The EB-5 Program is complex and oftentimes confusing. Potential EB-5 applicants who may be researching the EB-5 loan may come across what appears to be conflicting information.

Does an EB-5 investor make a loan to their project?

How does an EB-5 loan work?

How the investment works depends on whether the EB-5 investor chooses a to invest in the direct EB-5 Program or the Regional Center Program.The investor chooses the Regional Center Program:An EB-5 investor does not make a loan to their project. An EB-5 investor cannot receive any guarantees that they will have their investment repaid. They must place their capital "at-risk". What EB-5 investors do is they make an equity investment in a limited partnership that is created by a Regional Center. That Regional Center then makes a loan to the EB-5 project. The investor chooses the direct EB-5 Program:An investor may choose to invest in his or her own project and take an equity position in the project. In this scenario, no regional center is involved. Why choose one model over the other?Investing in the Regional Center loan model may provide investors with less risk, as they have a clear idea of when they are expected to receive repayment of the loan. Whereas, with the direct EB-5 Program, investors are more dependent on current market conditions. However, an investor who is confident in their industry and project, may feel more security investing in their own projects. Additionally, interest paid on Regional Center projects is relatively low, whereas, the sky is the limit in terms of how much return on their investment an EB-5 direct investor came make if they're investing in their own project.

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