EB-5 visa program - regional centers and risks - Complete guide for 2017

EB-5 is a class of United States (US) visa which allows foreign nationals to obtain permanent residency by making investments in a US business. Recipients of the visa (foreign nationals and their immediate family members) can permanently live and work in the U.S, with a path to US citizenship.

This class of US investor visa program was primarily created to create jobs through capital investment from foreign investors. And it’s administered by the United States Citizenship and Immigration Services (USCIS).

EB-5 financing

  • Foreign investor has to invest $1 million in a qualified investment OR

  • $500,000 if the investment is in a “Targeted Employment Area (TEA)”. TEA are certain areas with high unemployment compared to national average. This can be both rural and semi urban areas.

  • The investment should be expected to create at least 10 full-time jobs

  • The investment must be made to create for-profit commercial enterprise

  • Alternatively, investments can be made through predesignated regional centers

Non-commercial investments like personal residence do not qualify for the program

Targeted Employment Areas

Targeted Employment Area (TEA) is defined by USCIS. TEA is defined as a rural area outside a metropolitan statistical area (MSA) or an area within a MSA or an outer boundary of any city or town (with over 20,000 population) which has experienced 150% unemployment rate of the national average at the time of investment.

Investors can also request an area to be designated as TEA by presenting relevant publicly available government data at the time of petitioning USCIS for the visa.

EB-5 visa processing time

Currently USCIS takes about 1-2 years to process a EB-5 petition. Processing time has been creeping higher because of the recent surge in the popularity of the program. However, USCIS has been trying to bring down the processing times to reasonable levels.

The US immigrant investor visa is allocated about 10,000 visas every year to foreign investors. While the demand for the program was low in it’s first 2 decades of existence, demand has been increasing since the turn of this decade. For the first time in 2014, all the 10,000 investor visas were secured by foreign investors. The demand in recent years has been driven by Asian businessmen looking to immigrate to the U.S. The local industry is also helping the growth by creating projects in the regional centers to attract overseas investments.

Regional origin of the visa recipients, 2016 data

EB-5 recipients

EB-5 regional centers

A regional center is an economic unit designated by USCIS, which allows government and private organizations to create investment pools. Regional centers can then launch a new business or revive an existing business through the money in the investment pool. So, instead of individual investors launching a business on their own, they could simply become a participant in the business by contributing money to the investment pool. Jobs created from the individual contribution are counted towards the requirements of the EB 5 investor program.

Regional centers typically build business like casinos, apartments etc. Regional centers help reduce the overseas investors by providing the reducing the burden of launching a business. They also help in meeting the job requirements of the program. It also helps Regional center project developers to raise money for the business initiatives.

Another important advantage of Regional Center petitioners are that they may meet the job creation requirements based on economic projections of either direct or indirect job creation. But the petitioners through new commercial enterprise can only count the directly created jobs for the the job creation requirement.

Currently there are over 1000 USCIS approved regional centers spread across various states.

Regional centers which are also located in TEA areas are the most popular option by a large margin.

Economic vehicle of the US investor visa immigrants, 2016 data

Economic vehicle # of approvals
Commercial Enterprise 103
Commercial Enterprise in a TEA area 350
Regional Center 9
Regional Center in a TEA area 8,043

EB-5 program steps

USCIS conditionally grants green cards to qualified investor and their family members for a period of 2 years. This approval is granted on the evidence that the investor has already invested or actively in the process of investing in an EB-5 eligible investment. Approval also depends on the evidence that the requisite employees have already been hired. If not, a comprehensive business plan needs be submitted showing that at least 10 qualifying employees will be hired due to the nature of the commercial enterprise.

Before the second anniversary, the investor can apply for removal of conditions and obtain permanent residency. USCIS approves this petition based on the evidence that the foreign investor has sustained the qualified investment throughout the 2-year period of conditional permanent residence. It also hinges on evidence that the 10 full time jobs have already been created or will be created in a reasonable amount of time.

EB-5 risks

Even though USCIS approves the regional centers, it doesn’t endorse the activities of the center. The approval also doesn’t eliminate the risk nor does it guarantee U.S. securities laws compliance. Several fraudulent activities have come to the fore in recent times.

