Financing Options in EB-5: making the American Dream more accessible to global investors 

By Babak Hojjat

For many aspiring investors worldwide, the EB-5 Immigrant Investor Program represents a unique gateway to the United States, offering a path to permanent residency through capital investment. However, while the program opens doors to promising opportunities, its high upfront financial commitment can pose challenges for some prospective investors. Financing options, including those facilitated by third-party institutions with indirect relationships to EB-5 projects, help address these challenges by making the program more accessible. 

Projects may indirectly introduce investors to financing sources, allowing reputable third-party financial institutions to provide loans or payment options. This approach helps maintain compliance with USCIS regulations, as projects remain uninvolved in direct financing but can still facilitate the introduction of financing options to qualified investors. Let’s explore various financing solutions—such as HELOCs, property refinancing, installment plans, and project-provided extended timelines—along with capital stack considerations, making EB-5 investments available to a broader audience. 

EXPANDING THE REACH OF EB-5 WITH FLEXIBLE FINANCING OPTIONS 

The increase in the minimum investment requirement for the EB-5 program—from $500,000 to $800,000—has had a significant impact on the industry. This increase has benefited economic development, driving more substantial capital contributions that can stimulate job creation with less financial pressure on regional centers (RCs) and project developers. However, the extra $300,000, representing a 60% increase from the original $500,000 threshold, can be challenging to allocate for investors. 

For some, financing options provided through third-party lenders or financial institutions can help them meet this increased financial requirement without requiring a total upfront commitment. These approaches may suit those with a diversified asset base but prefer not to liquidate assets or reduce cash reserves. However, while third-party financing options offer flexibility, each option carries risks and compliance requirements. 

Despite the availability of indirect financing and installment options, the most secure approach remains a straightforward investment using the total EB-5 amounts sourced from a verifiable source of funds (SOF) for the entire $800,000. This bulletproof approach ensures regulatory compliance and avoids potential issues arising from financing structures. 

INSTALLMENT OPTIONS FROM PROJECTS VS. EXTERNAL FINANCING: A SIDE-BY-SIDE COMPARISON

Besides traditional financing options, some EB-5 projects now offer installment plans directly to investors, extending the investment timeline without requiring a separate loan. Here’s a side-by-side comparison of the benefits and considerations for each approach, including a third option for a total upfront investment with verified SOF: 

Criteria	Project-Provided Installment Plan	External Financing Option	Full Upfront Investment with Verified SOF
Interest Costs	Interest-free, paid directly to the project	Interest rates typically 9%–11.5%	No interest costs
Repayment Flexibility	Flexible timelines, project-specific	Fixed or adjustable terms, may allow early repayment	Not applicable
Project Options	Broad range within the EB-5 industry	Limited to projects accepting external financing	Full range, unrestricted
Timeline for Capital Commitment	Extended timelines, reduce immediate capital pressure	Faster access, shorter repayment periods	Immediate commitment
Approval Process	Simplified, project-specific terms	Requires credit review and lender approval	Simplest, only needs verification of funds
Total Cost Over Time	Lower, no interest on the financed amount	Higher due to interest and loan fees	Lowest, no financing or interest fees
Compliance and Regulatory Risk	Medium requires documentation and attorney review	High, must meet lender and USCIS standards	Lowest, fully traceable funds
Source of Funds Flexibility	Allows partial use of diverse sources over time	Leverages assets with interest (HELOC& Refi.)	Full flexibility with upfront verified funds
Ease of Documentation	Moderate requires tracking of installments	High, with lender agreements and checks	Simplest, with a single documentation trail
Regional Center Preference	Generally favorable, many RCs offer this option	Depending on RCs, it varies by project	Most preferred, maximum financial clarity

What does each option mean? 

