of around 2013.
Currently, COVID-19 anxiety and uncertainty have caused some lenders to pause their practice. Billy Meyer, a manager with a Seattle real estate investment firm, says this, “We are taking a 30-day pause. No one knows what the hell is going on here. The virus is massively outbreaking and we don’t know how bad it will get.” Other lenders have adopted a similar wait-and-see response to the pandemic. For developers looking to finance for new construction projects, options are limited, including private lenders who demand higher interest rates.
Any EB-5 visa changes such as, a decrease in the investment amounts or an increase in visa numbers for EB-5 would be all the more attractive during this current financial maelstrom. And it would certainly be huge EB5 news.
“Desperate times call for innovative solutions,” states Stephen Yale-Loehr, an immigration professor at Cornell University and an EB-5 expert. “This could be one way to jumpstart the economy.”
That the Immigrant Investor Program or EB-5 visa, as it is known, needs a major revamp to increase its popularity, especially given the EB5 minimum investment increase from $500,000 to $900,000 reduced the interest of foreign investors last year, is common knowledge. However, although there have been talks about Trump considering EB-5 changes, there has been no official confirmation of the same.
Wealthy aspiring immigrants eagerly await the election results to anticipate any positive changes like a decrease in the investment amount and/or an increase in the number of EB-5 visas, which will make it much easier for them to obtain permanent residency. Will the EB-5 program be renewed under a second Trump presidency? Or will Biden choose to renew it if he comes to power? These questions may not have clear answers as of now.
Although the Immigrant Investor program is a tool for attracting foreign investment and increasing economic development, its implications for immigration are far-reaching, which plague it with political overtones. President Trump has temporarily banned other visas, but he has spared the EB-5 visa program. But expanding the scale by decreasing the investment amount and raising the number of EB-5 visas may lead to serious political consequences. If Biden, who is seen as more immigration-friendly, is elected, he may also tread the program renewal path cautiously as the move would have an over-arching political effect.
But one thing is certain: regardless of who wins, the question of whether the EB-5 program will be renewed depends on who heads the Senate control of the committee that oversees the USCIS. As the election results are expected to be announced soon, let’s hope that whoever comes into power implements these much-needed changes to stimulate the plunging economy and provide deserving and qualified entrepreneurs with permanent residency options.
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