EB-5 and Hospitality Financing: A Structural Shift in Capital Markets

By David A. Sudeck —

This post is the first in a series presenting my current thoughts on the viability and timeliness of EB-5 financing for new hospitality construction. Each installment will be published as a standalone post, allowing readers to engage with individual topics as they are released.

The complete series will cover:

• EB-5 and Hospitality Financing: A Structural Shift in Capital Markets (this post)
• EB-5 and Hospitality Financing: Rural TEAs—Still the Fast Lane
• EB-5 and Hospitality Financing: Urban EB-5 Is Still a Large-Scale Game
• EB-5 and Hospitality Financing: Leverage and Structure Matter More Than Price
• EB-5 and Hospitality Financing: Why EB-5 No Longer Slows Deals
• EB-5 and Hospitality Financing: How EB-5 Improves Equity Returns
• EB-5 and Hospitality Financing: Practical Steps for Developers
• EB-5 and Hospitality Financing: Why Now Is a Good Time

Many hotel developers still view EB-5 as a slow, complex funding option suited only for large-scale projects. That misconception is limiting their access to higher-leverage, non-recourse structures, and competitive pricing, especially in markets where traditional capital is more difficult to secure. Today’s specialized EB-5 funds offer pricing competitive with banks, often below debt funds, while delivering stronger leverage and non-recourse terms. Many also close using balance sheet capital, eliminating delays for borrowers. Despite this, EB-5 adoption remains low due to outdated assumptions about timelines, complexity, and EB-5’s role within the capital stack.

This gap between perception and reality has become more consequential as the broader capital markets environment has shifted. Construction debt remained constrained in 2025, with private credit lenders generally capping leverage at around 60 percent loan-to-cost, resulting in equity gaps that conventional debt-and-equity structures were unable to address. At the same time, the EB-5 program underwent meaningful reform. The 2022 Reform and Integrity Act (“RIA”) introduced an integrity fund, established reserved visa categories, and enabled concurrent filing for investors already in the United States.

These changes helped drive a sharp increase in EB-5 activity in 2025, with I-526E filings rising markedly year-over-year. Most of this growth was concentrated in rural Targeted Employment Area (“TEA”) projects. Developers often approached deals expecting to rely on traditional capital stacks, only to find that EB-5 provided greater leverage and non-recourse financing, options that are extremely difficult to secure today, particularly in rural and tertiary markets.

Taken together, these developments mark a structural shift in how hospitality projects can be capitalized, one that developers who remain wedded to the old assumptions about EB-5 risk overlooking entirely.

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David Sudeck has been recognized as one of the Top 15 Corporate Attorneys by EB5 Investors Magazine for 2026—a distinction he also earned the prior year. This recognition reflects the trust and respect he has earned among investors, attorneys, and industry peers. View his 2025 profile here.

David is a partner and co-chair of Blank Rome’s Hospitality practice, where he focuses on the hospitality industry, with particular emphasis on the financing structures that support hotel development and acquisition. His practice draws on extensive experience guiding developers, lenders, and investors through complex capital stacks in the hospitality sector. Learn more about his practice here.