What investors should consider when selecting U.S.-based lenders for EB-5 investments - EB5Investors.com

What investors should consider when selecting U.S.-based lenders for EB-5 investments

By Nima Korpivaara, Phuong Le and Niral Patel

It’s been over a year since the EB-5 Reform and Integrity Act of 2022 revived the EB-5 program.  Yes, demand is certainly there, but today’s EB-5 investors must navigate situations where they want to invest but sufficient liquidity is hard to come by, interest rates tick increasingly higher, and nobody has much of an appetite to sell their stocks or house when they have to invest in EB-5.

Today’s investors are more sophisticated and grapple with an arguably more complicated matrix of issues than ever before. Gone are the days when an issuer could simply cross their arms and demand that investors fully fund their capital contributions before they can subscribe to an EB-5 offering.

But with complicated problems, today’s investors need and demand more thoughtful solutions to help them invest safely. One option is the recent appearance of U.S.-based loan programs to fund EB-5 investments.

While U.S.-based EB-5 loans are certainly a useful option for investors, it’s clear that there’s a lack of useful information on analyzing these programs. As discussed below, while most investors are familiar with the basic requirements to conduct due diligence on whether a project is ‘EB-5 compliant,’ it’s more difficult to analyze what immigration and investment risks are present in the various EB-5 loan options offered today.

When considering whether to use a U.S. EB-5 loan to fund and EB-5 investment, investors should include an analysis of the below issues as part of their due diligence process. Each of these issues plays a critical role in the investor’s case and should be analyzed thoroughly.


The only thing consistent about U.S. EB-5 loan programs is that there is no consistency. Flavors and key terms vary, and while loan maturity and interest rates can understandably be different, one may also be surprised to find secured and unsecured options, ones that demand quarterly interest payments while others are willing to take annual payments (or are willing even to let them accrue).

While all these terms are important, it’s likely that an investor is looking for a short-term funding option that they will repay once they unlock access to whatever capital they need. One of the most important factors to consider is repayment (and specifically pre-payment) options that will allow the investor to exit the loan and minimize any interest payments if they are able to do so in the future.

While these programs may seem attractive at first, like any other loan, one should consider whether the terms are suitable for their specific situation, including whether they will actually be able to handle their debt service, including any escalating interest payments if the loans aren’t repaid at an agreed upon time.


Does the lender have a professional underwriting process and loan package? Just as how one would feel suspicious of applying for a loan with a company that has sloppy paperwork and mannerisms, it would help greatly with the lender’s credibility (and peace of mind to the investor) if there was a polished, professional underwriting and loan underwriting/closing package.

It’s not enough to simply create a separate loan entity and issue a one or two page “loan document.” The application and closing process should feel similar to any other similar legitimate transaction with your local bank or credit union.

If one has questions about the approvability and legality of the loan under applicable federal, state, and USCIS law, is the lender able to credibly explain why it’s acceptable (or do they make their counsel available to speak with you?)

Finally, to guard against future potential requests from USCIS, it should be clear where the source of funding is coming from in case USCIS raises this issue later. Some lenders pull from a credit facility from a US banking institution. Others have healthy war chests and balance sheets they’ve sensibly accumulated through the years. Either way, one should understand and feel comfortable that the funding provided to them is legitimate and explainable. Arguably, USCIS cannot inquire about the source of funds for a third-party lender; however, they may examine whether it appears to be a legitimate and credible transaction.


Even if one finds a U.S. EB-5 loan program that he or she feels comfortable with, keep in mind that the vast majority (if not all) of U.S. EB-5 Loan programs currently will only issue loans for a specific project that they’ve underwritten and are comfortable with. In other words, most U.S. EB-5 lenders will issue a loan to an investor only for a specific project that they’ve pre-approved beforehand. Chances are by selecting one of the U.S. EB-5 loan programs out there in the market, you are also effectively making a decision to invest into a specific project.

This is understandable since the lender bears the risk if the project fails or the investor doesn’t repay. Lenders probably have more confidence in their project underwriting than that of the investor (as they should).

This could change in the future as many syndicates that are working on third-party lending solutions could allow investors to acquire loans to invest in a variety of projects, but as of this date, these programs are still in their infancy.


If an investor is interested in pursuing this option, it would be prudent for an investor to confirm whether current or future EB-5 counsel is comfortable with using this option for their investment. Not every firm is comfortable or willing to do it (not unlike filing with partial investments, for example). In fact, some firms may refuse to allow their clients to use this option at all or charge exorbitant fees to prepare a response to a Request for Evidence (remember, a consultation is an opportunity for you to interview an attorney as well as seek legal advice before making a decision to hire).

