EB-5 Investors, “Trust, But Verify”—Always Confirm an EB-5 Project’s Claims Before Investing

“Trust, but verify,”—this pithy phrase made famous by U.S. President Ronald Reagan emphasizes the need for caution and accountability before going into any agreement.

And as we’ll see in this article, it’s crucial for EB-5 investors to “trust but verify,” before committing their hard-earned funds to an EB-5 project.

President Reagan most famously used this phrase during the signing of a major nuclear treaty with the Soviet Union in 1987. In negotiating this treaty, the Reagan administration insisted on one of the strictest verification regimes ever, with exhaustive monitoring and regular inspections to keep both parties accountable.

Despite the generous promises made by Soviet negotiators, Reagan wanted to confirm that their claims were factual and that they would uphold their part of the bargain. EB-5 applicants would do well to imitate this cautious approach when planning their investments.

Why, you may be wondering, is the need for caution and verification so important in the EB-5 market?

Through its salespeople or brokers, an EB-5 project might verbally make all sorts of claims to attract investors. A project may, for instance, claim that investors will be repaid quickly and that they will qualify for Green Cards, and they may likewise deny any potential risks or conflicts of interest.

But EB-5 investors need to verify these claims before committing both $800,000 (along with all associated regional center fees) and their cherished immigration goals into the EB-5 project. No matter how attractive an EB-5 project seems, it could carry a high level of risk, leaving EB-5 investors without their Green Cards or their invested funds.

Before investing, keep in mind that an EB-5 applicant is neither guaranteed to receive a Green Card or to recover his funds. Rather, your financial and immigration outcomes depend largely on a project’s compliance with USCIS standards and its market potential.

In other words, if you invest in a compliant and financially successful EB-5 project, you’ll likely get both your Green Cards and your invested funds back.

But choosing a high-risk EB-5 project—even if it’s marketed as a safe option—can result in losing your funds and your dreams of permanent residency.

That’s why EB5AN strongly encourages EB-5 investors to get the facts about an EB-5 project before making an investment decision. By verifying an EB-5 project’s claims and identifying the offering’s true risk level, EB-5 investors can achieve both a successful financial investment and become U.S. permanent residents—now faster than ever before.

Since 2013, EB5AN has led the EB-5 industry in transparency and investor education. Through free online resources and consultations, we help EB-5 applicants identify project risks, ask the right questions, and get a solid understanding of each project before investing.

We want to help you and your family do the same: make a successful EB-5 investment and receive your U.S. Green Cards in a timely manner.

To that end, we are pleased to offer this in-depth guide to evaluating an EB-5 project. In this article, you’ll find what questions to ask, how to ask them, and strategies to determine a project’s actual risk profile—regardless of effective marketing or appealing claims.

The following will help you to follow the “trust but verify” approach for any claims about an EB-5 project and, in so doing, safeguard your funds and immigration goals. We’ll begin by reviewing why it’s important to ask questions in writing and check each EB-5 project’s offering documents.

Ask Questions in Writing; Review the Investment Documents

EB-5 investors should insist on receiving all information and answers in writing. Verbal promises often sound convincing but are easy to forget, misinterpret, or later deny. Written communication creates a permanent record—proof of what was said and promised—and allows investors to verify details before moving forward. It also reveals how transparent and professional a project’s management team truly is.

If a project refuses to answer questions or share its financial statements in writing, this should be treated as a serious warning sign that the sponsor may be hiding information or otherwise misleading you.

The same rule applies to reviewing a project’s offering documents. Every legitimate EB-5 investment must have detailed disclosures that outline the project’s risks, financing structure, job-creation estimates, and repayment terms. Only what appears in these documents—or in writing from the sponsor—can be relied upon under U.S. securities law. Any verbal statement not backed by written disclosure should be considered unverified.

Additionally, carefully reading the offering documents helps investors identify what is missing as much as what is included. A prepared list of questions allows them to spot gaps in information and request clarification before committing funds. Taking the time to read and understand the offering documents—and confirming all answers in writing—is the only way to make an informed and secure EB-5 investment decision.

Let’s now consider what questions you’ll need to ask before investing in an EB-5 project. Your questions should focus on an EB-5 project’s finances, the track records of the regional center and developer, and the project’s compliance with USCIS rules and regulations.

Evaluating an EB-5 Project’s Financial Risk

Financing Cost and Interest Rate

The cost of financing is one of the most revealing measures of a project’s financial strength.

A developer seeking capital from banks and investors must convince them that the project’s risk level justifies a low cost of borrowing. The more confidence lenders have in the project’s success, the lower the financing cost will be. When a project must pay high interest rates, it signals that lenders see substantial risk.

Interest rates comparisons between projects can quickly indicate relative stability. If one project secures a senior loan at 8% while another pays 15%, the latter carries significantly higher risk.

Banks and institutional lenders calculate interest rates according to how likely they believe repayment will occur. In the EB-5 context, lower-cost financing reflects not only a strong project but also a developer with a solid reputation and a history of successful repayments.

Capital Stack Position and Transparency

Understanding where EB-5 capital sits in the project’s capital stack is essential.