• Installment Payments in EB-5: What You Need to Know 

If your project allows for an installment option, interest-free installment payments directly to the project allow investors flexibility in capital commitment. While an installment option removes immediate cash pressure, they still require careful documentation and tracking to ensure compliance with EB-5 requirements. This option appeals to investors who prefer a phased approach but may need more limited project options than a full upfront investment. That said, if you’re considering financing your EB-5 investment through an installment plan, it’s crucial to understand that for immigration purposes, USCIS requires you to demonstrate that you have the entire investment amount—currently $800,000—available to you on the day your I-526/I-526E petition is filed. Even if you invest in installments, you must show that the total amount is accessible to you in a form that meets USCIS requirements. This means that your funds should be available in cash or in liquid or near-liquid assets, such as stocks, bonds, or assets being liquidated. While USCIS allows payment installments, they still expect proof that you can fully finance your investment from the outset. 

Important Note: Anticipated earnings, like future bonuses or income not yet received, cannot be counted as committed capital. To meet the requirements, investors must demonstrate that the total amount was accessible in tangible, traceable assets at the time of filing, regardless of any installment plan. 

To ensure your application is processed, it is essential to consult with an immigration attorney before finalizing an installment arrangement filing. They can thoroughly assess your EB-5 petition’s viability, helping you confidently move forward with compliance. 

• External Financing Option 

Third-party financing options—including a Home Equity Line of Credit (HELOC), property refinancing, and secured or unsecured loans—provide flexibility in meeting EB-5 requirements. While these options may involve interest costs and require compliance with both the lender and USCIS standards, they can be especially beneficial for investors with high-yield assets who wish to avoid liquidation. EB-5 projects might also support investors by introducing them to reputable third-party financiers, helping to ensure a smooth and compliant financing process. 

• Full Upfront Investment with Verified SOF 

The most straightforward and secure option is a full upfront investment from a verified source of funds, which is the preferred choice among regional centers and USCIS. This approach eliminates interest costs, regulatory risks, and project restrictions, making it ideal for investors with sufficient capital resources. Though it requires a larger immediate cash outlay, it offers the highest assurance of compliance and simplifies documentation. 

UNSECURED LOAN OPTION PROVIDES INVESTORS WITH ADDITIONAL WAY TO FUND THEIR EB-5 INVESTMENT 

The Matter of Zhang case, ruled in 2019 and upheld in 2020 by the U.S. Court of Appeals for the D.C. Circuit (Zhang v. USCIS, 978 F.3d 1314 (D.C. Cir. 2020)), changed EB-5 funding rules by allowing unsecured loans as a valid investment source. Previously, USCIS required loans for EB-5 investments to be backed by personal assets to ensure traceability. 

In Zhang, the plaintiffs argued that EB-5 regulations don’t require loans to be asset-backed. The court agreed, ruling that cash from an unsecured loan counts as “capital” under EB-5 rules if it is lawfully obtained. While investors must prove the funds’ legal origin, collateral is no longer mandatory. 

This decision opens financing options for investors who can legally secure funds without collateral. It also requires detailed documentation to prove the funds’ legitimacy, shifting focus from collateral to lawful sourcing. In short, the Matter of Zhang offers a new funding route, making EB-5 more accessible in a changing immigration landscape. 

THE CAPITAL STACK: UNDERSTANDING THE ROLE OF FINANCING IN EB-5 PROJECTS 

In the context of EB-5 projects, the capital stack represents the structure of various financial layers—such as senior debt, mezzanine debt, preferred equity, and common equity—that together fund a project. Each layer has its level of risk, expected returns, and repayment priority. 

The structure of a project’s capital stack can influence the availability of financing options or installment plans for EB-5 investors. For example, projects with a balanced capital stack that integrates senior debt and preferred equity may be more financially flexible, potentially accommodating installment options for investors. These projects may leverage lower-cost capital sources, which could reduce the need for immediate, total capital commitments from EB-5 investors. 

In contrast, projects that rely heavily on high-risk or high-cost mezzanine debt may have less and less flexibility to offer installment plans, as they must prioritize timely returns to higher-risk investors. By understanding a project’s capital stack, investors can gain insight into its financial health and capacity to provide financing options. 

