A lot of tech employees working in the U.S. on an H-1B visa are getting laid off. It’s a very frustrating time for folks who have made a life for themselves and their family in the U.S., but the EB-5 visa program may be an answer for some of them.
Added to this group are individuals who are working in the U.S. on an H-1B whose right to stay in the U.S. is tied to their employment and therefore at the mercy of that employment.
But let’s focus on the people who are in urgent mode. They’ve been laid off. How long before they have to go back to their country and what are some of the strategies to remain in the U.S. can they consider?
Dennis Tristani: The past few months have been very, very difficult. You can open up a news page, whether here or abroad and this is topical.
Five years ago, the US Immigration Agency revised its policy and regulations to provide a 60-day grace period that allows someone with an H-1B visa (or other work visas) to do a couple of things.
Termination: options
It begins the moment an individual is essentially terminated from their position. If you have more than 60 days left in your H-1B status, you'll have a full 60 days. If not, it's the lesser of the two time periods.
During this time period you do have options.
First, you’re able to move to another employer and file an extension of H status or change status to another temporary visa.
Additionally, you can pursue adjustment of status through EB-5, the investment-based visa.
Adjustment of status allows an individual present in the U.S., and in valid visa status (admitted lawfully into the US) to essentially change their status, by adjusting their status from the underlying non-immigrant status (H-1B) to Green Card status, pursuant to an immigrant-based petition. The EB-5 visa is an immigrant-based petition.
But in order to adjust status, you do need an underlying Green Card petition to be filed.
Kurt Reuss: So one option to someone might be to file an F-1 visa, if they become a student.
Live and work in the U.S. with an EB-5 investment.
When does the 60-day grace period start?
Dennis Tristani: What's generally more common for individuals in this situation is to first look at the temporary visa statuses they can change to. And you don't have a lot of time, unfortunately — you have 60 days.
I would advise that's from the last day a person was employed, but you could potentially argue that severance pay factors into the situation. So you have severance pay for an additional 60 days, it could be argued that your 60-day grace period begins at the end of that severance pay.
It's important to mention that this is a discretionary 60 days. And an argument the government might make is that if you are collecting severance pay, but you're not working anymore, that you're not really employed and therefore you’re not in H-1B status anymore.
So, I typically advise my clients to think of the 60 days as beginning on the date of termination.
So, you might think, do I want to go back to school? Is there a PhD I was thinking of getting? Do I want to change status to F-1 student status? That's an option some people might consider.
But a lot of people may decide to just change status to tourist, B-1 (business travelers) or B-2 (tourist) status, to provide themselves with a little additional time to figure things out. They might use this time to wrap up their affairs or perhaps to search for employment.
Change of status must be done in the U.S.
Kurt Reuss: And if an individual decided to pursue the B-2, the tourist visa, it’s not a problem for them to do this from within the U.S.?
Dennis Tristani: Yes. You’ll want to file the change of status to B-2 while you're in the U.S. Any change of status, whether it's from H to B or F has to be done while you're in the US.
You need to be in a valid non-immigrant visa status to change to another one. So you would use the 60-day grace period as an extension of your valid H stay, and you would file an application to change your status from H-1B to B-2 which is visitor visa status, which essentially provides you with an additional six months in the US.
Kurt Reuss: Okay. So filing an adjustment of status — that’s Form I-485?
Dennis Tristani: Yes.
Benefits of adjustment of status including work and travel permits
Filing Form I-485 allows someone in the US to adjust their status to green card, an immigrant based petition, whether it's I-526 (EB-5) or you've married a US citizen and file an I-130 family based petition.
The number one benefit of filing for adjustment of status is it protects you from having to leave the U.S. if your underlying temporary status expires.
For someone whose F-1 status is expiring, or H-1B status is expiring because they've lost their job, this is very attractive because it allows a person to remain in the US. It doesn't uproot them.
It allows them to maintain their life here, their friends, their family, without having to return to their home country. And the other big benefit is that when someone files for adjustment of status, you're allowed to file a few other ancillary forms with it, including Form I-765, Application for Employment Authorization, also known as a work permit.
