Some EB‑5 stakeholders have cautioned that the Department of Homeland Security’s (DHS) proposal to eliminate job‑creation credit for bridge‑financed projects would weaken the EB‑5 program. Bridge financing is a kind of temporary funding used to start an EB-5 project before the EB-5 investor’s funds arrive.
The proposal to remove it as a financial option for EB-5 project development appears in DHS’s final rule draft titled “EB‑5 Reform and Integrity Act of 2022; Ensuring the Integrity of the EB‑5 Program; Automatic Revocation of Petitions for Immigrant Classification,” published in the Federal Register in July, where people could comment until August 31.
Several regional centers, developers, economists, attorneys, and national trade associations openly commented on the proposed rule. Despite their varied roles, most of these EB-5 organizations reached the same conclusion: eliminating the bridge-financing job credit would harm credible projects, undermine integrity, and disadvantage EB‑5 investors, as it would render EB‑5 unusable for many development projects.
Why DHS proposes to eliminate bridge financing
DHS has expressed concerns regarding the use of EB-5 capital to “repay” or replace temporary “bridge financing” in EB-5 projects.
The U.S. government has noted that some projects might use EB-5 investments without demonstrating a clear connection between the funding and actual job creation. As a result, DHS proposed eliminating this financing tool in a broader Notice of Proposed Rulemaking (NPRM).
Marko Issever, a broker-dealer at BCW Securities, finds DHS’s concerns understandable, especially when job creation is treated as an afterthought derived from EB-5 capital. He noted, “That situation is fundamentally different from a project that incorporates EB-5 capital into its financing plan from the outset.”
For the EB-5 industry, the removal is a misguided solution
Many EB-5 stakeholders cautioned that its removal would contradict longstanding USCIS policy, conflict with the intent of the EB‑5 Reform and Integrity Act (RIA), and ignore the economic realities of slow EB‑5 capital raises. In addition, they said its elimination would destabilize credible projects, harm good‑faith investors, reduce integrity by eliminating third‑party underwriting, and ultimately hinder job creation.
They also urged DHS to adopt practical integrity safeguards instead of a categorical prohibition.
For these EB-5 stakeholders, bridge financing has a critical role in the EB-5 investment program, and the implications of its proposed elimination could be detrimental to its continuation, effectiveness, and integrity mainly because:
Bridge financing is normal and necessary in development finance
Many commentators explained that project developers cannot wait months or years for EB‑5 subscriptions to close or for USCIS adjudications to conclude.
“Bridge and interim financing are standard, legitimate tools in commercial real estate and infrastructure finance,” said Civitas Capital Group, a regional center operator and project sponsor, in its comment submission to the Federal Registry.
Regional center and developer Pinecrest also noted that “there are numerous credible and realistic reasons for its use — reasons that, properly understood, signal more credible projects with a higher likelihood of success, not less.”
Its elimination contradicts USCIS’s own policy and findings
Since 2013, the United States Citizenship and Immigration Services (USCIS) has explicitly allowed job credit for EB‑5‑repaid bridge financing. DHS’s own preamble acknowledges that projects already underway on bridge financing are more credible.
Removing this resource “contradicts DHS’s own acknowledgment that bridge‑financed projects are more credible,” said the U.S. Chamber of Commerce in its comments to the final rule. “Businesses across the country have structured transactions in reliance on the agency’s consistent treatment of bridge financing, and an abrupt, unexplained departure from settled policy of this kind undermines the regulatory predictability on which capital formation depends.”
According to EB-5 trade association IIUSA, it’s “reversing more than a decade of settled USCIS policy and practice.”
Peachtree, a regional center and project sponsor, added in their comments that the elimination proposed “would penalize the exact structure USCIS requires sponsors to demonstrate to obtain project approval.”
EB-5 RIA’s statutory “and/by” change does not justify elimination
DHS also bases its proposed elimination of the bridge-financing job credit on a small wording change Congress made when approving the EB-5 RIA, replacing the phrase “jobs created and maintained” with “jobs created by the EB‑5 investment.”
The U.S. government interprets this shift as requiring that EB-5 funds create jobs directly and immediately and therefore cannot be used to repay prior bridge financing.
Most EB‑5 stakeholders who commented claimed that Congress did not intend to outlaw bridge financing with this single grammatical edit.
“A single preposition, unaccompanied by any legislative history, is a thin basis on which to reverse more than a decade of settled agency practice upon which billions of dollars of annual economic activity depend,” Civitas said.
The removal pushes EB‑5 toward weaker projects
Multiple commenters warned that only projects unable to attract conventional capital would remain in EB‑5, precisely the risk profile associated with past fraud.
IIUSA argued the elimination would “produce adverse selection by steering EB‑5 capital away from stronger projects that can attract conventional bridge capital and toward weaker, unbridged projects — the profile most associated with the fraud losses that prompted the RIA.”
Intellex Capital, an economics and compliance consultancy, added: “Elimination pushes EB‑5 toward becoming a financing source of last resort, which is where fraud concentrates.”
The “but‑for” test is impossible to prove
In the proposed regulation, DHS also argued the “but‑for” issue, stating that EB-5 jobs may be counted only if they “would not have been created but for the immigrant investor’s capital investment.”
Therefore, the U.S. government claims that EB‑5 capital must be the direct cause of the jobs and uses this reasoning to justify eliminating job credit for bridge financing repaid with EB‑5 capital.
However, there is consensus among EB-5 stakeholders that proving what “would have happened” in a counterfactual world is not feasible. They also concluded that DHS’s proposal misunderstands both the economics of development and the mechanics of EB‑5 capital formation.
“Jobs are created by the project as a whole, not by matching specific dollars to specific jobs,” U.S. Immigration Fund, the owner and operator of multiple USCIS-approved regional centers, added.
A unified approach: retain job-creation credit for bridge financing with integrity measures and oversight
The reviewers urged the U.S. government to adopt practical, integrity‑focused guardrails that preserve the tool so it continues operating legitimately and transparently while addressing DHS’ concerns.
They urged a balanced, integrity-focused framework that requires documented intent, timely replacement, and proportional consequences; rejects unrealistic caps; permits third-party oversight; aligns with USCIS’s own funding requirements; and applies prospectively.
For Jonathan Rabinow, CEO of Intellex Capital, the provision ending bridge financing is the issue, as most of DHS’s proposed rule is right. “DHS already identified the fix in its own preamble, and it should adopt it.”
According to EB-5 fund administrator PRXY, since DHS’s drivers for eliminating this financial option are integrity and fraud prevention, oversight would be a thorough solution.
“Independent, third‑party bridge administration can supply needed discipline (…) and create a transactional‑level nexus of documentation tying together the initial bridge expenditures with the later deployment of EB‑5 capital and job‑creating activity,” said the fund EB-5 administration platform in its comment submitted to the Federal Registry.
“Both concerns can be addressed by requiring an independent gatekeeper to verify, trace, and document each movement of bridge capital — and its replacement with EB‑5 capital — in real time,” PRXY concluded.
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