Yes, financing is a perfectly acceptable source of an EB-5 investment. In fact, asset-based loans are the most common source of capital in the EB-5 visa program. Investors must, however, demonstrate that their funds and assets were obtained from lawful sources. As such, they must maintain detailed documentation that carefully traces the path of their investment funds and submit all records to United States Citizenship and Immigration Services (USCIS) along with their Form I-526, Immigrant Petition by Standalone Investor, or their Form I-526E, Immigrant Petition by Regional Center Investor.
If an investor is using a loan to raise their portion of the EB5 investment capital, they are commonly advised to use secured loans against their personal assets, not the assets of the new commercial enterprise (NCE) or another entity.
Unsecured loans may also be used for EB-5 purposes. Investors just have to pay attention to certain details, like adhering to market rates and proving lawful source of funds. The use of unsecured loans has been a topic of debate and litigation in the industry, but USCIS announced, in July 2021, that the agency classifies funds from unsecure loans as “cash.”
In both cases, the most important point is to provide the agency with a detailed paper trail. The type of documentation that should be submitted with the investor’s petition includes, when applicable:
- A capital source statement explaining the source of the loan, along with bank statements to prove the loan funds were received.
- A loan contract detailing the terms of the loan.
- Personal income tax returns from the previous 7 years.
- Documents proving the lawful source of funds used to purchase the assets being used to secure the loan.
- For investors borrowing from an individual and not a bank or other financial institution, a capital source statement from the lender.
This list is not exhaustive, as each investor will need to provide documentation based on their individual circumstances and terms of their loan. For example, investors may also be required to submit documentation proving that the funds used to cover administrative fees and costs associated with the EB-5 visa process—lawyer fees, filing fees, and so on—were also obtained legally. With this in mind, investors would do well to secure the services of an EB-5 industry professional, such as an immigration attorney, to guide and assist them throughout this process.
