The EB-5 immigrant investor visa is part of the Immigrant Investor Program that was created by an act of Congress in the early 1990s. The Act was intended to stimulate economic growth and development within the borders of the United States by providing a pathway to citizenship for foreign entrepreneurial investors. The program has widely been hailed as a success both for the United States and the individual investors and it has been reauthorized each year since its 1992 pilot program.
Despite the success of the program, unclarity regarding the exact requirements and questions about the process and procedures remain. Some may incorrectly believe that the EB-5 investment must be in the form of cash or otherwise liquid. Others may incorrectly believe that an EB-5 investment can never be a loan. In reality, there is no requirement that the investment be liquid or in the form of cash. Furthermore, multiple sources of income can be combined to reach the threshold investment for an EB-5 visa. Finally, while not all loans constitute a valid EB-5 investment, an EB-5 investment can indeed be made via a properly structured loan. However, additional requirements and conditions apply to the capital used as an EB-5 investment.
An EB-5 Investment Can Be a Loan
While a loan is a permissible source of funding for a qualifying EB-5 visa investment, certain requirements and conditions apply to this otherwise permissible practice. First, while unsecured loans have been permitted by the United States Citizenship and Immigration Services (USCIS) in the past, unsecured loans are no longer an acceptable source for an investment loan. Thus, if one needs additional funding in the form of a loan, only a secured loan will be permissible.
However certain conditions apply to even secured loans. While you may use personal assets such as property or a home as collateral to secure a loan, one may not use assets from the business receiving the investment as the basis for the investment. Furthermore, if one is not investing into a regional center it is important that the amount of loans do not give the impression that the investor would be too highly leveraged to meet the repayment schedule or otherwise be forced to divert a significant share of one’s income to the loans. Such arrangements can create questions of viability in the mind of the examiner. Finally, because the I-526 petition often takes more than one year for processing, you will likely be required to show that you have dutifully made loan repayments.
The Fund Must Be Legitimately Acquired by the Investor
Cash, inventory, equipment, and loans secured by assets are all viable sources of EB-5 investment funding. However a loan from the investor to the business is not typically sufficient because the funds that are invested into the business must, typically, bear some investment risk. Additionally, and regardless of the form or source of the investment, the immigrant investor must show that the funds were legitimately obtained and are not the product of unlawful activity. Evidence that may be utilized in proving that the funds are from a legitimate source includes:
- Salary reports
- A letter from previous employers that verifies one’s previous salary
- At least five years of business income tax returns
- Other official business documents including registration documents, share certificates, and articles of incorporation
- Bank account statements for the business
- Personal bank statements
- Personal tax returns for at least five years
- Loan documents
- Copies of judgments or liens
While the foregoing provides some sources a taxpayer can use to prove that his or her investment funds come from “legitimate sources”, this is not a comprehensive list. Many other means of proving that the funds were not sourced from illegal activities exist. While one is not required to account for every cent of income or funds, the USCIS will thoroughly examine the materials and documentation you provide. The main goal should be in showing that the money is question is from a “legitimate source” and that it was “obtained through lawful means.”
Questions about the EB-5 Immigrant Investor Visa?
If you have additional questions regarding what constitutes a qualifying EB-5 investment, the experienced immigration attorneys of Colombo & Hurd can provide guidance and immigration advocacy. The attorneys of the firm are result-oriented and dedicated to working to secure the immigration goals of our clients. To schedule a confidential initial consultation, call 800-659-7154 today or contact us online.
