Everything EB-5 investors need to know about combining sources of funds.
As an investment-based immigrant program, a primary requirement of the EB-5 visa is an investment in a new commercial enterprise (NCE). The investment amount must be $800,000 for NCEs located in targeted employment areas (TEAs) or $1,050,000 for non-TEA projects.
To comply with the regulations of United States Citizenship and Immigration Services (USCIS), any funds used for EB-5 investment must remain “at-risk” for the lifetime of the investment.
As another key requirement regarding EB-5 investment funds, an investor’s capital must be traceable and legally obtained. Regardless of the EB-5 project and the total investment amount, every EB-5 investor must provide adequate documentation proving their funds were lawfully obtained. This documentation must be submitted as part of the investor’s I-526 or I-526E petition.
Many EB-5 applicants want to use capital from several sources to fund their investment but may be unsure whether it is allowed. The short answer is, yes, investors can combine funds from multiple sources.
Given the complexity of the EB-5 program and the importance of the source-of-funds requirement, it is in an investor’s best interest to thoroughly understand the usage of mixed funds before beginning the EB-5 process.
Combining Sources of Funds
It is common for EB-5 investors to draw funds from various sources, such as property sales, property loans, home equity lines of credit, market investments, gifts, inheritance, and more.
The bottom line is, regardless of the source, all investment funds must be traceable to their origin and legally obtained. Investors whose funds come from multiple sources may have to pay higher attorney fees, as multiple source/proof of funds reports require more time to prepare.
USCIS takes anti-money laundering (AML) very seriously and thoroughly scrutinizes the source of an investor’s funds. As such, it is crucial for EB-5 applicants and their immigration lawyers to make strategic decisions about which sources to use. All verifying documentation must be available, valid, and accurately show where the investment funds originated from.
It is important to understand that USCIS also reviews the path of an investor’s funds all the way from their origin to being invested in an EB-5 NCE. Investors from countries that restrict the outflow of money may face difficulties, and multiple transactions may be necessary to transfer the full investment amount to the NCE. Therefore, before liquidating, transferring, or remitting funds, investors should consult with their immigration attorneys to determine the best path to take.
Standard of Proof
EB-5 investors must meet the USCIS standard of providing a “preponderance of evidence” for the source and path of funds. Under this standard, the USCIS official responsible for adjudicating a given EB-5 petition must conclude that it is “more likely than not” that the provided documents are valid and current.
Although USCIS officers officially operate under this standard, they often consider much higher standards such as “clear and convincing” and “beyond a reasonable doubt”.
As such, it is advisable for EB-5 applicants and their immigration lawyers to strive to meet these higher standards when submitting documentation. Doing so can help avoid receiving a request for evidence (RFE), a notice of intent to deny (NOID), or outright petition denial.
Can Spouses Combine Funds?
Through the EB-5 program, spouses and unmarried children under the age of 21 are eligible to immigrate alongside the primary investor. If two married foreign nationals wished to combine funds to meet the minimum investment amount, they are allowed to do so. However, only one of the two spouses can be the primary EB-5 investor, while the other is counted as a dependent.
EB-5 investment funds must come from one person — the primary investor. Based on the laws of the applicant’s home country, this can be done by gifting or loaning the funds. To comply with EB-5 regulations, this transaction must be properly documented. USCIS will also investigate the source of funds for the gifted or loaned capital.
Documenting EB-5 Funds
Sources of EB-5 funds can be mixed as long as each source is properly traced and they do not contradict one another. Furthermore, in cases where investors use mixed sources, they typically must provide several types of documentation.
Some eligible sources of funds and the corresponding verifying documentation are as follows:
- Bank Statements
- Bank statements going back as far as three years for all bank accounts.
- Statements should show records of funds being transferred between accounts.
- Transfers must be supported by letters from the bank confirming the transaction.
- Real Estate Assets
- EB-5 petitioners must provide appraisals for any pledged real estate.
- Documentation of all purchases and sales, as well as deeds and mortgage documents for all owned properties.
- Lease documents for all properties that lease/proof of rental income.
- Business Ventures
- Business registration records.
- Documentation proving ownership or officership.
- Business appraisals of all ventures in which the petitioner has a controlling or substantial interest. This applies to businesses both inside and outside the United States.
- General accounting and sales records, such as tax returns, financial statements, and employment contracts.
- Income from Investments
- Investors must provide documents of all owned investments or securities accounts within the last three years.
- Supporting documentation is required if substantial capital gains were made on investments prior to the preceding three years.
- Evidence can include brokerage firm statements, retirement account statements, stock certificates, and tax returns.
- Employment Wages or Salary
- Proof and confirmation of employment.
- Deposit records, earning statements, and W-2s covering the last few years.
- Inheritance and Gifts
- Investors must provide documentation showing that they have received a gift or donation, in addition to documents proving that the gift and/or donation funds were lawfully sourced. They must also present a letter in which the original donor states that the recipient is not obligated to return the monetary gift.
- When an inheritance is used for an EB-5 investment, the investor must present paperwork that shows they received an inheritance, such as wills and/or documents from an estate administrator.
- Legal Settlements
- Funds received as the result of a legal settlement such as a lawsuit or divorce case may be used toward EB-5 investments. In such cases, a certified copy of the judgment must be provided to USCIS.
- Loans
- If an EB-5 investor obtains funds from a third-party source, such as a bank or financial institution loan, they must provide bank statements proving they have received the loan as well as documentation showing that the loan funds themselves were sourced lawfully.
This list is not exhaustive, and other types of paperwork may be used to demonstrate the legal source of EB-5 funds.
Immigration attorneys can help investors determine what kinds of documentation is needed to prove the legality of their investment funds. Investors from non-English speaking countries should also pay special attention to officially translating their documents.
What if an Investor is Missing Documents?
In some cases, an EB-5 investor may be unable to obtain certain documents to prove the lawful source of project funds. In such situations, an investor can file a declaration explaining why they cannot obtain and present the necessary documentation. Although USCIS officers have been known to accept such declarations (provided they are detailed and provide valid reasons), it is best to avoid using declarations whenever possible and only resort to them as a last option.
Making an EB-5 Investment With Mixed Funds
One of the primary requirements of the EB-5 visa is investing a minimum of $800,000 into a qualifying NCE. The funds used for this can be derived from multiple sources as long as they are thoroughly documented and have lawful origins. In fact, using various sources of funds is commonly practiced among EB-5 immigrant investors, although doing so might require more documentation than usual.
With the proper guidance and help of immigration counsel, EB-5 investors can ensure they provide adequate documentation and have the best chance at petition approval.
For further information on getting a U.S. Green Card through the EB-5 program, schedule a free consultation with EB5AN.
