The EB5 program was created by Congress in 1990 to help create investments in underserved and underemployed areas of the country. The program offers green cards in exchange for an investment into the United States of $1,000,000. The original plan estimated 10,000 investment visas for foreign investors. 

In 1992 a second investment opportunity was added, allowing individuals to invest only $500,000, as long as the money went to low-income parts of the U.S. where the employment rate was at least 150% of the national average.  Unfortunately, states were put in charge of determining the targeted areas which created loopholes. EB5 regional centers determined where they invest could be adjacent to low-income districts. 

After the recession of 2007-2008, many developers who were looking for alternative financing means for their developments took advantage of the loopholes.  Several developed properties in high-income areas with a vast majority of the investors (some say upwards of 80%) coming from pooled sources of wealthy Chinese investors.  This brought many critics to the table, as developers looking to develop higher-end retail centers or hospitality properties took advantage of the loophole. 

The EB5 program is set for renewal every few years, with the last renewal date of September 1, 2017.   The program itself was not renewed in September, but the President did sign Public Law 1115-56 extending the regional center program through December 8, 2017.  Many people are wondering if the EB5 program will be renewed, and if it is, will there be changes to it. 

The most commonly talked about change is raising the amount of the foreign investment, which has not changed since the program first started.    Currently, all EB5 investors must invest in new commercial enterprises which were either established after November 29, 1990, or if established prior to that date, the business must be restructured in such a way either a new commercial enterprise results, or the business is expanded through the investment to show at least a 40% increase in the net worth, or number of employees.

What is a commercial enterprise?  As far as the EB5 program is concerned it is a for-profit business including any sole proprietorship, partnership, holding company, joint venture, corporation, business trust or any other entity which may be publicly or privately owned.  Some limitations are that it prohibits noncommercial activity such as owning and operating a personal residence.

The other main qualification for an EB5 investor is that the investment must create full-time positions for at least 10 qualifying employees.  Depending on the location of the commercial enterprise the job creations may be either direct or indirect jobs (direct being that the commercial enterprise must be the actual employer).   Jobs must be shown that they will be created for a minimum of 2 years. 

Overall, even with the issues, the EB5 program has seen in the last decade, it can still be shown to have made a positive impact on the economy. Odds are it will be renewed or extended this coming December, but likely with stricter regulations, and perhaps higher investment criteria.