The EB‑5 Reform & Integrity Act of 2022 (RIA) greatly overhauled the U.S. EB‑5 Investor Program—adding much-needed oversight and transparency. While most focus has been on reforms for Regional Center projects, the law also strengthened standards for direct EB‑5 investments, where applicants fund their own business. The bottom line: direct filings now involve increased risk, requiring more thorough due diligence and practical business planning.
1. Active Business Control & Job Performance Risk
Unlike regional center EB‑5 investors who may invest passively through a fund, direct investors must:
- Own at least 10% of the enterprise and manage the business daily.
- Operate the business while in the U.S., often in industries such as hospitality, retail, or light manufacturing.
- Maintain 10 full-time jobs in the U.S. for at least 2 years after I‑526 approval to qualify for permanent residency removal (I‑829).
If revenue declines or operational challenges occur, both job creation and I‑829 eligibility can be jeopardized. Businesses still face competitive risks, while immigration consequences become a serious concern if goals are not met.
2. Documentation Fueling RFEs and Petitions
The new policy environment is strict: USCIS now expects direct filings to include:
- An error‑free petition and business plan for “Matter of Ho” job creation modeling.
- Current Articles of Incorporation, IRS filings, payroll records, office leases, contracts, and hiring documentation.
- Third‑party attestations verifying job numbers, payroll timelines, and business legitimacy.
Any mismatch—such as incorrect payroll activity or unclear hiring dates—can lead to an RFE or outright denial. Even after I‑526 approval, failing to keep records during the conditional period can affect the I‑829 decision.
3. Zero Investor Protections Under RIA Transfer Rules
Under RIA, regional center investors have the advantage of project transfer protection: if a regional center loses its designation or a project fails, investors can transfer to a new USCIS-approved project and keep their priority date.
Direct investors do not have this safeguard. Since they own and operate a single enterprise, there is no fallback if the business struggles. The entire application—and the investor’s status—can fall apart along with it.
4. Escrow and Exit Planning Challenges
Most regional center offerings now include structured senior debt facilities or bridge financing, which aim to return capital within 2–3 years—even before conditional residency is removed.
In contrast, direct investors bear 100% of operational and market risk. Exit options are limited: poor planning can trap capital in the business for 4–6 years or longer. Timing is crucial—some business structures may prevent equity conversion or resale options.
5. Timeline Complexity & Visa Bulletin Retrogression
Direct filings often take longer:
- USCIS adjudication can last 24–36 months for I‑526 due to thorough review.
- I‑829 documents require proof of job maintenance and ongoing operations.
- Filing must match Visa Bulletin availability. Retrogressed chargeability countries (e.g., China, India, Vietnam) may delay eligibility for concurrent filing, making the conditional period more difficult.
Regional Center investors often experience faster processing, fewer RFEs, and more predictable timelines, increasing the chances of timely Green Card approval.
When Does Direct Still Make Sense?
Direct EB‑5 is suitable for:
- Experienced entrepreneurs already based in the U.S. with a proven successful track record.
- Investors who seek more control over their business rather than passive fund investments.
- Applicants prepared to handle ongoing operational responsibilities and long-term capital commitments.
- Situations where there isn’t a viable regional center project in a specific business sector.
However, even in these cases, careful planning and legal structuring from the start are essential due to the complexities involved.
How John Hu Migration Consulting Reduces Your Risk
At John Hu Migration Consulting, we provide comprehensive support for entrepreneurs considering the direct EB‑5 pathway:
- Business Plan Design & Documentation Planning
We collaborate with accountants and economists to develop USCIS-compliant, “Matter of Ho” approved business plans demonstrating sustainable 10-job creation and realistic revenue models. - Legal Entity Formation & Capital Structuring
We offer guidance on ownership structuring, capital deposit timelines, fund flow, and financial controls to enhance investor credibility. - RFE Minimization Strategy
We perform pre-submission audits to ensure accuracy and completeness of applicant documentation—including hiring records, payroll evidence, and vendor contracts. - Contingency & Exit Planning
Our strategies include early escrow arrangements, resale trigger mechanisms, or corporate restructuring options to protect investor capital during business disruptions. - Country-specific Visa Bulletin Planning
We monitor exposure for investors from high-volume countries and advise on aligning filing timing with EB‑3 ESO chart availability to optimize eligibility for concurrent filing. - Thorough Due Diligence
We assess potential developers, suppliers, and partners regarding financial health, legal compliance, and adherence to local regulations.
Final Thoughts: Make Your Direct EB-5 a Strategic Advantage (Not a Liability)
Direct EB-5 investment offers greater control and operational involvement but comes with increased scrutiny, job-risk, and documentation requirements. For most global applicants—especially those without prior U.S. business or managerial experience—regional center EB-5 remains a safer and more streamlined choice in the post-RIA era.
But for entrepreneurs willing to take responsibility, plan carefully, and structure wisely, direct EB-5 can still provide meaningful control and the potential for capital gains.
Ready to explore the best EB-5 strategy for your situation? Whether you’re considering direct or regional center EB-5, our team can help evaluate which option aligns with your goals and risk tolerance.
FAQ
What is a "Direct EB-5 Investment," and how does it differ from a Regional Center investment?
A Direct EB-5 investment involves an applicant funding their own business and actively managing its daily operations. This differs from a Regional Center investment, which is typically a passive investment in a large-scale project managed by a third party. Direct investors must own at least 10% of the enterprise and maintain it for a minimum of two years after I-526E approval.
How has the EB-5 Reform & Integrity Act of 2022 (RIA) impacted Direct EB-5 investors?
The RIA introduced stricter standards for Direct EB-5 investments, increasing the risk and requiring more thorough due diligence. It mandates stricter documentation for job creation and business legitimacy, and it does not provide the same project transfer protections that are available to Regional Center investors. This means the success of the immigration petition is directly tied to the performance of the applicant’s business.
What is the biggest risk for Direct EB-5 investors under the new RIA?
The biggest risk is the lack of investor protection. Unlike Regional Center investors who can transfer to a new project if the original one fails, Direct investors do not have this safeguard. If their single enterprise struggles or fails to maintain the required 10 full-time jobs, the entire immigration petition, including their status, can be jeopardized.
What are the key documentation challenges for Direct EB-5 investors?
The new policy environment is strict, demanding meticulous documentation. This includes an error-free business plan that meets the “Matter of Ho” job creation standard, current Articles of Incorporation, IRS filings, payroll records, and third-party attestations. Any inconsistency or missing document can lead to an RFE (Request for Evidence) or a denial.
How does the new law affect the processing timeline for Direct EB-5 applications?
Direct EB-5 filings often take longer to process, with USCIS adjudication for the I-526E petition lasting between 24 and 36 months due to increased scrutiny. The I-829 petition also requires robust documentation to prove job maintenance and ongoing operations. The process can be further complicated by visa bulletin retrogressions for applicants from certain countries.
Who is the ideal candidate for a Direct EB-5 investment?
Direct EB-5 is best suited for experienced entrepreneurs already based in the U.S. who want more active control over their business. It is for applicants who are prepared to handle the operational responsibilities and long-term capital commitments, and who have a clear, viable business plan to create and maintain at least 10 full-time U.S. jobs.
