Can EB-5 Investment Funds Come from a Loan?

For EB-5 investors everywhere, one of the most important decisions to make is choosing how to fund their EB-5 investment. Investors have a wide range of options available to them to fund their investment, including the use of loan proceeds. However, there are some considerations investors should be aware of before they begin the process, with that in mind here’s our quick guide to using a loan to fund an EB-5 investment. 

Please take caution that this is only a reference, and that an EB-5 investor applicant should always consult with a qualified EB-5 immigration attorney prior to filing an EB-5 investor visa application.

EB-5 Requirements

The EB-5 program provides foreign investors, and their immediate family, with green cards in exchange for investment and participation in a new business venture, and the creation of at least 10 full time American jobs. 

The minimum investment required will depend on the location of an investor’s business. Rural areas or areas with a higher than average unemployment rate can be designated as targeted employment areas (TEA), and businesses located within a TEA only require a $500,000 investment. Businesses not located in a TEA will have a higher investment requirement of $1,000,000. Investors will also need to provide evidence to USCIS that the funds for their investment have been lawfully sourced.

Funding your EB-5 investment

As we said earlier, there are a number of options available to fund an EB-5 investment, including  the use of loan proceeds. Although loans have always been an acceptable source of funds for EB-5 investors, USCIS guidelines regarding whether loan proceeds constituted ‘cash’ or ‘indebtedness’ often confused investors. However, these guidelines have been revised by USCIS, clarifying the requirements for use of a loan as EB-5 capital. 

As per USCIS guidelines, EB-5 investors can use loans from either an institutional lender or an individual as a source of funds for their EB-5 investment. A loan can be used as the sole source of funds for your EB-5 investment or used in concert with other sources of funds such as cash or the sale of assets. The full amount of the loan should be secured by an investor’s personal assets. Although recent court rulings may result in a change of USCIS policy and the approval of petitions using unsecured loans, the safest option to ensure approval for an EB-5 visa when using a loan as a source of funds is to have that loan secured by personal assets. 

Demonstrating Source of Funds

Investors who utilize a loan to fund their EB-5 investment will need to provide USCIS with documentation that demonstrates the loan was lawfully sourced. Exactly what documentation an investor is required to present will depend on the investor’s circumstances and the type of loan they have utilized. 

While you might assume that providing USCIS the details of your loan agreement with an institutional lender would be sufficient, USCIS requires a number of additional documents. In addition to your loan agreement, you will also need to provide evidence that the assets securing your loan have been obtained lawfully. For example, if an investor were to use their home to secure a loan, they would need to prove how they had originally purchased their home with legally sourced funds. This might require the investor to provide USCIS with: evidence of their ownership of the home; the purchase agreement; documentation on the source of funds for the down payment; and documentation on the source of funds for payments of periodic interest and principal.   

If your loan has been sourced by an individual rather than an institution, you may also need to provide  documentation evidencing that the funds loaned to you were legally sourced. For example, if a friend loans an EB-5 investor $500,000 to acquire an EB-5 visa. That investor may need documentation from their friend on how that friend obtained the $500,000 loaned (and whether it was lawfully obtained).

Although the paperwork required by USCIS can be demanding, investors should not let that dissuade them from applying for an EB-5 visa. Acquiring an EB-5 visa offers one of the fastest routes available to earning permanent resident status in the United States and a chance to become a full American Citizen. Even better, the EB-5 visa is a family sized package of green cards, ensuring that your spouse and qualifying children will also enjoy the benefits of living in America. 

Ready to start your EB-5 journey? Fill out our quick free evaluation form below and our team will reach out with the information to get you started.

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