The Direct American Dream
When first conceived the American investment immigration program known at EB-5 (Employment Based 5th Preference) was designed primarily to foster international relations through foreign investment. For generations, large corporations had availed of the advantages of globalization, but not so much the entrepreneur. So, an important purpose of EB-5 was to encourage entrepreneurial investment granting permanent residency with the quid pro quo of the politically popular mantra of economic development and the creation of American jobs.
In early years the program floundered. The challenges facing the would-be immigrant investor were vastly complex and the risks enormous. One had to conceive a business, fund it (at a minimum of US$500,000), decide a location, leave whatever else they were doing before, move family, and then try their utmost to see if the business actually worked and created the 10 required fulltime American jobs within a two- year time period. If not, the business as well as the immigration opportunity, could well be forfeit.
This gave rise to the Regional Center approach whereby investors could be grouped together to fund a business developed by experienced developers and administered by hired management that would create and maintain the jobs. The United States Citizenship and Immigration Service (USCIS) gave a further accommodation to regional center projects (for reasons unknown) of allowing consideration of economic development as pertained to jobs. Not only direct employment, but also indirect and induced jobs; i.e. jobs created via the creation of the business and supported by the economic impact of the business.
For the last 10 or so years more than 90% of those matriculating through this program have done so under the regional center program. It’s been a boon to economic development (billions of dollars) and job creation (tens of thousands) throughout the United States though perhaps more to major metro areas that arguably do not need such a boost as opposed to the rural and disadvantaged locations originally conceived as primary beneficiaries.
It’s also been relatively safe and sophisticated passage for the investor. Investments are now usually supported by extensive due diligence/marketing feasibility, secure capital structures, and experienced promoters/management. Investors now have a sophisticated third party to rely upon for the messy business bits while they get on with their lives and pursue their real passions. This is not to say that all such projects are successful. Like any business, circumstances sometimes arise whereby anticipated, promised performance outpaces reality. Welcome to the American development business.
Unfortunately, the program is collapsing under its own weight. Like any government program too much of a good thing is looked at with a jaundiced eye, territorial jealousy evolves, bureaucratic headaches ensue. There are thousands more investors than the government can process. And, of course, with such large numbers comes unscrupulous practice on both the demand and supply side.
So as of November 21, 2019, the minimum investment has been increased from $500,000 to $900,000 and the locational criteria as become far more restrictive. One can argue the logic, but it is what it is. Until Congress determines there is some serious flaw, it’s likely the program will go on as recently renewed for the foreseeable future.
The major source of investors (China) has left the room as the waiting time for the Chinese investor exceeds well over 10 years (during which time funds sit under-deployed though developers are happy to keep it). Same with most other countries.
Enter the Indian investor with a mindset of immigration plus RETURN. It’s back to the future. EB-5, especially in India, seems to be returning to its entrepreneurial roots. Why not? America is the largest economy in the world, the land of opportunity. Why not start or expand business, take considered risk and earn commensurate return?
At Nysa Global we see more and more investors asking, ‘what business should I pursue in the USA’ as opposed to, ‘what investment should I consider’? We have an adept group of professionals who provide business planning services as well as advise on traditional immigration matters. We are a company of successful entrepreneurs helping others bring their dreams to reality through proper concept development and business planning.
The EB-5 world is turning more toward investors who yearn to come for the American dream and not only the lifestyle or education for their children. Why not have it all?
Please contact us at +91 9910096169 or stop by our offices in Gurgaon and Mumbai.
-By Mark Haseeman