The capital stack defines who gets repaid first if problems arise. Senior loans hold first position, which means they are paid back before other forms of financing and therefore carry the least risk. Mezzanine loans, meanwhile, sit below senior loans, have higher interest rates, and face a greater chance of loss if the project fails.

If EB-5 funds replace senior debt, investor risk decreases. If those funds substitute mezzanine debt, risk rises sharply.

To assess this, the full capital stack should be disclosed before any investment is made. Prospective investors must examine the structure to determine whether EB-5 money occupies a safe position.

This analysis can sometimes be more complicated than it should be. Developers sometimes inflate land value to exaggerate their equity contribution or describe EB-5 loans as “senior” when, in reality, they start as mezzanine debt and convert only if specific, often unlikely, milestones are achieved. Other times, EB-5 loans that begin in a senior position can become subordinated later if new financing is introduced.

Investors must carefully review all relevant legal and financial documents to confirm that the capital stack is fully transparent. They should ask clear questions about whether developer equity consists of actual cash or only an appraised land value and whether the EB-5 position can change during the project’s life.

As emphasized above, these questions must be answered in writing to ensure accountability.

Because most investors lack formal financial training, involving an experienced immigration attorney during your project review can help identify potential red flags related to immigration outcomes, even though attorneys cannot provide explicit investment advice.

Profitability and Repayment Capacity

A project’s profitability is the foundation of repayment. While borrower quality measures the developer’s past record, profitability measures whether the current or future operations will generate enough cash to repay investors.

In real estate projects, profitability equals total revenue from sales or operations minus land and construction costs.

Projects that are already profitable before you invest have a much stronger repayment outlook. When a development has sold units or is generating operational income, repayment of the EB-5 loan becomes far more likely.

For projects still in development, investors must determine whether profitability is realistically achievable. Evidence of market demand, signed contracts, or non-refundable deposits indicates that profitability is on the horizon. Reviewing independent market feasibility reports and verifying them with outside research can confirm these claims.

The repayment schedule must also be tested against financial reality. A project that promises repayment in four years must be generating sufficient profit to make that feasible.

When a project’s repayment depends entirely on future operations—such as revenue from a hotel or apartment complex—the risk increases. If actual cash flow falls short or a liquidity event fails to occur, investors may lose part or all of their capital.

This danger is especially common in hospitality and multifamily projects without repayment guaranties from a financially strong parent company. Evaluating whether such a guaranty exists—and whether it is enforceable—is critical to understanding the true level of repayment risk.

Loan Security and Asset Strength

The nature and quality of loan security also reveal much about a project’s financial strength. The best EB-5 projects provide tangible collateral or repayment guaranties to protect investors.

Some EB-5 offerings claim that secured loans are not permitted, but this is incorrect; the program allows secured EB-5 loans.

Security can take several forms. A simple pledge of equity interests in the project company provides some assurance but little actual recovery value if the project fails. A mortgage on the property being built offers stronger protection because it grants the lender rights to take possession of the property in the event of a default.

The highest level of protection comes from repayment guaranties issued by well-capitalized entities with diversified assets. A guarantor with significant net equity and holdings across multiple asset classes provides a buffer against project-specific downturns. The broader and more diversified the guarantor’s resources, the more secure the EB-5 loan becomes.

Borrower Quality and Project Track Record

The borrower’s (that is, the developers entity’s) credibility is another central measure of financial strength.

Investors should verify whether all necessary financing is secured before EB-5 funds are solicited. Projects still seeking large amounts of capital may never reach full funding, leaving their EB-5 capital exposed.

Developer equity also plays a decisive role. A developer with significant personal equity in a project shares the same financial risk as the investors and is more motivated to ensure completion and repayment. Conversely, when developers contribute little or no equity, all risk shifts to EB-5 investors.

Evaluating the size and nature of this equity—cash versus land contribution—can help distinguish serious developers from opportunistic ones.

Market conditions should also be examined. A project in a growing market with strong demand for its product—whether residential, hospitality, or mixed-use—has a better chance of profitability and repayment. On the other hand, a project in a stagnant or declining area carries a much higher risk of underperformance, even if construction is completed successfully.

Finally, the stage of construction matters. Projects already under construction show that capital is actively being deployed and progress is tangible. A project still in planning, awaiting approvals or financing, may never break ground.

Reviewing the project’s current construction status, third-party progress reports, and confirmed sources of funds helps determine whether a project’s financial position is genuinely strong.

Be Sure to Read the Financial Statements

Keep in mind that evaluating the above aspects of an EB-5 project’s finances will require you to read its financial statements.

Reviewing the financial statements of an EB-5 project company is one of the most important steps before investing. These statements reveal where the project’s money is coming from and whether the company has the resources to complete development.

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Since most real estate projects depend on multiple funding sources—such as senior loans and private investments—financial documents allow investors to see the full capital structure.

This due diligence is standard in other investment fields and should be no different for EB-5 investors. Without these statements, investors have no reliable way to evaluate whether a project is financially sound.

