On October 11, 2023, United States Citizenship and Immigration Services (USCIS) updated its policy on the minimum investment period for EB-5 visa applicants. This update seeks to clarify how USCIS interprets changes made by the EB-5 Reform and Integrity Act of 2022 (RIA).
The RIA stated that an investment is expected to remain invested for not less than two years, but does not specify when the two years start. The new guidance published on the website states that this two-year period begins when investor funds are deployed to the job-creating entity (“JCE”). As long as 10 jobs have been created by an EB-5 investor’s investment, he or she can be repaid after two years and remain eligible for a U.S. Green Card. This is a significant change to the "at Risk' Requirement for EB-5 investors.
The new policy, however, is just that: a non-binding policy. It does not carry the weight of a regulation promulgated by the Immigration Agency, which has been subject to notice and comment. As a result, EB-5 investors should be cautious about selecting projects that promise a shorter investment timeframe.
Key Takeaways for EB-5 Investors
The at-risk period for EB-5 funds is now two years starting from the time the funds are “placed at risk” What USCIS means by “placed at risk” remains unclear, but the funds must be made available to the JCE for job creation. Although this appears to be a final pronouncement from USCIS on this subject, USCIS may reverse this new policy (at any time) as it is non-binding. Also, the policy may be overturned through the promulgation of regulations or litigation. If this happens, the required investment period would revert to the 2-year conditional residency sustainment period—EB-5 investors must receive and hold the Green Card for 2 years before being eligible for a repayment of investment funds. Because this policy, even though issued as a final pronouncement, may be reversed, investors should be cautious and keep this possibility in mind when considering an EB-5 project that has a much shorter repayment target than the average 5-year term that most EB-5 projects have. Generally, EB-5 projects that promise a two-year investment period are likely to pose both higher immigration and financial risk to investors.To qualify for a Green Card, an EB-5 investor’s funds must be “at risk,” which means the money must be invested in an EB-5 project and subject to gain or loss. Before the RIA, an EB-5 investor’s funds had to remain at risk until the end of his or her two-year conditional residence period, which may be long after the approval of Form I-526.
The RIA has new language regarding the investment period. Instead of having to keep their funds invested until the end of the conditional residence period, EB-5 investors must keep their funds invested for at least two years. However, Congress did not define the RIA when this two-year period started.
The latest guidance from USCIS seeks to clarify the situation. According to the new policy, this two-year minimum investment period begins once “the full amount of qualifying investment is made to the new commercial enterprise and placed at risk under applicable requirements, including being made available to the job-creating entity.”
In other words, the clock starts ticking once the investment is made and becomes at risk. The period no longer begins when the conditional Green Card is granted.
The reduced minimum investment timeframe does not apply to EB-5 investors who filed Form I-526 before the RIA was signed into law in March 2022.