What Investment Sources Are Allowed for EB-5 Investors?

EB-5 investors can qualify for a green card if they invest a large sum of money in a business enterprise in the United States.

To qualify for a green card under the EB-5 category the overseas investor must bring at least $1 million in a U.S. commercial enterprise, or $500,000 if the business is located in a targeted employment area (TEA).

There is a myriad of other rules. An EB-5 investor must be the legal owner of the invested capital. The foreign investor must be able to prove to the U.S. Citizenship and Immigration Services (USCIS) that all of the capital to be invested was lawfully acquired.

There are strict rules for EB-5 investors

Rules for EB-5 Investors

In recent years, the EB-5 program has been dogged by a series of scandals. These rules are meant to ensure the money comes from a legitimate source.

USCIS sets out the sources of investment money that are allowed. Funding obtained through an employer as part of a salary is one of the most well-recognized sources of money.

As long as income is properly documented, and does not involve any unauthorized employment in the United States, the ‘source of funds’ component of an  EB-5 petition should be straightforward.

The process is seldom so straightforward. Often EB-5 investors investment funds from a wide variety of sources. It may present a challenge to document these sources. These sources include:

Gifts

If money is obtained via a gift, it can be utilized for EB-5 investment purposes. However, the foreign investor must be able to document and prove it’s a genuine gift and not a loan.

He or she must show there is no obligation to repay the giver. It’s also necessary for the investor to show the gifting party obtained the funds lawfully. If gift tax is owed, USCIS may ask for evidence that it was paid.

Sale of Assets or Property

An investor from abroad can sell property or use other assets to raise the funds necessary for the investment in the U.S. economy

You should be aware that USCIS will want to know the lawful source of the funds. The investor should document how the money was originally acquired to buy property or an asset in the first place. There is no standard guidance related to how far the investor must go back to document the lawful source of funds used for the investment.

Loans

There are restrictions on the use of loans. If investment funds are obtained via a loan, this money can only be used when the loan is secured by assets of equal or greater value than those owned by the investor.

An unsecured loan, or another loan that is secured by the assets of the EB-5 enterprise, cannot be used for EB-5 investment purposes.

EB-5 investment is a complicated and tricky area that requires considerable paperwork. USCIS meticulously looks at evidence related to source of funding in all EB-5 cases. It’s important to keep a paper trail of where the investment money is coming from.

Our experienced Austin business immigration lawyers can help you with EB-5 applications. Please call us at (512) 474-4445.

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