History and Evolution of the EB-5 Program

Updated: June 23, 2024


EB-5 Insider Team

A group of professionals with years of experience helping people immigrate to the US

Note: This article is for informational purposes only. We are not providing legal advice or selling securities. The articles and content on this site are of a general informational nature only and should not be relied upon for individual circumstances.

The Immigration Act of 1990 (known as IMMACT90) led to the creation of the EB-5 Immigrant Investor Visa Program by the United States Congress. It was designed to offer foreign investors a path to U.S. residency through investments to help stimulate the domestic economy.

IMMACT90 significantly restructured the immigration system beyond the EB-5 visa, introducing a range of non-immigration visa categories and increasing legal immigration limits.

Over thirty years later, the EB-5 program has undergone extensive reforms to make it more appealing to foreign investors. It’s become the most efficient way for high-net-worth individuals to access a green card and achieve permanent residency and U.S. citizenship through investment.

While the minimum investment amount has now risen to $800,000, the program attracts more applicants than ever.

At EB-5 Insider, we work to simplify your path to U.S. residency. This guide looks at the history and evolution of the EB-5 program, including the impact of major reforms and legal cases.

Origins of the EB-5 Program

The employment-based fifth preference category (known more commonly as the EB-5 Immigrant Investor Visa Program) was launched in 1990 to create jobs for U.S. workers and infuse new capital into the U.S. economy. It offers foreign nationals a path to U.S. residency and citizenship through investment.

It’s commonly seen as the most efficient way for potential investors to obtain a green card, especially from countries that don’t have access to other programs, such as the E-2 visa. E-B5 visas serve the dual purpose of encouraging economic growth and foreign investment.

As one of the five employment-based (EB) preference programs in the United States, the original investment threshold was set as low as $500,000. The EB-5 program has always required investors to manage a new enterprise that creates ten full-time jobs for U.S. citizens and lawful permanent residents.

Major Milestones and Legislative Changes

Within a few years of its launch, the EB-5 Immigrant Investor Visa Program underwent legislative changes to become more investor-friendly.

In 1993, Congress enacted the Appropriations Act, amending the EB-5 Program with the ‘Pilot Immigration Program’ (IIPP) to increase interest in EB-5 visas. This pilot program led to the establishment of EB-5 Regional Centers, which operate today.

Regional Centers receive special designation from the United States Citizenship and Immigration Service (USCIS) and provide a more hands-off business management option. Most qualify for a lower investment amount. Three other major milestones and legislative changes have impacted how EB-5 Investor Visas operate.

United States v. O’Connor | Capital from lawful sources

In the early years of the EB-5 Investor Visa, there were several instances of fraud. The ruling in the U.S. District Court in ‘United States v. O’Connor’ led to the Administrative Appeals Office (AAO) of the USCIS making changes to the EB-5 requirements in 1998.

Investors must now show proof of the origins of their lawfully obtained funds and that they are involved in the project they invest in. It also prohibited investment return guarantees, requiring the capital to remain ‘at risk’. USCIS attempted to retroactively apply these new regulations to previous EB-5 cases by the ruling in ‘Chang v. United States,’ which outlawed this practice.

The 1998 requirements led to a drop in EB-5 Investor Visa applications.

The 1990s saw a wave of litigation that impacted the operation of EB-5 Investor Visas. These legal decisions are called Matter of Soffici, Matter of Ho, Matter of Hsiung, and Matter of Izumi. They clarified program requirements, including how investments could be administered, qualifications for legal funding sources, and the type of commercial entity that could accept EB-5 investments.

EB-5 Reform and Integrity Act (RIA)

The most significant legislative changes to the EB-5 Immigrant Investor Program came in March 2022 when President Biden signed the Consolidated Appropriations Act 2022, which included the EB-5 Reform and Integrity Act (RIA). It was designed to renew interest in EB-5 visas and help to address application backlogs.

RIA created new requirements for EB-5 visas and regional centers. Under the RIA, the Regional Center Program is authorized until September 30th, 2027. Regional centers continue to be approved by USCIS. Still, RIA has introduced a range of monitoring requirements to ensure greater oversight and reduce non-compliance, misappropriation of funds, and the likelihood of fraud.

The USCIS was initially slow to clarify what RIA meant in practice for EB-5 investors and regional centers. It eventually released updated guidance on how RIA would be interpreted in October 2023. The most important parts of these guidelines include how long investments need to be sustained and rules regarding investments made through terminated regional centers before the enactment of RIA.