LEVERAGING HELOCS AND REFINANCING FOR EB-5 FUNDING 

For investors who own property inside or outside the U.S., a Home Equity Line of Credit (HELOC) or property refinancing can be additional financing options. These methods allow investors to use the equity in their property to meet EB-5 investment requirements. While both HELOCs and refinancing come with fees and processing times, they can sometimes offer faster access to funds compared to project-provided installment plans or standard EB-5 financing loans. 

If an investor’s other assets or business ventures yield returns greater than the 9% to 11.5% typical interest rate for EB-5 loans, a HELOC or refinance might be more economical. By leveraging property equity, investors can preserve other assets with higher yields, allowing them to meet EB-5 requirements while optimizing overall portfolio performance. However, it’s to weigh the associated fees, processing time, and repayment terms of HELOC or refinancing options to determine which aligns best with individual financial goals. 

EXPERT GUIDANCE FOR COMPLEX SITUATIONS 

Working with a team of experts can be invaluable for investors facing unique challenges, such as language barriers or complex source-of-funds requirements in certain countries. This team must connect them with specialized immigration law firms, economists, and OFAC compliance specialists to ensure each application aligns with U.S. immigration and regulatory standards, making the EB-5 process more efficient and secure. 

Whether navigating regional financial regulations, managing source-of-funds in areas with limited financial transparency, or handling international compliance issues, a network of specialized experts provides critical guidance through each step. This approach is especially beneficial for investors from regions with complex banking and reporting practices, facilitating smoother progress throughout the EB-5 process. 

LEGAL GUIDANCE: THE IMPORTANCE OF CONSULTING A SECURITIES ATTORNEY 

For investors, projects, regional centers, or financial institutions considering offering EB-5 financing options, consulting with an experienced U.S. securities attorney is essential. The EB-5 program is highly regulated, and any financing structure involving securities, loans, or installment plans must be carefully reviewed to ensure compliance with U.S. securities laws and immigration regulations. To further support this complex process, immigration attorneys are also key, advising investors on EB-5 program requirements like job creation and “at-risk” capital and ensuring that the investment structure aligns with USCIS standards for green card eligibility. 

Connecting with reputable securities and immigration attorneys is essential for investors seeking trusted guidance throughout the EB-5 process. Recognizing the intricacies of the U.S. legal landscape, experienced consultants can also provide independent assessments of project viability and sustainability, helping investors understand job creation projections and other critical metrics. By bringing together these legal and compliance experts, they helps investors navigate the stringent requirements set by U.S. regulatory bodies, establishing a secure and compliant foundation for their EB-5 investments. 

FINANCING FOR EB-5: A PRACTICAL SOLUTION FOR GLOBAL MARKETS 

The cultural significance of financing options cannot be overstated. In many regions, particularly in MENA, South Asia, and parts of Africa, installment payment plans are common practice for significant investments, in business and personal finance. For potential EB-5 investors from these regions, financing options—like loans with 9% to 11.5% interest and terms of 2 to 5 years or project-based installment plans can be an attractive and familiar solution, aligning with their established financial strategies. 

Emphasizing financing as an option recognizes the unique economic practices in these regions, fostering inclusivity and showing prospective investors that the EB-5 industry is evolving to meet their needs.  

A PATHWAY TO POSSIBILITY 

The EB-5 Immigrant Investor Program has long served as a bridge for foreign investors to achieve residency in the United States, but its high financial requirements have limited access for some. By exploring financing options, including installment plans, HELOCs, refinancing, and project-provided installment structures, agencies can offer a pathway that aligns with the financial realities of a broader range of investors. Despite a limited selection of projects currently offering financing, these options can still have a significant impact.  

As the EB-5 landscape evolves, innovative financing options, smart repayment strategies, and customized solutions will empower more investors to embark on this life-changing journey. 

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