Money and structure
Capital stack
Also called capital structure, stack.
The capital stack is the ranking of a project's funding sources by priority of claim, from senior debt, which is paid first and absorbs losses last, down through mezzanine debt and preferred equity to common equity, which is paid last and absorbs the first losses. It is a finance term rather than an EB-5 one: nothing in the EB-5 statute or regulations fixes where a project's EB-5 money must rank.
What it decides
No provision of the INA or 8 CFR uses or defines the term, and USCIS neither approves a stack nor ranks its layers. The phrase returns no hit on a full text search of the Code of Federal Regulations, and appears nowhere in 8 U.S.C. 1153(b)(5) or in Volume 6, Part G of the USCIS Policy Manual. Two things in the filings bear on it. The first is arithmetic. Form I-956F, edition of 1 April 2024, which the form prints as 04/01/24 and which remains the acceptable edition on 5 August 2026, asks at Part 5, Item 6 for the "Total Estimated Cost of the Project", at Item 7 for the "Number of Expected EB-5 Investors into the NCE", and at Item 8 for the "Aggregate Amount of Project Costs Funded by EB-5 Capital". Item 6 less Item 8 is the amount other sources must fund, and Item 8 divided by the per investor amount should square with Item 7. That gives you the size of the rest of the stack, not its ranking. The form asks for no lender name, no subordination and no repayment order. The second is disclosure. Under 8 U.S.C. 1153(b)(5)(F)(i)(IV) the regional center must file the investment and offering documents with the application, and those documents "shall contain references, as appropriate, to" at item (aa) "all material investment risks associated with the new commercial enterprise and the job-creating entity". Subordination to senior lenders is where a reader should expect the ranking to be described, subject to that "as appropriate" qualifier. One position is fixed by regulation. 8 CFR 204.6(e) defines "invest" as "to contribute capital" and provides that a contribution of capital in exchange for "a note, bond, convertible debt, obligation, or any other debt arrangement between the alien investor and the new commercial enterprise does not constitute a contribution of capital". The investor's own interest in the new commercial enterprise must therefore be equity, never a debt instrument. That bar runs only between the investor and the new commercial enterprise. What the new commercial enterprise then does with the money, most often a loan to the job-creating entity, may sit anywhere in the project's ranking.
Where this is explained properly
Pages here that go into capital stack rather than mentioning it.
Related terms
- Senior debtSenior debt is the borrowing that ranks first in a project's capital stack, normally secured by a first lien on the project assets, and it is paid ahead of every junior claim, an EB-5 loan included, out of project cash flow and out of the collateral if the borrower defaults.
- Mezzanine debtMezzanine debt is a loan ranking below the senior lender and above every equity holder, and in a regional center loan model it is a common position for the loan the new commercial enterprise makes to the job creating entity. It describes that loan, not the investor's own stake, which has to be equity in the new commercial enterprise rather than debt.
- Preferred equityPreferred equity is an ownership interest that ranks ahead of common equity for distributions and for the return of its capital, and behind the debt of the entity that issued it. In EB-5 the phrase most often describes the form the new commercial enterprise's investment in the job-creating entity takes.
- Developer equityDeveloper equity is the project sponsor's own money in a deal, normally the most subordinate position in the capital stack: repaid only after the lenders and after the EB-5 capital, and first to absorb a loss. It is a project finance term rather than an immigration one, and no EB-5 rule sets a minimum for it.
- Loan modelThe loan model is the regional center structure in which the new commercial enterprise lends the pooled investor capital to a separate job creating entity, most often a company the project developer controls, instead of taking an ownership stake in it.
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