To kick off our “EB-5 Insights from the Experts” blog series, we asked two legal experts to share their 2020 forecast for the EB-5 program:
Robert Divine, leader of Baker Donelson’s Global Immigration Group and former Chief Counsel of USCIS, and H. Ronald Klasko, managing partner of Klasko Immigration Law Partners, LLP, have a lot to share about EB-5 3.0!
Closer eye on source funding
In 2020 I expect our firm to work harder with investors to document their source of funds, because USCIS appears to be applying increasingly greater scrutiny to this aspect of qualification. We always have tried to be fastidious, but now we will attempt to be pristine, and it might be more difficult with $900,000 than it was with $500,000.
The 2020 EB-5 market is smaller and more distributed than in the past, because (1) last year so many people who were interested in EB-5 “dove in” at the $500,000 level to “beat” the increase to $900,000, (2) some people who did not dive in then are still hoping that a court or Congress will return the minimum investment to a lower level, and (3) the waiting periods for visa numbers for the “big three” countries of China, Vietnam, and India are so long (though perhaps not so long for China as people might have been thinking).
It takes longer to get investors
Marketing to investors seems like an even more long term, broad spectrum effort than it was before. Only a relatively small number of projects and players will be able to sustain a systematic effort needed to raise meaningful amounts of EB-5 capital for the near future in the absence of something dramatic. With the significant waits involved—even just for I-526 adjudication regardless of visa waits—the immigration benefit available for investment is more distant thus speculative and thus may be less compelling, so that issuers may need to offer more opportunity for return on investment with immigration benefits as a “also nice to have.” I expect to see investors pressing for more clarity on the parameters for reinvestment for the same reasons of duration.
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