The current framework of the EB-5 requires that a foreign investor makes an investment into an EB-5 program. This investment is specifically called an ‘equity investment,’ and investing with a loan into a project is not allowed, even if there is a guarantee of repayment.

However, this has not always been the case. This is because when the EB-5 first came into existence in 1990, foreign investors would often make an investment with cash down. The USCIS eventually had to make clear that a loan would not be treated as an investment, and the law was promptly changed.

That being said, there are numerous Regional Center investment projects these days that are essentially structured as loans., because they offer loans with interest rates to investors that are to be repaid in five years.

As a result, many foreign investors are understandably a bit perplexed as to why the USCIS has made clear that loans are not investments in the EB-5 program, and yet regional centers will give them a loan with an interest rate that is to be repaid within the five year time period.

The basic reason for this is because the investor is not actually making a loan to the project. instead, they are making an equity investment into a partnership that the Regional Center creates. This in turn then creates a loan to the EB-5 project.

Make sense?

Another way to think about it is this: basically there are two models that Regional Centers use in order to structure their projects. Whenever an investor in the EB5 visas program decides to invest via a Regional Center that is approved by the government, they will need to carefully review the legal arrangement first. It’s also critical to understand that each regional center is very different from one another, as some will offer the loan with interest option like we described above.

One way to think about it is like an investor taking an equity position within a debt fund. The loan is structured within the Regional Center Company, as they act as the lender. The project then acts as the borrower. The secured loan term will usually be set to five years. The provided security will need to be anything that the borrower can give in order to cover the loan, regardless of whether it is related to the project or not. The loan can also be completely unrelated to the project itself, and can be a guarantee by the project’s owner or by a parent company.

Next, we’ll compare and contrast the EB-5 Equity Model with the EB-5 Loan Model:

EB-5 Equity Model

The EB-5 Equity Model is any project that takes ownership over either the business itself or the property. Thus, when a new project has been formed, the visa investors will form a limited partnership with the EB-5 regional center. The funds used for the investment will then be used to buy and develop property on which to invest in a business. This will usually include both commercial and land developments.

The investors will own ownership shares in the project because they will be essentially acting as limited partners. If the majority of partners decide to dissolve the partnership, then the shares will be dissolved as well. If the investors decide not to dissolve the company, however, then the shares can be sold to third-party buyers.

EB-5 Loan Model

The EB-5 Loan Model, as we discussed above, is basically where invested funds are instead loaned for spending on an EB-5 project. The regional center and the investors together will both create a limited partnership company. This partnership will then loan the funds to the borrower.

The borrower can either be a public organization or it can be an individual. The exit plan is when the loan has matured, which again, will be set to five years after initiation of the partnership. The only time that repayment will be allowed to be made early is if each investor has his or her permanent green card.


As was mentioned previously, not all EB-5 regional centers are alike. This means that both the agreements and the projects between regional centers can vary widely. As a foreign investor, it’s your responsibility to review partnership agreements and exit strategies to determine if investing through a particular EB-5 regional center will be the right move for you.

Whether you are interested in the loan or equity model, Rahbaran & Associates can help you find the right investment and obtain your Green Card through an EB-5 visa today.