On November 21, 2019, the EB-5 "Immigrant Investor Program Modernization" became effective. This is the first significant EB-5 regulatory change instituted by U.S. Citizenship and Immigration Services (USCIS) since 1993. This final rule makes a number of significant changes to the EB-5 Immigrant Investor Program.

A few of the major changes to EB-5 in the final rule include:

  • Raising minimum investment amounts: The normal minimum investment level will increase from $1 million to $1.8 million. The minimum investment in a Targeted Employment Area (TEA) will increase from $500,000 to $900,000.
  • TEA designation reforms: TEAs based on high unemployment areas will be determined only by USCIS itself and no longer state authorities (local authorities for Texas) and must either include the single census tract or contiguous census tracts in which the job creating business will operate, or also any or all census tracts directly adjacent to such tract(s).

EB-5 demand may substantially decrease, as many potential immigrant investors will not be able to afford the increased investment amount. However, such a decrease may be offset by a new ruling that allows for immigrant investment funds to be derived from unsecured loans. Previously, EB-5 investments could originate from loans only if such loans were wholly secured by the investors' own equity. Hence, home mortgages, home or business equity lines of credit, auto loans, 401k loans or similar strategies were utilized. Yet, at the end of last year, the U.S. District Court for the District of Columbia held that EB-5 investment funds may originate from unsecured loan agreements. This new ruling widening EB-5 acceptable debt arrangements will likely expand the EB-5 industry.

With these changes, EB-5 investment activities may slow down in the largest urban areas of the country (e.g., Manhattan, Southern California and South Florida) as investors forego the $1.8 million threshold for projects in economically feasible rural and middle markets (e.g. Texas, Arizona, Colorado, Missouri and Minnesota) that qualify for the $900k minimum investment.