Levels of foreign investment in the USA have scarcely been at higher levels. Figures collated by the Wall Street Journal indicate that $900 billion was put into US funds by international money managers in the first half of 2021 alone, a record figure. For many, this is an opportunity to get into the US and start forging ahead with a career in business ownership and investment. As with all forms of economic migration, this process is tightly controlled by the US and it’s arms of government. For businesses looking to attract top level investment, or investors looking to dispose of their wealth in the same way, the rules have been simplified.
The EB-5 visa
The crown jewel of the US visa system is the EB-5 visa. The rules on this are quite straightforward; an investor must invest in a New Commercial Enterprise (NCE), and they must invest $900,000 if the business is within a federally defined targeted employment area, or $1.8 million if in a high employment area. While these are technical terms, immigration lawyers are well acquainted with the nature of the system and what it entails. What’s more, the Financial Times of India have noted that a recent court ruling has struck down the investment amounts required. Instead, amounts of $500,000 are being mooted – though official advice is, currently, to persist at the $900,00 amount given the considerable political turmoil heading through the courts and the amount of change that could still be created.
Terminology of employment
What is defined as a ‘targeted employment area’? According to the USCIS, that’s any rural area within the USA or any area that exceeds 150% of the national unemployment average. What does that mean? In the USA, the unemployment rate sits at around 5.4%. States including Nevada and New York exceed this, at 7.4%, according to the Bureau of Labor Statistics. Within those states will be areas of acute unemployment that buck the statewide average further – these are the areas that investors can obtain an EB-5 visa without needing as much capital on demand. Elsewhere, there really is a premium for investors where they want to put money into established labor markets.
Increasing caps?
There is currently a 10,000 person limit on the EB-5 visa, and that includes family members as dependents on the main claim. Reform is on the way, with the scheme set to expire this year, but there is bipartisan support for renewal according to Forbes. Among the changes mooted are a more rigorous inspection policy, to ensure that the businesses founded by EB-5 holders are indeed producing jobs as required, and a closer eye on monitoring for securities compliance. The Senate and House do want the EB-5 system to persist – at a time when China is experiencing higher levels of foreign investment than the USA, it’s seen as a crucial tool on the world stage. However, Forbes notes the slowness with which the houses of power in the USA work, and there could yet be bumps in the road, never mind increasing caps, as the congressional session resumes.
The EB-5 is a fantastic vehicle to bring in direct foreign investment to the USA. It’s also a relatively simple process, once an understanding of the basic terms is generated. Real consternation is on the way, however, over the renewal of the bill and what role it will play in the years to come. Those considering investment from this manner should be mindful of developments in the USA, and be ready to adapt to new rules.
