How can EB-5 funds be used to pay off a traditional lender?

There is no law regulating how the project should use the EB-5 funds, so long as funds are placed "at risk." The EB-5 funds can be used to pay back the original loan.

This is not unusual, and you can certainly use the EB-5 funds to refinance the lender out of the deal. Usually, there is no limit on how much EB-5 funds can be used as it all depends on your business needs. Your plan is a common practice in business financing known under various names such as bridge loans or interim financing or gap financing. By all account, it will be a short-term loan (usually of up to a year) that is used until the company secures permanent financing. Last but not the least, if you raise funds through the EB-5 program ensure the EB-5 funds are from lawful sources.

If the non EB-5 funds from traditional financial sources have been used in the project and it is contemplated that EB-5 funds will be subsequently used to pay off the debt, the EB-5 funds will be used to pay off the bridge loan.

You seem to be describing bridge financing. EB-5 funds can be used to repay other earlier expenditures. The particulars of this must be reviewed carefully and disclosed properly.

Under certain circumstances, EB-5 capital can be used as you have described. It would be best for you to consult with an experienced EB-5 immigration attorney, such as myself who can guide you through this process so that the use of the EB-5 capital will be considered qualifying for EB-5 purposes.