The statute excludes capital exchanged for a debt arrangement between the investor and the new commercial enterprise, including a note, bond or convertible debt. Assess what the applicant actually receives.
Do not rely on the name of the product
Calling an instrument an investment or promising later conversion does not itself overcome the exclusion. The capital arrangement must satisfy the actual EB-5 rules, not merely use the program’s name. A convertible instrument remains debt until it actually converts, so a right to convert at some future date does not itself establish invested equity capital on the date the petition is filed.
Ask for the specific document evidencing conversion: an updated capitalization table, an amended operating agreement admitting the investor as an equity holder, or an issued equity certificate, rather than accepting the original convertible agreement as sufficient proof by itself. If conversion is expected to occur after filing, the petition should describe the investor as actively in the process of investing and explain the specific steps and timeline remaining, rather than describing the debt instrument as if it were already qualifying capital. Interest, a maturity date or a repayment obligation attached to the instrument before conversion are all features of debt and should be disclosed rather than omitted from the description of the arrangement.
Confirm with counsel exactly when, under the governing documents, the investor's interest actually becomes an equity stake in the new commercial enterprise rather than a contractual claim against it.