Construction professionals at work

Developers are constantly looking for an edge, and those who are most innovative often come out on top. The construction industry and financial risk go hand-in-hand, and smart financial managers should be on the lookout for any advantages available, and the EB-5 program has helped many secure funding from unexpected places.

In the 1990’s, Congress enacted a visa process that provides an easier route for wealthy foreign investors to attain US Citizenship. Under the EB-5 program, foreign investors who meet certain immigration requirements can obtain visas when they invest at least $1,000,000 in a qualifying project, or $500,000 when that project is in rural areas or “targeted employment areas.”

This program has come under heavy scrutiny in recent years, and what was once seen as a great stimulus to the US Construction industry is now facing heavy criticism.

So what’s the big deal?

EB-5 Requirements

In order for a project to qualify an investor for a visa under EB-5, the candidate must invest $1,000,000 in a commercial enterprise in the United States. The investor would then receive the necessary visa to live in the United States for two years. If after two years the project has created at least 10 jobs for every visa obtained, the investor can obtain a green card for permanent residence. If the project fails, foreigners can lose both their investment and their opportunity to get a green card through the program.

For developments in rural areas or in areas of high unemployment, acquiring a visa is cheaper. Targeted employment areas include areas where unemployment exceeds 150% of the national average. Investors in these areas need only invest $500,000 and adhere to the job creation requirements listed above to obtain a green card. There has been quite a bit of scrutiny on these projects, which will be further explored a little further down.

To be approved for the EB-5 program, investors must prove that their investment comes from legitimate funds. The investment capital may not be borrowed. Investors are also subject to background checks, and will not be able to obtain a visa if not cleared by immigration officials.


Much of the criticism to the program is that the government is essentially selling American citizenship. Many it as a a shortcut to the process for becoming a US citizen available only to wealthy foreigners. In the words of Senator Dianne Feinstein of California, “The right to immigrate should not be for sale.”

According to supporters of EB-5, the program spurs growth in underdeveloped areas by providing investment from new sources. However, many of the projects have little or nothing to do with this sort of development. Projects in well to-do areas have become commonplace. In some instances, developers have been accused of manipulating boundary lines in order to land projects in areas that would not otherwise qualify as a targeted employment area.

However the strongest concern is that of national security. Over the last several years there have been many allegations that the program has been improperly run. Concerns of fraud have escalated after several EB-5 projects failed. There are ever growing concerns that sophisticated schemes to circumvent the proof of funds requirements leave the US subject to accepting investments of dirty money. While the program requires extensive background checks, officials have been less effective in practice. Most notably, one visa recipient was found to be funneling money from a Chinese fugitive on Interpol’s Most Wanted list. If a high profile criminal enterprise was able to slip through this program, who knows how many other investments were tainted in some capacity.

Weighing the Pros and Cons

Despite very valid concerns, the EB-5 program has real benefits. In the year 2013 alone, $379M was invested in New York State through the program. When properly utilized, it creates a real win-win: investors have the opportunity to immigrate to the United States and underdeveloped areas can obtain investments that American investors might not be willing to put forward. Even more, developers on these projects typically receive greatly reduced interest rates on investments as the ultimate goal is not return on capital but US Citizenship. The combination of low interest rates on risky investments, job creation in high unemployment areas, and an international pool of interested investors is enticing. However, greater regulation of the EB-5 program is necessary to protect against fraud and to regulate who is utilizing the program.

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Trading Construction Funding For Green Cards? The EB-5 Program
The EB-5 program allows foreign investors to acquire visas when funding certain projects. The program has faced heavy criticism of late.
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