Every EB-5 investment is a private equity investment. That is not a flaw in any particular deal; it is what the law requires. U.S. Citizenship and Immigration Services (USCIS) regulations say a contribution in exchange for a note, bond, or other debt arrangement between the investor and the new commercial enterprise does not count as qualifying capital (8 C.F.R. § 204.6(e)). So when you invest, you are not lending money and you are not buying a guaranteed return. You are buying an equity interest in a limited liability company (LLC) or limited partnership (LP). That interest is illiquid and restricted. It is typically sold under Regulation D or Regulation S, it cannot be freely resold (17 C.F.R. § 230.502(d)), and there is no market for it. Your repayment depends on two things: the project borrower repaying the EB-5 loan, and the manager of the issuing entity deciding to return that money to you.

Many EB-5 projects do repay. Some never do or delay repayment for years. But investors who understand how the structure works, and where their protections actually come from, make better decisions than those who rely on sales materials. Here is what I think every investor should know.

The manager has broad discretion, and the law supports it

The most common repayment issue I see is simple. Repayment is tied to the maturity of the loan extended by the issuer, known as the “New Commercial Enterprise” (“NCE”), to the project company, known as the “Job Creating Entity” (usually, the borrower). When the loan matures, the NCE’s manager often has the authority to extend it.

Courts give that decision a lot of room. Under the business judgment rule, managers are presumed to have acted on an informed basis, in good faith, and in the honest belief that the decision served the company. To overcome that presumption, an investor generally has to show the manager:

• Had an undisclosed conflict of interest or was not independent (breach of duty of loyalty).
• Acted in bad faith, or
• Was grossly negligent in becoming informed (breach of duty of care).

In EB-5 deals, the affiliations between the regional center, the manager, and the developer are usually disclosed in the offering documents. Once a conflict is disclosed and investors sign the operating agreement, it becomes much harder to challenge. A decision to extend a loan rather than force repayment, without evidence of self-dealing or bad faith, will usually be treated as a protected business judgment.

Fiduciary duties also tend to be narrower than investors assume. Many NCEs are Delaware entities, and Delaware allows the operating agreement of an LLC to restrict or even eliminate fiduciary duties. What cannot be eliminated is the implied contractual covenant of good faith and fair dealing. In practice, that means the operating agreement, not general fiduciary principles, defines most of what the manager owes you.

Why lawsuits are a weak backstop

Investors sometimes take comfort in the idea that they can sue if things go wrong. It is worth understanding why that option is limited.

Most mismanagement claims are derivative. Under Delaware law, a claim belongs to the entity rather than the individual investor when the entity suffered the harm and would receive the recovery (Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1033 (Del. 2004)). Derivative claims come with procedural hurdles, including a demand on the manager or proof that demand would be futile, and continuous ownership requirements (6 Del. C. §§ 18-1001 to 18-1003; 6 Del. C. §§ 17-1001 to 17-1003). In plain terms, the investor has to get past the manager’s gatekeeping before the court even looks at the merits. Even if they win, the money goes back to the NCE the same manager still controls.

Collecting a judgment can be harder than winning one. The NCE’s manager is often a special-purpose LLC (or LP) with few assets of its own. Reaching the principals behind it requires piercing the corporate veil, which Delaware courts permit only in narrow circumstances involving fraud or similar injustice.

Litigation is slow and expensive. A small group of investors facing a well-funded sponsor in court carries most of the cost and risk. None of this means managers act in bad faith. Most do not. It means your real protection comes from two places: the terms of the deal, and the integrity and capacity of the people running it. Those are the things to evaluate before you invest. It would be prudent to run background checks on the principals and manager.

What often happens at loan maturity

I have followed several disputes between EB-5 investors and NCEs managed by well-known regional centers. A common pattern: five to eight years in, the project has been built and operating for some time. The loan matures. However, EB-5 investors are told that the market is not right for a sale or refinancing, and therefore the manager extends the loan for a year or several.

Sometimes that is the right call. A forced sale or refinancing in a weak market can destroy value that a continuation of the loan term would have preserved. The problem is that investors usually have no vote in the decision, limited visibility into the reasoning, and few practical options if they disagree. An investor who understands these risks going in is far better positioned than one who learns them at year seven.

Unfortunately, oftentimes EB-5 investors are pushed to sign releases or settlement agreements where they agree to receive immediate partial capital repayment and give up the remainder in exchange for a waiver of claims.

Only your capital is at risk

Your capital is at risk. The manager’s is not and collects a fat margin. But these are the rules of the EB-5 game. What sponsors and regional centers primarily risk is reputation, but some have moved past failed projects with little lasting effect. Prior project problems are not always prominent in marketing materials or surface search.

The EB-5 Reform and Integrity Act of 2022 improved transparency by requiring regional center business plans to address material investment risks, material litigation, and fees paid to agents, finders, and brokers. It is still worth doing your own research. Useful sources include:

• Federal court records (PACER) and state court dockets, including the Delaware Court of Chancery
• Securities and Exchange Commission (SEC) EDGAR filings and SEC litigation releases
• Financial Industry Regulatory Authority (FINRA) BrokerCheck for any broker-dealer or registered representative involved
• The USCIS list of terminated regional centers.

Deeper research of regional centers is not always helpful because they are shell entities with a USCIS license valid in a particular state, which allows the selling group to use the EB-5 program to raise capital. USCIS says that as of Oct. 26, 2026, there were 572 approved regional centers. One with a bad track record is unlikely to be used in another EB-5 deal; the underwriter will replace it with another, since regional centers are generally available for lease, rent, or purchase.

Track record, asset class, and capital stack do matter, but they are not guarantees. The structural gap between the manager’s interests and EB-5 investors exists in every deal. The question is how well a particular deal narrows it.

What protective terms look like

When reviewing an offering, these are the provisions worth paying closest attention to (in fact, a serious underwriter should have a much more comprehensive list):

• Extension limits. Is there a cap on the number or length of loan extensions? Do extensions require investor consent?
• Removal rights. Can investors remove the manager for cause by majority vote, and is “cause” defined broadly enough to matter?
• Information rights. Are there audited financials, regular project reporting, and an independent fund administrator?
• Sponsor capital. How much of the developer’s own money is in the project, and does it sit below the EB-5 loan in the capital stack?
• Value of sponsor capital. I have seen a lot of capital stacks with mispriced equity valuation.
• Loan security. Is the EB-5 loan secured by collateral, a pledge of interests, or a guaranty from a creditworthy party?
• Value of collateral. Same issue as with mispriced equity.
• Fee transparency. Are all fees and interest spreads retained by the regional center or manager clearly disclosed?
• Dispute resolution. Applicable law and venue. Where will disputes be heard, and does the agreement require arbitration?

No single term makes a deal safe. Together, they show whether the sponsor has built in accountability or reserved maximum discretion and risk-hedging for itself.

Bottom line

Read all of the offering documents, not just the summaries. Analyze the project and the people behind it. If you are not capable of doing that on your own, work with an experienced licensed EB-5 broker whose track record you can verify, and by track record I mean not having placed dozens of investors into projects that later failed. Understand that in most deals your recourse is limited and you will depend largely on project economics, investor protections, but also the good faith and competence of the manager and its principals.

EB-5 can work well, and many investors have obtained their green cards and their capital back. Some have been less lucky. Still, EB-5 works best for investors who go in with clear expectations and after thorough due diligence and obtaining clear answers.