Stymied by wary banks, some waterpark firms are exploring a new source of financing: the U.S. government’s immigrant investor, or EB-5, program.

Under the initiative, established in 1990 to spur international investment in the USA, foreigners investing $500,000 to $1 million in projects that create at least 10 full-time jobs within a two-year period can receive “green cards,” or permanent legal residence, here.

EB-5 was formerly a niche program attracting less than 1,000 petitions annually from would-be immigrant investors. Yet over the past five years, its popularity has expanded dramatically, thanks to wealthy foreigners hoping to shorten the often lengthy wait for a green card for themselves and their families. In 2012, the U.S. Citizenship and Immigration Service received more than 6,000 such petitions, of which nearly 3,700 were approved.

It adds up to big money. The government says that more than $6.8 billion has been invested in the United States via the EB-5 program since it began, creating a minimum of 49,000 jobs. However, it’s not an unlimited program; by act of Congress, the government can issue no more than 10,000 EB-5 visas each year, according to the U.S. Citizenship and Immigration Service.

Much of that interest in EB-5 financing has come from the job-heavy hospitality industry with major players such as Marriott, Hyatt and Hilton all turning to EB-5 funding to build new hotels.

Now the waterpark industry is testing those same waters for projects small and large. “I think it’s an exciting opportunity for capital, and it helps bring money into our country,” said David Sangree, president of Hotel and Leisure Advisors in Cleveland.

After all, finding the money to build new parks remains difficult. “No major resort is going to open this year. There is a shortage of resorts under development right now,” Sangree noted. “There’s a lot of talk, but not a lot of shovels in the ground.”

Given the number of jobs that waterparks can create, the EB-5 program may be able to help those projects stalled due to a lack of financing.

The best-known example of a waterpark built with this type of funding is Jay Peak, a four-season resort with skiing, ice skating, golf and an indoor waterpark in Vermont’s Northeast Kingdom area. Co-owner Bill Stenger has already tapped an estimated $275 million in EB-5 investment for the project, which he hopes to expand with a conference center, window manufacturing plant and more. Overall price tag: $865 million, most of which is expected to come from EB-5 investors.

“Traditional bank financing would never fund enough of a project like this to make it feasible,” said Stenger, who has worked with the EB-5 program for 15 years.

Developers of less-massive waterpark projects also are looking at the program.

“We started pursuing it because getting large projects done these days isn’t easy,” said Craig Wilkinson, principal of Wisconsin Resort Consulting, who has turned to EB-5 money to build his own planned $80 million hotel waterpark resort in Michigan. “There are several components that are intriguing about it.”

One major advantage: the much lower interest rates of an EB-5 loan compared with equity investors or other lenders. According to Kate Kalmykov, a business immigration lawyer at Greenberg Traurig in Florham Park, N.J., most immigrant investors expect returns of 4 percent or less on their money in an EB-5 investment, which can be extremely attractive. “Even the biggest developers want cheap money,” said Kalmykov, who is currently working with a handful of waterpark firms on EB-5 financing, including Jay Peak.

But there are costs, especially in terms of time. “I think it’s a viable means of financing, but the developer needs to know what the limitations are and what work needs to go into it,” Stenger said. “You need to have $300,000 to evaluate and create a project. You must wait a year for the federal government to approve your application. Once you can seek investor funds, that takes about a year. The patience and outlay of money is not overwhelming, but not insignificant either. “

Given those considerations, smaller firms and projects may want to continue pursuing more traditional lenders. EB-5 financing “doesn’t make sense if it’s less than a $10 million deal,” Kalmykov said.

Developers who do desire to use EB-5 money must first decide if they want to go through existing regional centers for EB-5 investments or establish their own to get their projects approved and funded.

The centers help American businesses market their projects to potential EB-5 investors and also essentially create pools of EB-5 funds so a foreigner does not necessarily have to make a direct investment in a company or project, but rather in the fund supporting it.

As of press time, the U.S. Citizens and Immigration Service currently has 295 regional centers with many states operating their own centers as a way of encouraging economic development.

If a waterpark developer does go with an existing center, they should find out which ones might be set up to support the types of jobs (construction, retail, hospitality) that they’ll be creating at their projects because different centers focus on different industries.

The number of jobs is also critically important because each immigrant investor must demonstrate that their contribution created 10 or more full-time jobs within two years to exchange their temporary green card into a permanent one.

“You’ll want at least a 20 percent surplus for the jobs needed for your capital raise,” Kalmykov said. “What if immigration disallows some of your jobs? What if you spend less on construction because you’re more efficient than you expected? You need to have enough cushion [in the jobs numbers] for your investors because their entire temporary green card depends on this. In two years, you must go back and show that you spent the money.”

Despite the EB-5 program’s appeal to developers and immigrant investors, though, it has not been without controversy. Mainly, there are objections about the foreign investment aspect and concerns about lack of oversight.