Answer: The loan and equity based models differ in the timing of the expected return of the investment. The loan usually has a 5 - 6 year note for repayment to the Commercial Enterprise. The equity program has no such timing. Return of the investment is dependent on market conditions to refinance the existing project and pay back the investors or to sell the project. Equity entails a greater potential participation in the income and profit on resale than the loan model. There is a lot more intricacies that will need to be dealt with on a case specific basis.
What is the difference between loan and equity based EB-5 regional center projects?
A loan generally means that the investment capital is kept for a number of years and returned to the EB-5 investor. The investor may or may not expect a return on his/her investment. An equity arrangement generally means the capital investment purchases an ownership interest in the EB-5 enterprise, and the investor usually expects a return on his/her investment.