The second is an application on Form I-131 for advanced parole, which is a travel permit.
Both applications are filed together with the I-485 adjustment of status application, and this is an enormous benefit, especially if your underlying status is expiring or you've lost your employment. You’ll receive a temporary work permit, that's an open work permit, within three to four months after filing the adjustment of status application.
Kurt Reuss: So let's assume for a moment that someone files, within the first 60 days after getting laid off, an EB-5 visa petition, which is Form I-526.
They apply for an adjustment of status to B-2, a tourist visa, thus buying themselves time to organize their thoughts, and subsequently make an investment within the next six months and file an EB-5 petition.
Walk me through that process.
Concurrent filing explained
Dennis Tristani: One of the big benefits of the new EB-5 law that was passed in March 2022 is it allows for what's called concurrent filing — filing for adjustment of status with Form I-526, which is the initial form you’d file if you're pursuing an EB-5 investment visa.
Prior to the new law passing, individuals had to wait until the I-526 was approved before they could file form I-485. The new law brought EB-5 more into parity with the other employment-based Green Cards which allow concurrent filing.
So, you can make your investment, file Form I-526, concurrently with Form I-485 and the other forms that I mentioned for a work and travel permit. It's essentially an I-526 adjustment application package. You file all four applications at once and they’re all sent to the same service center. Within a few weeks you'll get a receipt for your I-526 petition as well as a receipt for the I-485 application package.
You can work on both processes in parallel, while researching your investment options, doing your due diligence, and working on source of funds with your EB-5 immigration attorney.
Kurt Reuss: How long does the I-765 form take to adjudicate?
Processing times for work and travel permits
Dennis Tristani: Fortunately it's taking three to four months, which might sound like a lot of time, but over the last few years it was taking 7-12 months.
My clients have been receiving work permits within three to four months. The travel permit is taking longer, upwards of six to eight months to arrive. But again, for individuals in the US who are more concerned with continuity of employment, it's definitely an important benefit and the processing times have gotten better.
Tourist and student visa holders must wait before an EB-5 filing
Kurt Reuss: When you file the B-2 tourist visa you must attest that you are not intending to stay in the U.S. permanently. But it may become their intention when they file. How long before USCIS, in your experience, would be comfortable with someone going from a tourist visa, to filing an I-526 for EB-5?
Dennis Tristani: Yeah, that's a good point. There are certain visa statuses, namely a tourist visa, F-1 student visa, that are strictly non-immigrant, which essentially means your intent, when you arrive in the U.S., has to be to visit, whether it's for work or pleasure, or to study and then return home.
You’re not supposed to have an intent of residing permanently when you enter on a tourist visa or a student visa. USCIS policy, which has sort of gone back and forth on this, typically after 90 days of being in the U.S., your subjective intent is no longer examined.
And so again, if I have a client that approaches me and says, listen, I've been a student in the U.S. and I arrived four months ago. I'm looking at EB-5 and I want to file a concurrent EB-5 adjustment of status application.
If you've been in the U.S. for more than 90 days, most attorneys would say you're safe to file that application. If for example you’ve just arrived in the U.S. on a tourist visa, I would’t recommend that you turn turnaround and marry a U.S. citizen, for example, or file a Green Card application, because USCIS will look at that and say when you arrived in the U.S. a week ago, you told customs one thing and now you're turning around and filing an application that goes directly in the opposite direction.
Most attorneys would say there's a gray 90-day rule. The 90-day rule is actually codified in the Foreign Affairs manual. It's also referred to in the USCIS policy manual. Most attorneys would say wait 90 days before you apply for adjustment of status based on EB-5, if you’re within the U.S. in temporary visa status.
EB-5 set-asides offer advantages for backlogged countries
Kurt Reuss: When you file an I-526, are there any limitations in the category a client of yours should be considering when evaluating investments to consider?
Dennis Tristani: Yeah, the new EB-5 law created what are called visa set asides. They carve out visas within the total pool of EB-5 visas for investments made in high employment areas, rural areas, and a small portion of projects that are located in government infrastructure projects.
