How to Prepare an EB-5 Source of Funds Report

When applying for an EB-5 investor visa, the funds that you use have to fulfill certain criteria. In order to prove that your funds qualify, prospective EB-5 investors must fill out an I-526 petition.

The main requirement when applying for an EB-5 investor visa is that you invest your money into a new, U.S.-based financial enterprise. However, the funds that you use to make that investment have to fulfill certain criteria. In order to prove that your funds qualify, prospective EB-5 investors are required to fill out an I-526 petition.

Yet this process is easier said than done.

Along with the I-526 petition, you will also have to submit an EB-5 source of funds report that provides evidence of your funds’ origins. Depending on where you acquired your funds, this can require several dozen pages of documentation.

For that reason, it’s highly recommended that you consult an experienced immigration attorney before submitting your I-526 petition.

In this article, we’ll go over the basic steps to preparing an EB-5 source of funds report to help make this process easier. We’ll talk about what sources of funds you can use as well as what evidence you need to prove your claims. Finally, we’ll end with a few tips on how to avoid common I-526 mistakes.

Step 1: Acquiring Valid Funds

Before you fill out your I-526 petition, it’s important to make sure that your funds are actually valid for EB-5 purposes. As a reminder, USCIS will accept the following sources of capital, as listed on page 6 of the I-526 petition:

  • “Income,” such as salaries and general wealth accumulation.
  • “Indebtedness,” such as mortgages and other loans. USCIS will only accept certain loans; see below for details.
  • “Gifts,” including inheritance.
  • “Tangible Assets,” such as equipment.
  • “Other,” including the sale of securities like stocks or retirement funds.

Your funds can come from any combination of these categories, provided that you can provide the required documentation.

Which Loans are Valid?

In most cases, USCIS will accept funds acquired by taking loans. In fact, mortgage loans are some of the most common sources of capital for EB-5 investors. Remember however that as an EB-5 applicant you must personally own the property being mortgaged.

The same is true of shareholder loans, which must be secured by your own stock. Finally, note that you cannot use the enterprise in which you are investing as collateral for a loan.

Step 2: Document Your Funds

Next, you’ll need to acquire documentation for the funds you’ve gathered. The exact type of documentation you need will vary based on the source of your funds. Remember to list each form of documentation separately on pages 6 and (if necessary) 13 of your I-526 petition.

Salaries and Accumulated Income

Many EB-5 applicants partially finance their investments using “accumulated income.” This is what we might think of as liquid capital, such as salaries, interest payments, and other everyday sources of income. USCIS requires the following documents to verify the legitimacy of accumulated income:

  • Proof of employment, such as employment contracts.
  • Bank statements.
  • Tax returns or other proof of tax payment.

These documents need to go back far enough to plausibly account for the total investment amount, and ideally further (five years is a common benchmark).

One issue some investors face is that they are not required to file taxes in their country of origin. Fortunately, this issue has a number of solutions.

First, you can always choose to finance your investment solely through other means. However, keep in mind that many (including mortgage loans) still require documentation of accumulated income.

This leaves you with a declaration, which is a kind of legal document explaining your unique situation. If your source of funds report relies heavily on declarations, USCIS is likely to reject it—thus, this should be treated as an option of last resort.

Property Sales or Mortgage Loans

If you’ve sold or mortgaged property to acquire your investment funds, the first thing you’ll need are bank documents showing that you were the sole owner of the property. You will also need to show that you originally purchased or inherited the property  through lawful means. If you are unable to do so, a detailed narrative declaration may suffice.

The same sources of proof used for accumulated income will also work for proving your lawful ownership of the property.

To prevent confusion, it is highly recommended that you keep the proceeds from your sale or mortgage in a new bank account. This account should be kept separate from your personal and business accounts as much as possible.

Business Assets

If you already own a business, you may want to sell your stock in that business to finance an EB-5 investment. In that case, you will need to provide documentation demonstrating the lawful nature of the business, as well as your ownership of it. In some cases, you may also need to demonstrate the business’s earnings.

How you prove these things will depend on your individual business. In most cases, securities statements can be used to prove that the sale of the business occurred lawfully.

Proving that the business itself is lawful can be tricky, but you can usually accomplish it through descriptions and bank statements. Likewise, USCIS rarely requires more than bank statements or earnings reports to prove that a business’s earnings are consistent with the investor’s claims.

In the case of business assets, it’s very important to keep the money from the sale in a new personal account. That’s because transferring funds directly from your previous business to the new investment could create the mistaken impression that your business entity, rather than you yourself, is making the investment. This is impermissible under EB-5 regulations and could lead to your application being delayed or even denied.

Sale of Securities

Another option is financing your investment through the sale of securities, such as stocks or bonds. In that case, you’ll need documentation proving the legitimacy of the sale. You’ll also need to prove that the funds you originally purchased the securities with were legitimate. This works exactly like proving the legitimacy of accumulated income.

Retirement Funds

In the case of retirement funds, you’ll need to provide three extra types of documentation:

  • Proof of your continued contributions to the fund.
  • Proof of legitimate withdrawal.
  • Evidence that the funds you contributed were obtained lawfully.

