EB-5 and Verifying the Source of Funds

In order to apply for an EB-5 investor visa, you’ll need to invest at least $500,000 in a U.S.-based financial enterprise. However, this isn’t a simple exchange of cash. Instead, USCIS requires documentation showing both the origin and legitimacy of your assets.

In order to apply for an EB-5 investor visa, you’ll need to invest at least $500,000 in a U.S.-based financial enterprise. However, this isn’t a simple exchange of cash. Instead, USCIS requires documentation showing both the origin and legitimacy of your assets. If your funds don’t meet their standards, USCIS may choose to decline your I-526 petition.

Clearly, that’s a situation you’d like to avoid. That’s why in this article we’re going to go over which sources of funds are valid for EB-5 investment purposes. Keep in mind that no online article is a substitute for real legal counsel. Always consult an immigration lawyer before, during, and after applying for an EB-5 visa.

Valid Sources of Funds

Generally speaking, USCIS will accept any funds which you can prove you obtained lawfully. The following sources of income are all considered valid for EB-5 investment purposes:

  • Salaries paid by an employer
  • Capital gains from selling securities or real estate
  • Proceeds from selling your previous business
  • Retirement funds
  • Inheritance
  • Gifts
  • Personal loans

Documenting the Source of Your Funds

Once you’ve figured out where your funds will be coming from, its time to start assembling documentation. In general, you will need to show exactly how the money was obtained, as well as proof that it ended up in your personal bank account. In most cases, this will include your previous five years (or more) of tax returns. You may also need to provide several months or even years of bank statements.

Of course, USCIS realizes that not every applicant will be able to provide these documents. If you cannot provide tax returns documenting the source of your loans, you will have to rely on other means to demonstrate the legality of your funds. In such a case, it’s important to work closely with your immigration lawyer to explain why you were unable to provide the necessary documents.

In the cases of certain sources of funds (such as the four below), USCIS will also require additional documentation.

Real Estate

If you sold property to acquire your funds, you will need to demonstrate that you (and your spouse) were the sole owners of that property. This will mean including a record of when you purchased the property, as well as your final sale agreement. You’ll also need to provide documentation for any loans that you took out to purchase the property.

If you purchased or inherited your real estate many years ago, you may not have the documentation that USCIS requires. In that case, you will need to provide the best proof that you can that the funds that you purchased the property with were lawful funds. This is another place where working closely with a good immigration lawyer can be helpful.

Selling Your Previous Business

Many EB-5 investors prefer to sell their previous commercial enterprise before moving to the United States. Documenting the funds from such a procedure works very similarly to documenting real estate profits. You will still need a proof of sale, as well as bank statements proving that you received the profits. You may also need to prove that your business was worth the price that you sold it for by demonstrating its financial health and viability.

If you do sell your business to afford an EB-5 investment, make sure that you make that investment from your own private bank account. Making the investment from your business account could cause confusion on USCIS’s part, which might result in your I-526 petition being mistakenly rejected.

Gifts

If you received your funds as a gift, you will need to provide a narrative explaining why and how it was given to you. More importantly, you will need to show that the person you received the gift from obtained it by lawful means. This means that they will be subject to a level of scrutiny similar to an individual applying for an EB-5 application. At bare minimum, they will need to provide an employment history and income tax returns.

Inheritance

If you inherited your funds, you will need to prove your relationship to the deceased. In most cases, probate documents or death certificates will be sufficient. In some cases, USCIS may request proof that the deceased obtained their own funds lawfully. As with gifted funds, you will then need to provide income tax returns, employment histories, and the like.

Understanding Loan Validity

In most cases, you can take out a bank loan to acquire the funds for your EB-5 investment. However, USCIS generally only accepts direct loans to the investor as valid. The collateral for the loan must be your personal property but cannot include the business in which you are investing. You will also need to provide full documentation of both the loan and the property you are using as collateral.

Business and shareholder loans are a little more complicated. USCIS will only accept loans for which the applicant is “personally and primarily liable.” This means that loans secured by a business will only qualify if you are the majority owner of the business. Shareholder loans may qualify, but they must be secured using only your own personal assets.

Conclusion

No matter how you’ve obtained the funds for your EB-5 investment, it’s important to be thorough and careful in filing your I-526 petition. Even if you feel that you’ve obtained your funds in a straightforward fashion, taking the time to provide full documentation is a must.

Unfortunately, difficult questions will arise in almost every I-526 petition. When this happens, your best bet is to contact an experienced immigration lawyer. A good attorney can help you save time and avoid stress by filing a complete I-526 petition the first time.

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