As of today all these categories are “current” in the Visa Bulletin, which means if you were born in China, if you were born in India, countries that as of today are backlogged, you can still move forward and file for adjustment of status today, and based on a pending EB-5 investment, remain in the U.S. — but only for projects that are located in a high unemployment area, in a rural area or in an infrastructure project.
Kurt Reuss: That's available to anyone in the world. Those categories.
Dennis Tristani: Correct.
Kurt Reuss: Jason, you’ve written articles about EB-5 visa processing times for each country, so someone who's transferring from H-1B to EB-5 needs to invest in a current category. Could you share with us what categories are not current and maybe walk us down the path of where things are going?
Jason Buback: Well, as everybody knows in the unreserved EB-5 visa category, the category of EB-5 investments from before the Reform and Integrity Act, people from mainland China are not current. And they have a cutoff date of March 22nd, 2015. India recently, in the October visa bulletin in the unreserved category, now has a cutoff date of November 8th, 2019.
So if you're an investor from China or India and you want to file concurrently for adjustment of status, you're going to have to consider investments in the new set aside categories, either rural, high unemployment or infrastructure.
Vietnam is backlogged and also benefits from the reserved category
Kurt Reuss: Jason, one confusion in the market, and the eb5Marketplace website actually draws from your analysis is the situation for people born in Vietnam.
Vietnamese investors should probably anticipate a longer wait time than people from other countries because you’re anticipating that they will be facing backlogs shortly, certainly by the time their application gets processed. I believe you have estimated that they're probably going to be encountering a seven-year wait.
Should EB-5 petitioners from Vietnam be investing in one of the set aside categories, or do they have the ability to invest in any category right now and still file for adjustment of status?
Jason Buback: My understanding is that even though there's a backlog for Vietnam, if at the moment of filing, the category you are filing under is “current,” then you're okay.
The Visa Bulletin doesn’t always show when a country has a lineup
So there is a backlog for unreserved investments if you are Vietnamese, but the visa bulletin doesn't reflect that yet. And just as a word of caution, in April of 2022 this year, Charlie Oppenheim said that there was a 10-year India backlog, yet the Visa Bulletin was still “current” for Indians and it stayed “current” for another six months.
So just because you're “current” on the Visa bulletin, it doesn't necessarily reflect the wait for new investors. It's complicated.
Dennis Tristani: What we've seen over the last five years is that countries will show “current,” and the expected wait times that have been published or made public or have been in policy statements from the Department of State haven't really lined up with what the Visa Bulletin is showing, and there are reasons for that.
USCIS processing of I-526 petitions has slowed down considerably. And so the way things work is that your I-526 has to be approved in order for you to move on to adjustment of status. And it's only at that point in time where a visa is pulled from the quota of visas.
Right now, we still have a backlog of cases pending adjudication at USCIS from 2017, 2018, and 2019. So, there's a boatload of people in this waiting room waiting for their case (I-526) to be approved.
One thing I would say with certainty. If the category is “current” then you can apply for adjustment of status.
Kurt Reuss: So a Vietnamese employee has just gotten laid off and he looks to EB-5 to protect his ability to live and work in the US. And he anticipates that he's eventually going to run into a backlog, but he decides to invest in a standard EB-5 investment.
Because the category is “current” today, he can go ahead and do that, correct?
Dennis Tristani: Yes.
Adjustment of status can keep investors in the U.S. during a visa wait of even many years
Kurt Reuss: And so that he makes that investment. Now, let's say six months from now, that category goes into retrogression becoming uncurrent. And so the wait for a visa, maybe he’s looking at seven years. Is he or she okay with that adjustment of status for that length of time?
Dennis Tristani: Yes. As long as you apply when the category is “current,” and subsequently your category retrogresses, that doesn't nullify your adjustment of status application.
It's one of the big benefits of having the adjustment of status — it will continue your ability to reside in the U.S. indefinitely until the underlying application is approved, which would be the I-526 petition. At that point in time, you'll be able to get your Green Card.
Kurt Reuss: The situation with rural and high unemployment right now with the new visa set aside categories, we're not in as much of a rush.
