Steve Muehler's Plan to Increase Foreign Capital Investments in the United States
Updated: Apr 23
EB-5, the once wildly popular green card program giving developers and select entrepreneurs easy access to financing at low rates, is alive but in limbo.
Real Estate Developer and Entrepreneur demand has fallen, and backlogs in issuing those green cards has created foreign investor uncertainty. The program, which was scheduled to expire Sept. 30th, 2018 received a short reprieve from President Trump, but only through Dec. 7th, 2018. The extension was part of a spending package the president signed to avoid a government shutdown.
Congress will have to decide whether to create a more permanent solution, but industry pros say it isn’t on the radar. If the government doesn’t create new legislation, more foreign investors will start to back out, market experts say, looking instead to similar visa programs in others countries.
The lack of clarity surrounding the Federal initiative has already tamped down demand among real estate developers and entrepreneur, which leads to less foreign capital invested in the United States, which is less dollars that are invested in American Jobs, and less jobs for hard working Americans!
The EB-5 program gives foreign investors the opportunity to obtain a green card if they invest at least $500,000 USD in a project and create at least 10 American jobs. It has been extended on a short term basis for the last three years. Direct foreign investment in EB-5 fell nationwide to $3.81 billion in 2016, a 13 percent drop from $4.37 billion in 2015, according to Invest in the U.S.A, a prominent industry trade group for EB-5 regional centers.
Though real estate developers and entrepreneurs looking to finance deals have been weaning themselves off EB-5 money, many investors — especially those from China — still like the program.
Seventy-five percent of EB-5 visas, or more than 7,500, were awarded to Chinese mainlanders in 2017. The U.S. government now issues about 10,000 new EB-5 visas per year, and sets quotas on how many it awards to each country. Chinese demand has far exceeded supply. But there is a limit.
The list of EB-5 investors from China who are waiting for their green cards has gotten so long that many have begun backing out, exploring other option such as private equity or other countries with similar programs.
Developers and Entrepreneurs are also turning to other countries, such as some in South America and India for EB-5 investors, though the demand is not as high in those places.
Meanwhile, Congress’ inaction comes at a time when much of the news about EB-5 has concerned fraud and abuse.
Earlier this year, two owners of a Vermont ski lodge were charged with misusing more than $200 million of EB-5 investor money and in South Florida, a group of EB-5 investors is suing the developers behind a failed hotel project in Fort Lauderdale Beach. The list goes on.
Under my Administration, we would: (1) Give the United States Securities & Exchange Commission greater oversight over the EB-5 program, which would include Exam & Qualification of new offerings, as well as mandatory reporting requirements for issuer firms that look much like those required for OTCQX and OTCQB Public Companies. (2) We would cut the EB-5 Minimum from $500,000 USD to $250,000 USD, which would increase the amount of foreign capital invested in the United States (which will lead to more capital for U.S. Companies and more American Jobs). And finally, (3) we would increase the investor background checks to ensure that the lower EB-5 Investor Visas are being issued to "qualified investors".
Steve Muehler is the Founder & Managing Member of the Private Placement Markets:
Private Placement Markets: www.PPMSecurities.com
Private Placement Debt Markets: www.PPMDebt.com
Private Placement Equity Markets: www.PPMEquity.com
Private Placement Markets – Real Estate Loans: www.PPMLoans.com
Equity Lock Residential: www.EquityLockResidential.com
Equity Lock Commercial: www.EquityLockCommercial.com
About Mr. Steve Muehler, Founder & Senior Managing Member:
Personal Site: http://www.SteveMuehler.com
Personal Site: www.StevenMuehler.com