Key Reforms and Updates

Similarly, the EB-5 Immigrant Investor Visa has undergone several reforms and updates through its three decades of implementation. These have shaped the program into what it is today and continued to make it more attractive to foreign investors.

In 2003, Congress passed the Basic Pilot Program Extension and Expansion Act to revitalize the investor program. It required the Government Accounting Office (GAO) to investigate the EB-5 visa program to understand why it wasn’t successful. This investigation revealed that only a small number of the 10,000 visas allocated annually to the EB-5 program were being granted, leading to renewed calls for program reforms.

The main reform from this work was the creation of the Investor and Regional Center Unit (IRCU). It’s a specialist unit within USCIS overseeing the EB-5 program, including policy creation, form design, case auditing, and regulation development. The IRCU has drastically improved the program’s reliability and led to better government coordination.

The Immigrant Investor Pilot Program is required to be extended by the President or Congress. In 2009, President Obama extended it to September 30, 2012, before extending it again to 2015. President Trump then extended the program until September 30, 2020.

However, the Immigrant Investor Pilot Program hasn’t always been valid. It lapsed on June 30, 2021, for a period that led to USCIS pausing its processing of regional center applications. EB-5 investors were in limbo for almost nine months until the RIA reauthorized the program. As a result, the RIA includes a provision protecting regional center investors in the event of a future lapse.

Another key reform of the RIA is the change to the sustainment requirement for investors who file for their visas on or after March 15, 2022. It reformed the requirement for investors to sustain their investment throughout their conditional residence, instead requiring them to show their capital is expected to remain invested for ‘not less’ than two years. The RIA also requires that regional center investors wait until USCIS approves their project before they can submit their I-526E petitions. EB-5 projects are required to file a project request, known as a Form I-956F, to be approved by USCIS. Project requests now allow USCIS to closely monitor the activities of regional centers to detect any irregularities or non-compliance at an earlier stage. Regional centers are required to submit their operations strategy, investment documents, and information on their marketing fees.

Current State of the Program

Retaking where these reforms have now brought about the EB-5 Immigrant Investor Visa Program is worth retaking. Below are the requirements for investors to acquire a green card through investment with the EB-5 program.

EB-5 visa applicants must invest at least $800,000 in projects in a targeted employment area (TEA) or $1,050,000 in a qualifying commercial enterprise. EB-5 investors must invest in a new commercial enterprise established after November 29th, 1990. The only exceptions to this occur when the investor purchases an existing business to restructure or reorganize it in a way that results in a new commercial enterprise or the investment results in at least a 40% increase in the number of employees or net worth.

A new commercial enterprise is any for-profit activity for the ongoing conduct of lawful business, including joint venture, sole proprietorship, business trust, limited liability company, or a publicly or privately owned entity.

EB-5 investors must invest at least $800,000 or $1,050,000 in a new commercial enterprise that creates full-time positions for at least 10 qualifying employees. Job creation is a crucial aspect of the EB-5 investor program and has remained consistent throughout its three-decade evolution.

Direct job creation is required for a new commercial enterprise outside a regional center. The employees must be directly employed by the commercial enterprise to qualify for the necessary job creation.

For a new commercial enterprise located within a regional center, jobs directly or indirectly created will count towards the necessary full-time positions. In most cases, up to 90% of the necessary job creation for regional center investors comes from indirect jobs.

Alternatively, if an EB-5 investor has invested in a troubled business, they can rely on job maintenance instead of job creation. They must show that the number of existing employees is, or will be, no less than the pre-investment level for at least two years.

Before RIA, EB-5 investors were required to have already created ten jobs by the time they filed their I-829 petition to remove the conditions to their permanent residency. RIA sought to streamline the EB-5 investor timeline by allowing investors to show that they are ‘actively in the process of creating’ the jobs.

Other attempts within RIA to offer reassurance to EB-5 investors include the guarantee that regional center investors who file their I-526E petitions by September 30, 2026, will have their applications processed. This guarantee specifically ensures that the EB-5 Regional Center Program lapses again.

Become a U.S. Permanent Citizen Through Investment with an EB-5 Visa

An EB-5 visa is the most efficient way to become a permanent resident with a pathway to U.S. citizenship after obtaining a green card. If you have the capital to make the required $800,000 investment, it can be the best option to allow you to work, live, and travel freely through the United States.

EB-5 Insider simplifies your path to U.S. residency and citizenship through investment, working with foreign nationals to streamline the application process. We’ll help you obtain a permanent U.S. green card for yourself, your spouse, and any unmarried children under 21 for an investment of $800,000.

Start applying for an EB-5 visa today, or contact our team for more information.

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