Dennis Tristani: Yeah, I would anticipate that these categories will be current for a good part of 2023.
Investment options for faster processing and partial payment options
Kurt Reuss: Carel, you have a selection of investments in the high-unemployment category, the rural category, and you even have an investment that is in the national interest and is likely to provide investors with expedited processing.
Carel van der Merwe: Yes, and we actually have three regional center investments that will accept an initial partial investment as well, which offers the benefit that you could file your EB-5 petition, get the process started, and do a concurrent filing.
So people in a pinch could apply for their work permit, travel authorization, with just an initial partial investment amount.
It's advisable to ideally put down as much as possible, but it's flexible. The money will be held in escrow until the full amount is funded and the petitioner needs to commit to making the full investment, thus be seen as ‘being in the process of investment’.
If there’s a hiccup and the full amount can't be funded, then the EB-5 application will be withdrawn and the investment amount will be returned to the investor.
So it's a wonderful mechanism for individuals that are in the 60-day interim period and need to move quickly, to get the process started, and gives them some time to gather their remaining funds.
USCIS has allowed partial EB-5 payments to start
Kurt Reuss: Dennis, give us a little guidance on how flexible USCIS is when it comes to not putting the full investment up prior to filing your I-526.
Dennis Tristani: I’d probably say most investors don’t know that you can be in the process of investing when you file your I-526 petition, both law and case precedent has confirmed that.
So the term “in the process of investing” literally means that you are committed, you have begun the process of investing when you file your petition. Now, how much that means, what specifically that amount is, there’s no set dollar amount.
I think a lot of installment plans that I’ve seen on the market will depend on the project and the structuring the offering, and getting money in before construction ends, or the timeline of the project may influence how much money a particular project is going to ask for upfront. The USCIS form has space available to say how much have you invested on day one (and how much is committed to be invested later).
I don’t see USCIS approving a case until the entire amount is funded. Most of my investors clients who have pursued partial-payment plans will normally go with either a two or three-step installment plan, based on the project they’re investing in.
That might mean $200,000 upfront and $300,000 over the next six to eight months and the remainder before the end of the year. So it’s a good option.
It allows you to get the I-526 and adjustment of status filed. When using an installment plan, I want USCIS to know what the plan is (what the contractual language says), that the investor is contractually obligated to fund the entire amount, that he is not only in the process of investing, but has a plan to make all future payments.
Realistically, if you don’t do anything (fund compleletly), you’ll get a request for evidence (RFE) in a few years and the government will ask, have you completed the final payments that you’re obligated to make pursuant to the offering documents?
Slower processing options can benefit investors with partial payments or remittance challenges
Kurt Reuss: So if a client needs more time to put together their funds, they’ll be more inclined to make an investment in a high unemployment or standard investment because a rural project might be approved in as little as six months.
Dennis Tristani: Slower processing can sometimes be beneficial, depending on the merits of a case. For people from India that have currency remittance laws where you can only remit $250,000 per annum, for example.
If they’re selling property, or an asset, especially if the market is soft. Some people may want to sell equities over a few months when the market may be more favorable.
Promissory notes and collateral for partial payments
Kurt Reuss: What about having a promissory note. Obviously the Immigration Service wants to know that you’re committed to the investment and a promissory note, committing that you will come up with the rest of the money; how important is that? Is it crucial or just a nice to have?
Dennis Tristani: I’ve seen projects require a promissory note and at the most secure level the fund requires the investor to post collateral. The document might be flexible in the sense that the regional center or the fund could amend it if need be (to provide the investor additional time).
The government is going to want to see that the investor is obligated to make the required payments, whatever the relevant investment threshold is. I’ve seen funds going with a more flexible, deferred payment contract but you’ll see different agreements in the market right now.
Accredited investor status
Kurt Reuss: Carel, let’s talk about accredited investor status. Investors in the U.S. will not qualify for Regulation S, as they will be solicited to from within the U.S.
