United States Citizenship and Immigration Services (USCIS) has put in place several regulations governing the way EB-5 investors can fund their projects. For instance, USCIS strictly requires all EB-5 funds to remain at risk, and investors can only use their personal assets as EB-5 investments. Due to this last requirement, EB-5 investors should generally avoid using venture capital to fund their projects; most likely, USCIS would not consider venture capital as part of the investor’s personal assets. Even though it may be technically possible to use venture capital for an EB-5 investment, doing so would be complicated, challenging, and likely unnecessary.
Using venture capital to fund EB-5 projects is generally inadvisable, but USCIS does allow investors to use a wide variety of sources to finance their projects. Common sources of EB-5 investment funds include stock proceeds, gifts, loans, real estate sales, salary payments, and inheritances. EB-5 investors can even use less traditional sources of funds, such as cryptocurrency sales. The important thing is for all these sources to come from the investor’s personal assets and remain at risk.
In addition to enforcing the at-risk requirement of EB-5 investment funds, USCIS also dictates that all funds must be sourced lawfully. When filing Form I-526E, EB-5 investors must submit copious evidence I-526E that traces their funds back to their origin and proves that they were sourced lawfully. The nature of the evidence to be submitted will vary depending on each investor’s source of funds and unique situation. Investors may have to submit documents such as capital source statements, employment contracts, property ownership certificates, or loan agreements.
Proving that EB-5 investment funds were sourced lawfully and comply with all of USCIS’s many other regulations can be difficult and time-consuming. Therefore, investors would do well to work with EB-5 professionals such as consultants and immigration attorneys, who can provide invaluable guidance.
