EB-5 Guide
How to Choose an EB-5 Project
Quick read
Financial Due Diligence
The EB-5 Capital Stack
Explained for Investors
Understanding where your $800,000 sits in the capital stack is the single most important factor in evaluating the financial risk of an EB-5 investment. Learn the difference between Senior Debt, Mezzanine, and Equity.
50-65%Typical Senior Debt
10-30%Typical EB-5 Capital
10-20%Developer Equity
3-5 yrsTypical Loan Term
EB5Visa.io Editorial TeamJune 28, 20268 min readAttorney Reviewed
Anatomy of a Deal
The Tower of Capital
Think of the capital stack as a tower of money. The safest money is at the bottom (paid first), and the riskiest money is at the top (paid last). Select a layer to explore its risk and return profile.
Select a layer in the stack to see detailed risk and return profiles.
Deep Dive Tools
Evaluate Your PPM
Use these tools to analyze the financial structure detailed in a project's Private Placement Memorandum (PPM).
The Repayment Waterfall
When a project is sold or refinanced, proceeds are distributed in a strict legal order known as the "waterfall." EB-5 investors must wait for senior lenders to be made whole.
1
Project Completion
The real estate project is built and reaches operational stabilization.
2
Refinancing or Sale
The developer sells the property or secures a permanent loan to pay off construction lenders.
3
Senior Debt Repaid
Exit proceeds go directly to the Senior Bank to fully retire their first-position loan.
4
Mezzanine Debt Repaid
Once the bank is whole, proceeds flow down to repay the Mezzanine (EB-5) loan principal.
5
Equity Distributed
After debt is cleared, preferred equity receives capital/returns, followed by the developer.
At-a-Glance
Debt vs. Equity Comparison Matrix
A quick reference guide to evaluating your position in the capital stack.
| Feature | Mezzanine Debt (EB-5) | Preferred Equity (EB-5) |
|---|---|---|
| Repayment Priority | Higher (2nd to Bank) | Lower (Subordinated to all debt) |
| Targeted Return Rate | Typically Lower (4-8%) | Typically Higher (6-12%+) |
| Return Type | Fixed Interest Rate | Preferred Return + Possible Upside |
| Collateral / Security | Pledge of Equity Interests | None (Unsecured Equity) |
| Foreclosure Rights | Yes (if structured correctly) | No (cannot foreclose) |
Always Consult a Professional
This guide provides educational frameworks, not financial or legal advice. EB-5 investments are complex securities offerings. Always engage a licensed broker-dealer or financial advisor to conduct independent due diligence on a project's capital stack and PPM before investing.
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