Unlike other investments, the primary objective of EB-5 investments is securing a U.S. green card and in many cases the investors are located in a far off country. Fraudulent businesses can take advantage of the situation and raise money from foreign investors by marketing as EB 5 qualifying investment opportunities. Such investors potentially could potentially lose their investments and the immigration petition as well.

The United States Securities and Exchange Commission (SEC) has recently stepped up the monitoring of the immigrant investor visa program. However, SEC urged investors to be cautious of fraudulent investment opportunities. So it’s highly important for the foreign investors to do their own due diligence before making investment decisions.

USCIS has recently stepped up it’s audit efforts of the regional centers. And it periodically terminates regional centers which were approved earlier. Such terminated regional centers are published on the USCIS website

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4 new H1b bills in congress that are trying to make H1b great again

Since the recent presidential elections, H1b visa program has become a hot topic. Several new reform bills are being introduced in the congress. In fact, H1b and EB-5 visa are the two legal immigration programs law makers are trying to reform lately. And there was also the executive order for the H1b. Here is the highlight of the 4 new H1b bills and the rumoured executive order,

New H1b bills

This page will also track employment based legal immigration bills that affects H1b employees.

A quick primer on the bill process in congress. Introduction of the bill is just the first step. It has to go through multiple and lengthier steps before it becomes a law. So, here are the bills introduced so far,

Table of Contents

H1b $100K bill by Darrel Issa

More formally: Protect and Grow American Jobs Act (HR 170) - Darrel Issa - California

  • H1b dependent employers (15% or more employees are H1b) have to pay atleast $100K a year for hiring a new H1b employee
  • Current law stipulates that Employers must pay atleast $60K a year, when hiring a master’s degree employee. Eliminates this exemption

H1b & L1 visa refrom bill by Chuck Grassley

More formally: H-1B and L-1 Visa Reform Act - Republican Chuck Grassley (Iowa) and Democrat Richard Durbin (Illinois)

  • Employers with 50% or more employees on H1b or L1 visa are not allowed to hire additional H1b workers
  • Small employers with under 50 employees are exempted from the above rule
  • Placing a H1b worker at a worksite should not replace or adversely affect a similarly employed American worker at the site. This includes workers placed through other employers too
  • Increase law enforcement mechanisms for the Department of Labor
  • Eliminates the current practice of random lottery when allocating new H1b. Replace it with merit based preference system. Such a system prefers foreign students educated in the US, advanced degree holders, those with high salary and those with high skills
  • Introduce a minimum salary requirement for L1 visa employees
  • Redefine the criteria for issuing a L1 visa to allow only truly key employees

H1b $130K bill by Zoe Lofgren

More formally: High-Skilled Integrity and Fairness Act of 2017 - Zoe Lofgren - California

  • H1b dependent employers (15% or more employees are H1b) have to pay atleast $130K a year for hiring a new H1b employee (Exceptions allowed with supporting data)
  • 20% H1b visas reserved for small startup employers with less than 50 employees
  • Replace the current H1b random lottery and award based on the order of salaries, starting from the highest.
  • Eliminate country cap: Employment based immigrant visas should be allocated to the more skilled worker regardless of country of origin. This ensures fairness to H1b worker by enabling them to change jobs and negotiate salary etc. Thus preventing any artificial wage depression caused in the market
  • Remove visa hurdles for US educated foreign students to apply for permanent residency

Fairness bill by Jason Chaffetz

More formally: Fairness for High-Skilled Immigrants Act of 2017 - Jason Chaffetz - Utah

  • Eliminates the country cap for the employment based immigrant visas. This stops the H1b worker’s dependency on the employer, there by ensuring easy job mobility and balanced job market.
  • Employees from a single country cannot exceed 85% of total visas issued in a year

Trump H1b visa executive order

And then finally there was the leaked draft executive order by the president Donald Trump. Most of the details of the draft order are vague. And this is still an unconfirmed and unsigned executive order. Here are the top highlights from the draft document.

“restore the integrity of employment-based nonimmigrant worker programs and better protect U.S. and foreign workers affected by those programs”

“make the process for allocating H1B visas more efficient and ensure that beneficiaries of the program are the best and the brightest”

“recommend changes to the immigrations [sic] laws to move towards a merit-based system”

So, the statements in the document seems to be more broad policy direction and doesn’t get into the details of how it would be achieved. So how and when it would impact the current visa programs is just speculation. If at all this order comes through in the same format, it would still take a long time to know what this all means. But one thing that seems to be certain is some kind of merit based system around immigration seems to be the way forward.

