The EB-5 Immigrant Investor Program is remarkably flexible regarding sources of investment funds; investors can use a wide variety of different sources to finance their EB-5 projects. Still, all EB-5 investors must show United States Citizenship and Immigration Services (USCIS) that their funds were sourced legally. Regardless of the source of funds in question, all EB-5 investors must submit with their I-526 petition abundant evidence tracing the funds back to their source. USCIS requires a high evidentiary standard for source-of-funds documentation; if the evidence on an investor’s I-526 petition is deemed insufficient, USCIS may send a request for evidence (RFE) or deny the investor’s petition altogether.
Investors who choose to use gifted capital to fund their EB-5 projects must pay close attention to USCIS’s source-of-funds requirements. They must procure all the necessary evidence to prove that the gifted funds were sourced lawfully by the gift giver. Additionally, EB-5 investors must demonstrate that the funds were transferred lawfully and gifted irrevocably with no expectation of their being repaid.
In light of these guidelines, foreign nationals who already live in the United States are allowed to receive gifted funds from benefactors outside the country and then use the capital in an EB-5 investment. Of course, the laws of the gift giver’s country must allow for such a transfer, and the transfer itself must be legal. The important thing is for EB-5 investors to be able to trace the gift back to its original source and prove that the gift giver obtained the funds legally.
Investors should note that they will have to submit a written gift agreement signed by both the gift giver and the investor. Further, they may have to procure documents from the gift giver such as salary payment records, loan agreements, and tax returns to demonstrate the original source of the investment capital.