The EB-5 Visa is an excellent option for foreign investors willing to put down the required amount of investment and meet the strict requirements of the United States Citizenship and Immigration Services (USCIS).
In this article, you will discover whether an EB-5 applicant can rely on a loan to fund an EB-5 investment.
Understanding the EB-5 Investor Program – The Fundamentals
The EB-5 Investor Program was created in 1990 to stimulate the American economy with the influx of capital from foreign investments and job creation for qualified workers.
Eligible foreign investors approved for EB-5 status can be admitted to the United States accompanied by a spouse and unmarried children under 21 to live as permanent residents (green card holders). The elementary eligibility requirements for EB-5 status are:
- To invest a certain amount of capital in a US commercial enterprise, and
- Plan to create (or preserve) ten full-time jobs for qualified US workers
USCIS defines the term “capital” as “cash and all real, personal, or mixed tangible assets owned and controlled by the immigrant investor.” Please note that the amount invested will be valued at fair-market value in US dollars.
The applicant must show that he or she is the legal owner of the capital invested. Even though some cases allow applicants to use a promissory note, these are rare exceptions to the rule.
Since March 15, 2022, the minimum amount of investment applied to the EB-5 classification is $1,050,000. If the applicant opts for investing in a Targeted Employment Area (TEA), the minimum cap is $800,000.
Can an EB-5 Investment be a Loan? – The Verdict
USCIS has no specific requirement that the EB-5 investment must be liquid or exclusively in the form of cash. Accordingly, EB-5 applicants can rely on multiple sources to reach the threshold investment.
A loan can serve as a source of funding for a qualifying EB-5 investment. However, specific conditions must be met to make this alternative permissible. Essentially, USCIS only allows EB-5 applicants to use secured loans.
Several years ago, the USCIS allowed EB-5 investors to use unsecured loans, but this source of funding is no longer acceptable. Additionally, not all secured loans are eligible to fund an EB-5 investment.
A basic requirement is that the visa applicant cannot utilize assets from the business receiving the investment as collateral to secure the loan.
Another important factor applies to EB-5 applicants opting to invest in a regional center. In such cases, an applicant overwhelmingly leveraged or utilizing a loan that comprises most of the capital invested might not give examiners a good impression.
Additionally, depending on the processing time required to get the application approved, EB-5 investors will likely need to demonstrate they have properly fulfilled the loan repayments due.