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H1b 2018 lottery predictions - H1b lottery completed!

USCIS will begin accepting petitions for the H1b visa 2018 season by April 1st 2017. We track the Labor Condition Application (LCA) data from the Department of Labor (DOL). Data already indicates that this year is going to be another high demand year and hence a H1b lottery. Here are the important details.

H1b News:

USCIS announced that the lottery has been performed for the new H1b application on April 11th.

USICS announced H1b 2018 cap reached. Unlike last year no mention of lottery or actual numbers. And the announcement seems to have come sooner compared to previous years!


H1b 2018 cap

General cap: 65,000; Advanced Degree cap: 20,000

Students who studied in the U.S. (Masters degree and above) are eligible for the 20,000 master’s cap. Everybody else will be qualified for the general 65,000 category.

H1b 2018 predictions

For the last 3 years there has been an overwhelming demand for the 85,000 visas slots available. Filing LCA is the first step before applying for the H1b. Hence, tracking LCA data can give insight into the number of expected H1b petitions for the cap. LCA data indicates strong start to this year’s season and compares to the last 2 years. USCIS 2018 H1b lottery is inevitable. The question is what are the odds of getting selected in the lottery? The higher the demand, the lesser the chances. That one is obvious. So, without further ado here is what we think. LCA data upto this point indicates,

Around 230,000 new H1b petitions can be expected this year. So approximately, 3 out of every 5 H1b applicants will be rejected

Following is the tracked LCA data (updated frequently),

Applications 2016 2017 2018 2018 estimation
Total H1b petitions 230,000 236,000 ?? 230,000
Number of LCA decisions made as of March 3rd 54,995 53,322 54,706 230,000
Number of LCA decisions made as of March 7 63,159 63,128 64,693 230,000
Number of LCA decisions made as of March 11 82,932 91,780 82,013 Around 230,000
Number of LCA decisions made as of March 15 96,392 96,264 97,116 Around 230,000
Number of LCA decisions made as of March 17 122,915 134,928 126,812 Around 230,000
Number of LCA decisions made as of March 21 130,926 139,504 135,257 Around 230,000
Number of LCA decisions made as of March 23 142,254 150,134 162,535 Around 230,000
Number of LCA decisions made as of March 25 167,882 170,266 186,181 Around 230,000
Number of LCA decisions made as of March 28 182,496 188,775 195,146 Around 230,000
Number of LCA decisions made as of March 31 196,046 205,897 215,900 Around 240,000

2015 and 2016 H1b lottery involved 230,000 and 236,000 petitions respectively. The above graph compares the LCAs decisions announced by DOL by March 3rd of the respective years. As you can see above, 2018 LCAs are roughly inline with the last 2 years. Hence, if the 2018 numbers continue to trend like the last 2 years, the projection for final H1b petitions is around 230,000 petitions. As more data becomes available in the upcoming weeks, the projections might change.

This season is different from the last years because of the new president Trump. H1b also took a center stage during the campaign. So, the future of H1b program is uncertain. Already may bills are in the works in Congress. Economy in general has been robust and unemployment rates at the lowest. Given all these, employers may want to take one last swing at the available opportunity. That may lead to increased H1b demand this year.

But, on the other hand, with H1b under lots of scrutiny, H1b sponsoring employers may choose to play a wait and watch game. Traditionally, the so called outsourcing companies have depended on the H1b visas. They may tweak their business model to rely less on H1b visas. We are already seeing signs of it. Last month, a top executive of Tata Consultancy Services (TCS) a top H1b consumer indicated that they are preparing to operate in a visa constrained environment. He also revealed that TCS already reduced their H1b petitions even last year.

So there are strong reasons for the demand to go either ways. But the LCA data that we track doesn’t seem to indicate any these new circumstances. So it may be business as usual. Or things may change as we go deeper into March. So, we will continue to monitor and update the pages as and when we get new data. So, keep an eye on this page.

