Funding Source Documentation Required of EB-5 Investors

Since its inception, the EB-5 Immigrant Investor Program has provided countless investors from all over the globe with a direct route to U.S. permanent residency. From 1990 on, foreign investors have been infusing capital into new commercial enterprises (NCEs) through this program, boosting the U.S. economy in ways that other programs simply can’t.

Large Foreign Investments Require Adequate Documentation

Much of the funding this program has received from EB-5 immigrant investors has also directly impacted high-needs targeted employment areas (TEAs) across the United States.

For projects inside designated TEAs, each investor contributes $900,000 at a minimum. EB-5-qualified projects outside TEA boundaries receive investments of at least $1.8 million per investor. Aside from the minimum project investment amounts, an EB-5 participant must also be prepared to shell out upwards of $50,000 to $75,000 in administrative fees.

Because of these large sums of foreign capital moving into U.S. hands, to maintain the integrity of the EB-5 program, it is of utmost importance to adequately document every investor’s sources of funds. Regardless of the EB-5 project, whether it is established inside a TEA or not, and the total investment amount, every EB-5 investor must prove the sum of their investment capital was lawfully obtained. This documentation must be provided in conjunction with their I-526 petition.

When to Involve an Attorney with EB-5 Program Experience

Every investment is different, and as an EB-5 investor’s U.S. green card (and his or her immediate family’s green cards) are at stake, the work it takes to gather required documentation can often be daunting. Besides ensuring the submission of the proper documentation, simply handing off the difficult and often tedious tasks associated with the proper tracing of the source of funds to an expert often saves a significant amount of time in processing.

Remember, the path of every source of investment capital from acquisition to final investment in a qualifying EB-5 project must be traced. And this can be a time-consuming affair, especially without the appropriate legal counsel.

Common Sources of Capital Among EB-5 Investors

Although every EB-5 investment is unique, there are certain sources of funds that EB-5 investors tend to favor. A qualified EB-5 investor may use funds from nearly any source as long as it is traceable and proven to be lawfully obtained. EB-5 investments can be funded in a myriad of ways.

Below are some of the most common sources of funds for EB-5 investments today, as well as what kind of documentation is typically required to accompany them.

Business Ownership

When an EB-5 investor secures funds through a business they own, the records they need to provide can include the following:

  • Business registration documents
  • Documents reflecting business ownership
  • Business appraisals
  • General accounting and sales records

Donations and Inheritance (Gifts)

Often, young EB-5 investors fund their investment through donations, gifts, and inheritance from their parents. When an EB-5 investor funds their investment by donation, they must present a letter in which the original donor states that the recipient is not obligated to return the monetary gift. The donor must also provide documents supporting the legal acquisition of the capital they have gifted the recipient.

Generally, the documentation requirements are the same for inheritance gifts, except instead of a letter, investors typically present documentation from the estate or business as sourcing support.

Employment Wages or Salary

EB-5 investors who fund their investments through traditional employment salary or wages may satisfy the source-of-funds requirement through bank statements, deposit records, earnings statements, employment contracts, and W-2s covering the last few years.

Income from Investments

When funds are sourced from various types of investments, evidence of lawful acquisition can include brokerage firm statements, retirement account statements, stock certificates, and tax returns, among other documents.

Non-Bank Loans

While bank loans are already typically documented in such a way that EB-5 adjudicators will accept them as evidence of lawful funds, when the source of a loan is not a bank, EB-5 investors are still required to provide source documentation. Sometimes this also requires documents covering any collateral used on the loan.

Real Estate Income

If a foreign investor uses income from the sale of real estate, source-of-funds documentation usually includes a combination of things like the following:

  • Appraisals
  • Bank account statements
  • Deeds
  • Documents certifying a mortgage
  • Proof of income from renters
  • Property purchase and/or sales contracts

This list of funding sources for EB-5 investments is certainly not exhaustive. Talk to an experienced EB-5 attorney if you are not sure whether a particular funding source is a good one for your investment.