City boss Nigel Pearson told BBC Radio Humberside: "Hopefully, the deal will be concluded over the weekend.
"Whenever you're dealing with the MLS, there's a bit more paperwork to be done but we're very close to doing the deal," he added.
"The time is right for him and us to move on.
"We're moving in a different direction and he probably needs a new challenge."
Folan began his trial spell with the MLS Cup holders by scoring the winning goal in a pre-season game against LA Galaxy.
The former Chesterfield striker has fallen down the pecking order at the KC Stadium, with his last appearance for the Championship club coming against Barnsley in October, when he suffered a knee injury.
Source: BBC Sport
Source: BBC Sport