New EB-5 Regulations Could End Before They Go into Effect

Senator Rand Paul (Republican from Kentucky) is looking to overturn the EB-5 Immigrant Investor Program Modernization rule, where the investment amount is set to increase from $500,000 to $900,000 on November 21st.

As a major supporter of the EB-5 Program, Sen. Paul is seeking to stop the investment amount from increasing and also hopes to stop the regulation from restricting each states’ ability to designate targeted employment areas. If the new rule were to go into effect, “it may undermine the very purpose of the program, which is to create jobs and grow the economy” states Sen. Paul. Raising the minimum investment amount could potentially deter families from the program, which would then have a significant impact on the U.S. economy as direct capital investment and American job creation decrease.

EB-5: An Engine for Economic Development

The EB-5 Immigrant Investor Program is a modern economic development tool that uses globalization to solve the need for flexible and affordable financing for regional economic development projects throughout the country. The Program has produced a dramatic increase in much-needed foreign direct investment (showed on the chart below) in the U.S. and has experienced an exponential growth since 2008.

While the issue of the investment amount gets addressed, another issue that deserves attention from Congress is the EB-5 visa cap. Right now, only about 3,000 of the 10,000 visas are issued to primary EB-5 investors each fiscal year. The rest are issued to the EB-5 investor’s immediate family members. It can be argued that when the EB-5 Program was first created it was intended to only count the principal EB-5 investors toward the visa cap.

Here’s what could happen if Congress only counted EB-5 investors toward the visa cap:

  1. It would relive the visa backlog that currently affects Mainland China, Vietnam and India
  2. It would allow for 7,000 more EB-5 investors could contribute to the U.S. economy, adding billions of dollars in investment capital and creating tens of thousands of jobs for U.S. workers
  3. It would prevent the number of EB-5 visas issued each fiscal year from shrinking further. In the past, the average amount of visas each investor received was about 3.3 (a spouse and one child). This was because most of the investors originated from Mainland China where the one-child policy was in place. Now that Mainland China is facing retrogression, investors from other countries, where they are allowed to have more children, may take up more visas from the 10,000 visa cap.

It’s important to remember that the EB-5 regulations do still take effect on November 21, 2019 and the investment amount will still go up from $500,000 to $900,000. If you and your family are interested in pursuing the EB-5 visa, the time is now to lock in the current investment amount. Follow our blog for the most recent industry updates. Please email our team at info@ctp-fl.com if you have any questions.