Misconceptions about EB5 investment.

The source of funds and project selection for the EB-5 program:

Immigration addresses two significant misconceptions that arose this year among the clients concerning the source of funds. “One prospective client intended to utilize the proceeds from the sale of his U.S. business for his EB-5 investment. During our discussion about the source of funds, we discovered that he might have established the business while potentially out of status in the U.S. Consequently, the funds might not be considered ‘lawful.’ This situation necessitates a deeper examination of the viability of the originally intended source of funds. This individual may have advanced in the process only to realize too late that his source of funds had an irreparable flaw.”

When a client insisted on investing in a specific project that promised a lower administrative fee and a partial investment option. “Coincidentally, it also possessed I-956F approval. Upon conducting our due diligence, we uncovered potentially unacceptable redemption features that were not immediately obvious. Following our counsel, the client opted not to proceed with that EB-5 project and is now exploring alternative options.”

In a similar vein, EB-5 visa continues to address misconceptions regarding the influence of the recent U.S. elections on the EB-5 program. “Amidst the conversations girding immigration, numerous guests believed that a new administration might exclude the program. However, the EB-5 program is established by federal law, and no administration can unilaterally abolish it. Repealing the EB-5 program necessitates an act of Congress. Moreover, the EB-5 program has existed in various forms since the 1990s and has endured through administrations from both political parties.”

It encountered challenges related to misunderstandings concerning the source of funds (SOF) for her Chinese clients. “Many investors do not realize the necessity of verifying the source prior to transferring their funds. When I inquired about how they initially established the business and financed the substantial registration capital listed on the business registration—such as RMB 5,000,000 (approximately $700,000)—they frequently lacked adequate documentation to demonstrate their financial capacity at that time. We refer to this scenario as a ‘chicken-and-egg’ dilemma. The loan represents the egg, but it originates from the chicken—the company. A well-supported SOF necessitates a credible explanation of how the ‘chicken’ was obtained. For Chinese investors, foreign currency control regulations add another layer of complexity, as individuals are limited to exchanging $50,000 annually. Prematurely transferring funds without properly tracing the source can deplete their annual foreign currency exchange allowance if the loan is deemed an inappropriate source of funds for their situation. They may be required to begin the handle over. Therefore, it is essential for investors to seek guidance from a knowledgeable attorney to identify the appropriate asset to utilize for their SOF before initiating any fund transfers.”

Investing in a rural project allows the applicant to obtain the EB-5 visa more swiftly:

Rural projects benefit from expedited processing and a greater allocation of EB-5 visas. Nevertheless, prospective investors should also evaluate other designated categories, such as high-unemployment areas, infrastructure projects, and those classified as Unreserved. It is crucial to make investment choices based on factors such as location, experience, and the track record of both the project developer and the regional center.

There are no travel restrictions for investors while their EB-5 application is under review:

Some investors may have concerns regarding travel limitations during the EB-5 visa application process, particularly if they need to travel frequently to and from the U.S. for business or personal matters. Individuals already residing in the U.S. who have applied through the concurrent filing pathway are provided with work and travel permits while awaiting the processing of their applications. Those who did not apply concurrently can still travel using the I-131 travel petition.