Dennis, do you feel like there’s any concern with a terminated H-1B visa holder leaving the country with the intention of signing a Reg S, which I’m by the way, not a fan of because it is just trying to circumvent securities laws and that can come back and bite people. But what do you think about the possibility of someone leaving the country in order to sign a Reg S because they don’t want to enter into a Reg D offering, which will generally require them to be an accredited investor?
Dennis Tristani: If you’re in your H-1B 60-day grace period because you’ve just been laid off, I would 100% advise against travel. Unless you’ve filed another H-1B petition to change employers that’s approved, then you can travel and come back to the U.S. saying, here’s my H-1B approval. I’m coming to work for my new employer.
If you depart the U.S. and come back using your old notice from an employer that has terminated you, that’s a recipe for having a customs officer ask you for proof of employment and having to tell the officer no or something incorrect.
So, I definitely wouldn’t advise travel during the grace period.
Carel van der Merwe: Because these are unregulated securities, petitioners need to be accredited investors. This is an SEC requirement. They’re in the U.S., they’re buying an unregistered security, therefore they need to be accredited.
The definition of accredited investor is defined by the SEC under Reg D as someone who has earned income of more than $200,000 in each of the prior two years, and has a reasonable assumption of doing that in the coming year.
Or, combined with their spouse, they’ve earned over $300,000 in the prior two years, and they similarly have the expectation of earning that in the coming year.
There is also a net-worth calculation that they have a net worth of over one million dollars, excluding their primary residence.
In certain circumstances, professional qualifications can count towards qualifying as an accredited investor as well.
This is something that we have to verify prior to any investor making an investment. Definitely something to bear in mind before embarking on this.
Kurt Reuss: You mentioned that there are a few investments that have the ability to take partial payments.
Five kinds of EB-5 investments
Carel van der Merwe: There are five categories of EB-5 investments.
We’ve briefly discussed three of these categories that fall into the new visa set aside categories including rural, which constitutes the largest portion of the set aside visas, at 20%. Rural also qualifies for priority processing and the $800,000 investment amount.
Then you’ve got high unemployment areas which make up 10% of the visa set asides, and they also qualify for the lower investment amount of $800,000.
Then a small amount (2%) of visas are set-aside for infrastructure investments. We don’t see too many of those in the market.
Then there’s a basically a legacy category of projects that would not qualify for set aside visas, nor do qualify for the $800,000 investment amount. Those would be projects located anywhere else, and the investment amount is $1,050,000. They would be typically located in urban areas.
Then I would say there’s a fifth category that is not dependent on the location at all but qualifies for expedited processing, the fastest processing track, and this is a result of the project being deemed to be “in the national interest.”
We at eb5Marketplace are very fortunate in that we now have three projects in the market at the moment, one being rural, one being in a high-unemployment area, and a third that has had investors qualify for expedited processing.
A rural investment with faster repayment and expedited processing potential
I’ll touch on each of these three very briefly, starting with the rural project.
This project is called Western Energy, an oil and gas project in Oklahoma. And it is fairly unique for two reasons. Apart from the fact that it’s rural and therefore qualifies for a visa set aside and priority processing, it is also structured in order to potentially repay investors quite quickly.
In the new Reform and Integrity Act of 2022 which passed this past March, investment sustainment has been reduced to just two years from the time of investment. And this project is designed to repay EB-5 investors first, which could, happen depending on the price of oil and natural gas, in as little as two or three years.
Secondly, I would highlight that this particular investment has the potential for expedited processing. The regional center applied for a “in the national interest” designation in its regional center filing and its I-956F filing, both of which were approved for expedited processing.
So there’s a very reasonable chance that investors will get expedited processing in this project as well. So you’ve got a very potent combination of potential fast payback and very fast processing as well.
The fund for this investment wants to start pumping oil as soon as possible and we will know fairly soon as the first investors are filing and they are all applying for the expedited processing.
A high-unemployment-area investment in manufacturing
Our next project is located in a high-unemployment area (qualifying for reserved visas) and it’s called American Industrial Brands. This is a manufacturer of bathroom fixtures such as toilets, sinks and tubs. It’s not the sexiest business but I think that’s one of the attractions of the business. It’s a very stable industry with long-term contracts.