  • Single LCA may be used to apply for multiple H1b petitions. For the purposes of the prediction, that data is not included
  • For simplicity, prediction doesn’t separate out the lotteries for master’s and general cap

In the last few years the cap is reached within the first week. Before that it has taken longer time of reach the cap. In those years there will not be a H1b lottery. Typically a random lottery is held by USCIS if the cap is reached within the first week. Here is more historical details about the petitions and time it took to reach the cap,

Disclaimer: Efforts are made to ensure the accuracy of data used. But this website is not responsible for any descrepancies or any impacts arising out of them.


H1b visa 2018 lottery date

In the past years USCIS accepts H1b visa petitions for the first week. At the end of the first week, USCIS stops accepting any new visa petitions. USCIS also announces the number of petitions received and proceeds to perform a randomized computer lottery. The lottery has happened in the second week of April. This year also, it will be the similiar. Here are the lottery dates in the past,

Year Date
2014 April 10, 2014
2015 April 13, 2015
2016 April 9, 2016
2017 April 13 - 17, 2017 (estimated)

Little bit about the lottery process if you are new to the game. If the number of petitions received by USCIS exceeds the 20,000 cap then all those petitions are included in random lottery just for the 20,000 cap. Those who did not get selected in that lottery is then grouped with rest of the applications for the lottery for the next 65,000 visas. So, Masters students get 2 chances.

Either ways, first week of April is important deadline and the petitions from the employers have to reach USCIS by then. Otherwise, the petitions will not be included for the H1b lottery.

USCIS rejects and returns the petitions that are not selected in the lottery along with the H1b fee paid.

H1b 2018 updates

  • 3/7/2017 : LCA data updated as of March 7th. Trend still seems to be inline with last 2 years. Eventhough 2018 seems a slight increase we have to see if it becomes a trend in the next few days

  • 3/4/2017 : USCIS [suspended premium processing of H1b applications] (https://www.uscis.gov/news/alerts/uscis-will-temporarily-suspend-premium-processing-all-h-1b-petitions) USCIS reasons that it is to clear the long pending H1b extensions, amendments etc. This also means new H1b petitions for the FY 2018 H1b cap cannot be applied in premium processing. This may be minore inconvenience if you were planning to apply in premium. It could also be an indication that USCIS is expecting lots of new H1b petitions. Hence this suspension of premium processing for 6 months could be part of the plan to handle the load.

  • 3/4/2017 : Another new H1b reform bill was introduced. This bill is just in early stages, and hence this year H1b will not be affected.
  • 3/3/2017 : Latest LCA are updated and H1b lottery projections updated

H1b 2018 and Trump

Summary: Nothing to worry this year. H1b is under news for the last 2 years, primarily fueled by the election year. Specially, since President Trump took over the administration there has been significant attention on the H1b visa program. There has been flurry of bills introduced in congress this year. But the bills are in early stages and they have to undergo a long process before it becomes a bill.

Here is a quick summary of the bills introduced so far,

Minimum $130,000 salary
  • This bill as not as bad as it is made to look like.
  • Minimum $130,000 salary is not for everyone, but only for H1b dependent employers. H1b dependent employers are the ones who have at least 15% of their work force on H1b.
  • Even for the H1b dependent employers, it’s not the end of the world, employers have to file additional paper work to hire people less than the $130,000.

Minimum $100,000 salary bill

  • This bill proposes to increase the minimum salary of H1b positions to $100,000 a year. It’s not clear if the minimum salary will be adjusted according to the location

Stricter H1b and L1 visa bill

  • This bill proposes to redefine the qualifications for the H1b and L1 visa programs. This bills aims to put in place checks and balances so that it rewards candidates with better education, high skills and high salary.

Trump’s executive orders.

There were rumors that President Trump will issue an executive order around the H1b program. However, in the recent weeks the rumors have died down. Recently in his speech in Congress, he called for introducing a Merit based immigration program. But not much details are available about it and it can take many years to put in place. More importantly for such total sweep of the program, Congress has to act. President cannot act unilaterally to achieve this.

Efforts from India

India has been traditionally a high user of the H1b visa program. So, with all the news going around about H1b, India has naturally initiated diplomatic contacts with the U.S. around the program. The out come of it will not be known until later.

The bottom line is that all these bills are not going to affect this years H1b. This is going to be another high demand year.

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