FINANCING OPTIONS IN EB-5 — BY BABAK HOJJAT
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 nearliquid 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 .
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 .
· 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 .
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