Financial statements provide key insights into a project’s health, showing how well it can cover expenses, repay loans, and generate returns. For EB-5 investors, this financial strength directly affects their immigration success, since job creation depends on project completion and profitability.

Put simply, a financially stable project company is more likely to create the required jobs and return investor capital on time. Conversely, poor financial performance or high debt levels may signal that the project could struggle to meet both its financial and immigration obligations.

A close look at a company’s debt obligations is especially important.

Real estate developers often use leverage to enhance returns, but excessive debt increases risk. Financial statements disclose the level of leverage, repayment schedules, and whether the company is current on its payments. This information helps investors judge whether the company can service its debt responsibly.

The same applies to guarantors—if repayment is guaranteed, investors should review the guarantor’s financial statements to confirm it has enough equity and diversified assets to back the guaranty.

Financial documents also indicate the value of the project’s underlying assets. These values form the collateral that secures the investment.

While this aspect may be overlooked in examining the numbers, the professionalism and accuracy of the statements themselves are revealing. High-quality, transparent financial reports reflect competent management and sound accounting practices, while poorly prepared statements or missing information may point to mismanagement or potential compliance problems.

Finally, a refusal by a regional center or developer to share financial statements is a serious warning sign.

Developers sometimes claim such information cannot be shared, but this is incorrect. Any legitimate real estate project will have to provide these documents to banks or private investors to obtain financing. If they are not willing to show them to EB-5 investors, it likely means they are trying to conceal financial weakness or irregularities. In such cases, investors should proceed with extreme caution or walk away entirely.

Developer Track Record

Developer Experience and Project History

A developer’s experience is one of the clearest indicators of the likelihood of a project’s success.

Evaluating the developer’s track record begins with identifying how many similar projects the company has completed. A firm that has repeatedly executed developments of comparable scale and type has demonstrated it can manage the full life cycle of a project—from planning and financing to construction and completion.

While past results cannot guarantee future performance, consistent success signals a well-established process, strong management, and sound risk control.

If the development company itself is new, it is important to examine the experience of its principals and management team. Individuals with histories of successfully completing projects within the same asset class—such as residential, hospitality, or mixed-use—bring operational expertise that reduces uncertainty.

The number and quality of completed projects are meaningful indicators of whether the company can deliver on its commitments.

Borrowing and Repayment History

An equally important dimension of a developer’s record is its borrowing and repayment performance.

Most EB-5 investments are structured as loans to the project company, which must ultimately repay the borrowed funds. Investors should therefore verify whether the developer has a history of borrowing capital and repaying it on time.

A company that has borrowed and repaid substantial sums across multiple projects demonstrates reliability and financial discipline. By contrast, a company with little or no borrowing history—or one that has defaulted, declared bankruptcy, or faced foreclosure—presents higher risk.

These patterns reveal not only financial strength but also the firm’s relationships with lenders and its reputation in the financial community.

Immigration Risk: Evaluating a Regional Center’s Track Record of USCIS Compliance

Evaluating a regional center’s track record with USCIS is one of the most practical steps an investor can take before choosing an EB-5 project.

A strong history of approvals—especially consistent I-956F adjudications after the changes made to the EB-5 program with the Reform and Integrity Act of 2022—shows that the regional center understands the rules, prepares clean filings, responds quickly to USCIS, and operates with disciplined internal controls. Project approvals demonstrate that the regional center team has the ability to keep a project compliant throughout the full immigration process.

It is also important to separate the regional center’s compliance record from the status of any single project. A project may still be awaiting I-956F approval for reasons that have nothing to do with its underlying strength.

USCIS processing times are slow and uneven, and many high-quality projects are still pending simply because the agency has not yet worked through the queue.

A pending I-956F is not a negative sign by itself. What matters is whether the regional center leading the project has a pattern of clean approvals on other filings and a history of managing projects that move smoothly through the EB-5 process.

Investors should look for regional centers that have secured several I-956F approvals, earned a large number of I-526E approvals across multiple projects, and maintained compliance. A consistent record—like EB5AN’s—gives investors confidence that the team knows how to structure projects correctly, document job creation, and avoid preventable USCIS issues.

Even if a particular project does not yet have its I-956F approval, investors can move forward with far more confidence when the regional center behind it has a proven, transparent, and verifiable compliance history.

“Trust But Verify”: The Key to Success in EB-5

EB-5 investors should remember that trust is built on evidence. No claim—whether about repayment, job creation, or compliance—should be accepted without written confirmation and supporting documents. A disciplined review of disclosures, financial statements, capital structure, and the regional center’s compliance history is the only way to understand a project’s real risk.

At the same time, caution does not mean avoiding strong opportunities. Many EB-5 projects are well-structured, well-capitalized, and managed by teams with proven records of USCIS compliance and successful project execution.

When investors verify the facts and confirm that the regional center has delivered consistent I-526E approvals and the developer has repaid its prior loans after successfully completing similar projects, they can invest with confidence.

“Trust but verify” is ultimately about protecting both sides of the EB-5 equation: your immigration outcome and your invested capital.

For more information on making a safe EB-5 investment, schedule a free consultation with EB5AN.