Thus, it’s advisable for investors to ask a law firm whether they are experienced with filing I-526E petitions with U.S. EB-5 Loans, including structuring them, submitting supplemental filings, and preparing responses to future USCIS inquiries. Some questions an investor should ask a law firm they are interviewing is whether they believe U.S. EB-5 loans are legal/approvable, whether they are familiar with the U.S.-based EB-5 loan program that the investor is interested in, and whether the firm is comfortable preparing an I-526E with this option.

For example, as one can imagine, incorporating U.S. EB-5 loans isn’t exactly a cookie-cutter filing. Oftentimes, that includes weaving together multiple options that the investor has combined to fund their EB-5 investment and file their case.


Needless to say, the credibility and professionalism of the parties involved with the U.S. EB-5 loan and the preparation of the underlying I-526E petition are critical. Lender credibility, lender source of funds, lender underwriting, and experienced counsel are important because they are all necessary components to the investors’ I-526E petition.

The catastrophic scenario is if there’s a weak link that could trigger USCIS denial, which will require refunds that may or may not be available, which would cause the biggest tragedy of all – an investor having to start from scratch.

Retaining suitable and experienced counsel isn’t important to only the investor – Regional Centers and issuers have a vested interest in protecting their hard-earned track records as well as refund provisions to be wary of. They, too, have a vested interest in protecting their investors and making sure their cases are approved. It is not unusual for Regional Centers and issuers to do their own vetting of EB-5 attorneys to make sure they have the requisite experience and knowledge working with U.S. EB-5 loans before allowing them to prepare and file a case. If there are any doubts about an attorney’s ability to navigate and prepare a case, a Regional Center may require the investor (or their attorney) to hire experienced counsel to conduct a peer review of the I-526E before submission (similar to when the Regional Center’s requires inexperienced attorneys to send their source of funds for third-party review with experienced EB-5 counsel).   

Before selecting a U.S. EB-5 loan or EB-5 counsel, one should carefully review the subscription documents for their EB-5 project and consider whether a poorly structured loan or poorly prepared EB-5 filing will jeopardize his or her eligibility to receive a refund if the I-526E is denied.


Finally, it’s worth noting that just because this option is available to an investor doesn’t mean they should use this option. Ultimately, whether it’s a good option depends on an investor’s circumstances. Some investors are more price-sensitive and would rather not pay the interest rates being offered with most of today’s U.S. EB-5 loans. On the other hand, even with short-term high-interest rates, maybe this is an attractive option to hedge for an investor with vested RSUs who would rather not sell in a down market, with the bet that any rebound of the stock would far outweigh any interest the investor would pay.

Many lucky investors do not need exotic funding structures or higher interest loans, but as long as demand in EB-5 slowdown is tied to a lack of liquidity or adversely affected by depressed securities markets, innovation in lending will find its way to EB-5.

The ability to acquire a U.S.-based loan is another useful option in an investor’s decision-making toolbox before they make an informed investment, no different than whether to file based on a partial investment, whether to pursue concurrent filing, choice of lead investor based on nationality, and a host of other branches in their flowchart.

Niral Patel

Niral Patel, a partner at KLD LLP’s New York office, has experience in many aspects of corporate and investment immigration law. For EB-5, he oversees the lifecycle of EB-5– corporate structuring, preparing I-956F applications, preparing I-829 templates, and advising on issues related to redeployment. For non-EB-5 matters, Patel consults companies in maintaining compliance for E-2 and L-1A programs. He represents both domestic and global corporations with respect to preparing employment-based petitions and adjustment of status applications for their employees in the U.S. Patel also has federal litigation experience. He has successfully represented investors in federal court in mandamus actions for pending immigration cases, including EB-5. 

Phuong Le

Phuong Le is a founding member and partner with KLD LLP. He has over 15 years of experience and helps lead a global EB-5 practice group. He draws upon an extensive background advising parties on all sides of EB-5 transactions, including regional centers and direct EB-5 investments, project developers, agents, and investors. His clients span the globe, and he has advised on over 5,000 investor petitions and over $2.5 billion in EB-5 financing for projects across the U.S., including commercial real estate, multifamily, charter schools, hotels, and publicly traded franchises. He frequently travels and shares his knowledge regarding complex EB-5 matters as a lecturer, author, and EB-5 expert witness for other firms and the EB-5 industry. 

Nima Korpivaara

Nima Korpivaara

Recognized nationally for his vast experience in EB-5 law, Nima Korpivaara has advised a multitude of developers, project principals and regional centers on EB-5 program compliance. He primarily works within the immigration practice at KLD LLP, counseling corporate clients and individual EB-5 investors on the EB-5 program’s USCIS requirements and processes.

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