The owners, the manufacturing team that acquired this factory in Indiana are very experienced. They acquired an existing factory that they’re retooling and modernizing. It’s a $27,000,000 phase one upgrade and they’re very well positioned. The company is offering a full refund in case of EB-5 petition denial.
Right now, given the global supply-chain disruptions that we’re seeing, a lot of these products that were being imported from China and Mexico, by American Industrial Brands, are now in a very good position to sign favorable contracts with big-box retailers.
In fact, the bulk of their 2023 production is committed in long-term contracts. They’re also very cost competitive in terms of domestic manufacturers because of their robotics and their automated production lines.
The manufacturer is located in a high-unemployment area, which doesn’t have the priority processing, but it’s a sound business. Clearly, we’ve done a lot of due diligence on this and we’re comfortable recommending this project and sharing our investigative work (due diligence report).
Kurt Reuss: I know the Biden administration has talked about the importance of bringing manufacturing back from China, where the majority of this type of manufacturing has been done in the past. Has this project filed for expedited processing?
Carel van der Merwe: Yes, they have. There is a possibility that they could get expedited processing as well.
Kurt Reuss: I would imagine that you’ll probably find out in the next couple weeks.
Carel van der Merwe: Yes, absolutely.
Kurt Reuss: Jason, I imagine you are listening to Carel use the phrase TEA and wanting to correct him each time. Would you just tell us a little bit about what the definition of TEA is?
Two kinds of targeted employment (TEA) area investment categories
Jason Buback: TEA is a targeted employment area and it comprises both high-unemployment areas and rural areas, if you look at the regulations. So when Carel is saying TEA he means high-unemployment. But the new regs view both rural and high employment areas as targeted employment areas (TEAs).
Kurt Reuss: Okay. And they both have set asides, but the rural has twice as many.
Jason Buback: Rural gets 20%. High-unemployment gets 10%. But only rural has priority processing.
Processing times for expedited and rural investments
Expedited approvals right before covid were taking three to six months. I think I saw a deal that recently had a direct investor get processed with expedited in just seven months this year. A lot of the lawyers I'm talking to are anticipating expedited processing to take six to 12 months in the current post-Covid climate.
Kurt Reuss: And we see USCIS adding a lot of new staff right now, so perhaps, we'll see improvements on processing times soon.
Jason Buback: They are adding staff. Yes.
Kurt Reuss: Carel, sorry to interrupt you. And your third investment?
A hospital investment with expedited processing
Carel van der Merwe: So the third is a project that has had investors expedited in the past. It's a hospital in Ohio. It’s a fully functioning regional hospital called the East Ohio Regional Hospital.
The reason investors have been expedited in this particular project is because the hospital is establishing a behavioral treatment center to treat patients with opioid addiction. The location of this project is in the epicentre of the opioid crisis in the U.S.. It’s clearly a national priority, addressing the opioid concern.
We've had about a dozen investors in this project approved for expedited processing to date but we have yet had an I-526 approval yet.. But hopefully those will start to come through quite soon.
A direct investment option with 40% ownership
Kurt Reuss: I'm going to add one more investment category and opportunity for people to be aware of. Direct investments may only have a single investor. We at eb5Marketplace are offering a single investor the opportunity to invest in Southern Oak Dental.
This is a facility that mimics an investment made by previous EB-5 investors from China. They invested in a similar dental office in a different location, got their I-526 and their I-829 approved, along with two other families who invested in the two other dental clinics.
And then this family bought out the clinics and now they're opening three new locations and they're offering three opportunities to single investors to invest in each of those three projects.
The locations are each in a high-unemployment area. One of the things that stands out about a project like this is you can meet with the owners and discuss the opportunity with them. One big opportunity to a direct investment like this is you own 40% of the company while you're invested.
Generally it takes about five years to be repaid, so based on their firm’s projections of earning $1,000,000 dollars over the first five years, a 40% return would yield an internal rate of return of about 11%.
So it's an opportunity for investors to potentially make a little money if they're comfortable with a smaller project, one that we’ve evaluated and produced a due diligence report on.
