Understanding EB-5 investment risk

To qualify for EB-5, the investor's capital must be placed at risk for the purpose of generating a return. In general terms, this means the investor must face a real possibility of losing some or all of the money, as well as the possibility of gain. A mere intention to invest, or money held in a way that ensures its return, does not meet the requirement.

This has a practical consequence: arrangements that guarantee repayment of the investor's capital, or that give the investor a guaranteed right to sell the interest back at a fixed price, can be inconsistent with the at-risk requirement. USCIS policy on this topic is set out in the USCIS Policy Manual (opens in a new tab).

Capital-loss risk

EB-5 investments are not risk-free. If a project fails, becomes insolvent or simply performs worse than projected, investors can lose part or all of their capital, and no government agency guarantees the return of principal. To understand how exposed the capital would be, investors and their advisers generally examine the project's financial statements, its total debt, the collateral available, any contingency reserves and how much of the developer's own money is in the project. Whether EB-5 capital is debt or equity, and where it ranks against other financing, also matters; see the EB-5 capital stack.

Risks can interact. A construction delay can push back job creation, which can affect the investor's petition to remove conditions; a market downturn can make refinancing harder, which can delay repayment.

Project delays and cost overruns

Construction and business projects rarely run exactly to plan. Permit delays, labour shortages, rising material costs and changes in market demand can all push back completion or increase the budget. For EB-5 investors, the consequences can include later repayment, reduced cash flow to service debt, and slower job creation that may matter for the petition to remove conditions.

For a project already under way, investors can ask for independent construction progress reports, the current schedule compared with the original one, evidence that the required permits are in place, details of any cost overruns, and an explanation of how the project will be fully funded if costs rise.

Refinancing and repayment risk

Many offerings expect to repay EB-5 capital by refinancing, by selling the asset or from operating cash flow. Each of these depends on conditions no one controls: interest rates, property valuations, lenders' requirements and the project's own performance. If refinancing is not available on workable terms, repayment may be delayed or reduced.

Useful points to examine include the loan's maturity date and extension rights, the size and terms of any senior debt, the collateral and who has first claim on it, and what alternative plan exists if the main exit fails. A projected exit date is not a guarantee. See exit strategies and capital repayment.

A developer can default for ordinary business reasons, such as poor management, excessive borrowing or weaker demand than expected, and a default can lead to bankruptcy or foreclosure in which EB-5 investors may recover little. Separately, some offerings have involved outright fraud. Checking the regional center's designation, the offering documents and the developer's track record independently, rather than relying on promotional material, is an important safeguard.

The U.S. Securities and Exchange Commission and USCIS have warned investors about fraud involving EB-5 offerings in a joint investor alert (opens in a new tab). Warning signs include:

• Promises that a green card or visa is guaranteed.
• Promises of guaranteed repayment, guaranteed returns or no risk.
• Misleading or unsupported claims about the project, its approvals or its past results.
• Pressure to commit quickly, including pressure tied to deadlines or limited availability.
• Reluctance to provide offering documents, financial statements or answers in writing.
• Requests to send money directly to an individual or to an account not described in the documents.
• Sellers who are not appropriately licensed, or who do not disclose their compensation. You can search individuals and firms on FINRA BrokerCheck (opens in a new tab).
• Conflicts of interest that are not disclosed, such as related-party arrangements between the developer, the regional center and those promoting the offering.
• Claims that USCIS or another government agency has endorsed or approved the investment itself.

Each investor generally must be credited with at least 10 qualifying full-time jobs. Regional center investments may count indirect jobs estimated with economic models, while direct (standalone) investments generally rely on direct employment by the business. If a project creates fewer jobs than projected, for example because of delays or a smaller budget than planned, investors may have difficulty showing that the requirement was met when they file Form I-829.

Investors and their advisers can review the economic impact report, the project budget on which job estimates are based, the employment assumptions and methodology, and how jobs will be documented and allocated among investors, including whether there is a cushion above the minimum. See EB-5 job creation explained.

USCIS evaluates each investor's case on its own evidence, including the lawful source and path of funds, whether a qualifying investment was made, job creation and compliance with program rules. Visa availability for the investor's category and country also affects timing. For these reasons no legitimate offering can guarantee a green card or repayment:

• USCIS decides every petition individually. No sponsor, regional center, agent or website can bind USCIS to approve an investor's I-526, I-526E or I-829 petition.
• Project approval is not investor approval. USCIS approval of a project application (Form I-956F) concerns immigration eligibility of the project. It is not an assessment of the investment's merits or safety, and each investor must still meet the requirements individually, including a lawful source of funds.
• Project outcome and petition outcome are linked but not identical. A successful project does not guarantee that an investor's petition will be approved, and a struggling project does not necessarily decide every investor's case. Each depends on the specific facts and evidence.
• Visa availability is outside anyone's control. It depends on annual numbers, demand and per-country limits, and can change month to month.
• Repayment depends on the business. Whether capital is returned depends on the project's performance and capital structure, and the at-risk requirement generally rules out guaranteed returns of capital.
• Laws and programs can change, as the 2021 lapse of the Regional Center Program showed.

The rules themselves move over time. The minimum investment, currently $1,050,000 or $800,000 in a targeted employment area or infrastructure project, is scheduled to be adjusted for petitions filed on or after January 1, 2027; as of our last review, the adjusted amounts had not been officially published. See the 2027 investment adjustment.

The EB-5 Reform and Integrity Act of 2022 strengthened oversight of the program, including audits of regional centers, compliance reviews and site visits.

Stronger oversight and updated fees support the administration of the program, but they do not remove investment or immigration risk.

Risk cannot be removed from EB-5, but it can be understood and weighed. Families often find it useful to:

1. 01

   Step 1: Decide what you can afford to lose

   Consider whether your family could absorb a partial or total loss of $800,000 or more without affecting essential needs.

2. 02

   Step 2: Separate the two questions

   Evaluate both the immigration case and the investment case; a strong answer to one does not answer the other.

3. 03

   Step 3: Use structured questions

   Work through the due diligence questions for any offering.

4. 04

   Step 4: Get independent advice

   Use a qualified U.S. immigration attorney and a licensed securities or financial professional who are not paid by the offering.

• Review the EB-5 requirements to see how the at-risk rule fits with the others.
• Work through the project due diligence questions and how to evaluate an EB-5 project.
• Understand where EB-5 capital sits in the capital stack and how exit strategies and repayment work.
• Read our disclosures to understand the limits of the information on this site.
• If you would like to be connected with qualified professionals, request a consultation.