Each retirement fund will handle this documentation slightly differently. However, in most cases, copies of your benefits statements will sufficient.

When it comes to proving the legitimacy of your contributions to the fund, you’ll want to follow the steps for documenting accumulated income, above.

Gifts, Personal Loans, and Inheritance

If you received your funds as a gift or through a personal loan, you’ll need to provide a narrative explaining why.

The main object of scrutiny however will be the individual from whom you received the gift. In effect, you will need to demonstrate that that individual acquired his or her funds lawfully, using the methods described above.

If you inherited your funds, you’ll instead need to prove your relationship to the deceased. Most of the time, a simple death certificate will be sufficient.

In some exceptional cases, USCIS may apply the same standard of evidence as a gift. In that case, you’ll need to prove that the decedent obtained their funds lawfully, as described above.

Step 3: Translate and Compile

USCIS requires that you provide all paperwork and documentation in both the original language and English. However, you can’t translate these yourself.

Instead, you’ll need to send your documents off to a professional translation service that specializes in business documents. Make sure you choose a credible service that provides certified letters of translation with the finished documents. Most good immigration attorneys already work with such services.

Once you’ve received your documents and letters of translation, you’ll need to compile them into a Source of Funds Report. In virtually all cases, this process will be handled by your lawyer.

Despite this, you should still review the finished Source of Funds Report to make sure it includes all the evidence you compiled.

Once you’re ready, you can submit your complete I-526 petition, business plan, and source of funds report to USCIS.

Step 4: Respond to Any Requests for Evidence

USCIS rarely rejects applications that lack sufficient documentation outright. Instead, USCIS will issue a Request for Evidence (RFE). Given the current long processing times for I-526 petitions, a year or more may pass before you receive an RFE.

First of all, RFEs are increasingly common, so take a deep breath first.

Second, an RFE is merely a legal request detailing exactly what kind of documentation USCIS would like to see. In the absence of such documentation, USCIS may accept a declaration instead—again, however, this should be your last resort.

An investor living outside the United States will have 98 days to respond to the RFE. If you live within the United States, USCIS shortens that deadline to 87 days.

It’s always possible for an RFE to become lost in the mail, so USCIS also recommends that EB-5 applicants frequently check their case status online. One other reason to work with a lawyer is that USCIS will mail a notice to both you and your lawyer, making it less likely to miss these kinds of notices.

After USCIS has received your additional documentation, they will accept or reject your petition. If they accept it, they will grant you a conditional visa. After two years, you may then apply for unconditional permanent residency by filing an I-829 petition.

Common I-526/Source of Funds Report Mistakes

Mingling Sources of Funds

Many potential EB-5 investors are unaware of the standards to which USCIS will hold their investment funds. As a result, they, like most people, keep money from different sources in the same bank account.

Unfortunately, this can make it impossible to determine what amount of money came from where, especially in the absence of proper documentation.

If you believe that you will apply for an EB-5 visa in the future, it’s important to start planning now.

Keep sources of potential investment funds in separate bank accounts and avoid using them to conduct business transactions. Make sure you file your taxes, even if you don’t technically have to, and keep the returns on file. Most importantly, document every major transaction, and keep those records in a safe, easy to access location.

Withdrawing Your Petition

It’s common to find out that there are errors on your I-526 petition or source of funds report after filing it. However, it’s almost always a bad idea to withdraw your petition. That’s because when you withdraw your petition, you lose your priority date as well as your filing fee.

Instead, you should consider interfiling a corrected petition or documents as soon as possible. You may also wait until USCIS sends you an RFE. However, this can be a risky option, because USCIS may reject petitions with truly extreme errors.

In both cases, there is no benefit in withdrawing your petition. The only exception is if your petition appears to indicate criminal activity or deliberate misrepresentation. Either one of these could critically damage your eligibility for an EB-5 visa in the future.

In those rare cases, it’s best to immediately withdraw your petition so as to prevent USCIS from reviewing it.

Not Responding to a Request for Evidence

Even if you complete your source of funds report to the best of your abilities, USCIS may still issue a Request for Evidence. This is routine, and not a cause for alarm.

However, if you fail to respond to the RFE, USCIS will reject your petition, forcing you to start again from the beginning.

Unfortunately, the only way to know that an RFE has been issued is to receive one in the mail, or to check your case status online. Worse yet, checking online will only show USCIS has issued an RFE, not what information the RFE contained.

For this reason, it’s important to check back in with USCIS via email if you haven’t received confirmation within a reasonable time-frame.

Conclusion

Preparing a source of funds report is one of the most difficult parts of the already complex process of filing an I-526 petition. It can be difficult to know which documents to include, to the point that an online guide can only provide general advice. For specific guidance tailored to your situation, your best bet will always be to talk things over with an experienced immigration lawyer.

Need an attorney?

Our articles provide general information about all of our practice areas. If you're looking for legal counsel specific to your situation, you'll need to talk to a lawyer.

Share This