Does “Direct” EB-5 Make More Sense?
By: Joseph Barnett and Bernard Wolfsdorf
In Fiscal Year 2019, for the first time, South Africa was listed in the top ten in terms of the percentage of EB-5 visa number use, according to recent statistics from the U.S. Department of State.
We anticipate that this number will continue to grow as more South Africans initial EB-5 applications – the Form I-526 – are approved, which allows individuals to apply for an immigrant visa at a U.S. consulate and enter the United States to obtain a conditional green card.
Nevertheless, on November 21, 2019, the U.S. government increased the minimum investment amount to $900K, or $1.8M if not in a “Targeted Employment Area” (TEA), and the market for new EB-5 investment has slowed down.
Yet, with many South Africans looking for a “Plan B” and the ability to control their money throughout the EB-5 process, we expect the “direct” EB-5 model to generate more interest. Unlike investing through a Regional Center, the “direct” EB-5 model allows the immigrant investor to manage the business and create ten, full-time positions for qualifying U.S. workers on payroll. For example, a farmer contributing $1M to start a farm in the U.S. is attracting increasing numbers.
Previously, at the lower investment level, it didn’t make much economic sense to do a “direct” EB-5 case because the amount of payroll expenses over the course of the EB-5 investment usually far exceeds $500K. But now, with the increased investment levels, there could be sufficient capital invested in the U.S. business to hire such employees and generate profit.
Wolfsdorf Rosenthal LLP attorneys are thought-leaders in U.S. immigration and experts in assisting EB-5 immigrant investors.