The EB-5 Loan Trap: How Financing Structures Could Undermine Dubai Investors’ U.S. Residency Plans

The U.S. EB-5 Immigrant Investor Program has continued to grow in demand for Dubai based investors seeking access to long-term residency planning for their families. The demand has been so strong that certain players in the industry have in recent years been a little creative with the financing structure and inadvertently exposed EB5 investors to avoidable immigration risk, not because of the project, but because of how the investment is financed.

The EB-5 program requires foreign nationals to invest $800,000 in a government preapproved project, with the investment leading to the creation of ten U.S. jobs per petition. Crucially, the capital must be lawfully sourced, fully traceable, and placed “at risk” for the purpose of generating a return.

Over the past year, the industry has seen a new financing model being introduced to the market. Under this financing model, investors are requested to remit a portion of the required capital contribution and the balance will be provided to them by loan. While borrowing under the program is permitted, the financing model structured the loan from funds obtained from the same regional center which houses their investment project or a regional center affiliated entity. This is where the lines got a little blurry.

The true intent of Congress with this program is that the funds must be fully from the EB5 investor and said funds must be used for U.S. economic development. When the loan originates from within the same project structure, such as the regional center, or a related affiliate, adjudicators begin to question whether the arrangement constitutes true at-risk capital or instead resembles circular financing. Circular financing is when the project is effectively funding part of the investor’s required contribution.

The team of U.S. licensed attorneys at the American Legal Center Dubai looked into the recent adjudications on loan program petitions. According to their team, the data suggests that these petitions funded through loans issued by the same regional center or affiliated project entities are receiving heightened review and even denials.

Dubai-based EB-5 specialist Shai Zamanian previously warned about this risk in a 2024 episode of the EB-5 Unplugged podcast. He emphasised that the statutory framework is built around full capital contribution and job creation. “The goal is for the investor to create ten jobs from their $800,000” he noted. “If they’re putting in a partial amount, I don’t see how that creates the requisite jobs within the framework of the law.”

As demand for U.S. residency options remains strong across the region, careful due diligence and early legal review are essential. In the current regulatory environment, financing structure is no longer a secondary consideration, it is central to the viability of the EB-5 strategy.

The team of U.S. licensed lawyers from The American Legal Center in Dubai will be hosting a series of seminars and webinars where they will be educating prospective investors on how to ensure that their EB5 petition is secure and approvable. Connect with them on +971 52 446 6095 for more information.