The EB-5 Immigrant Investor Program has two primary requirements. Applicants must invest the required amount of capital in a new US-based commercial enterprise and plan to create (or preserve) at least ten full-time jobs for qualifying US workers. 

In this article, you will discover whether you can use an unsecured loan to fund an EB-5 investment 

EB-5 Investment Requirements – An Introduction 

Since March 15, 2022, the minimum amount of capital eligible for an EB-5 application is $1,050,000. The amount can be used to start a new company from scratch, purchase an existing business, or invest in a Regional Center. 

If the applicant chooses to invest in a Targeted Employment Area (TEA), it is possible to qualify for a reduced investment of $800,000 (also applied to infrastructure projects). First and foremost, EB-5 investors must establish that they legally own the amount of capital invested.  

The United States Citizenship and Immigration Services (USCIS) defines the term “capital” as “cash and all real, personal, or mixed tangible assets owned and controlled by the immigrant investor.” These assets must be valued at fair-market value in US dollars.  

USCIS specifies that “the definition of capital does not include: 

  • Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) 
  • Capital invested in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the immigrant investor and the new commercial enterprise 
  • Capital invested with a guaranteed rate of return on the amount invested, or 
  • Capital invested that is subject to any agreement between the immigrant investor and the new commercial enterprise that provides the immigrant investor with a contractual right to repayment, except that the new commercial enterprise may have a buy back option that may be exercised solely at the discretion of the new commercial enterprise” 

In exceptional circumstances, USCIS may accept a promissory note as part of the capital invested.  

EB-5 Unsecured Loan – Is it a Legit Funding Source? 

USCIS requires that the funding sources used to invest in an EB-5 commercial enterprise must be lawfully obtained. 

Traditionally, unsecured loans would not be permitted by USCIS. In this sense, EB-5 investors could rely exclusively on loans: 

  • Secured by the investor’s personal assets, and  
  • Not secured by the assets of the proposed EB-5 business enterprise  

These are the basic eligibility requirements for EB-5 loans. However, every rule has its exception. In 2013, two foreign investors respectively borrowed $500,000 in cash to fund their individual EB-5 investments.  

After two years of processing, their I-526 (Immigrant Petition by Alien Investor) petitions were denied based on the fact that the applicants used unsecured loans, which were not considered “viable sources of funds.” 

The disgruntled duo teamed up to file a lawsuit against USCIS, which was won by them in late 2018. USCIS appealed the ruling to the US Court of Appeals, but the verdict came in October 2020. 

The final judgment stated that the proceeds obtained from unsecured loans counted as viable funding sources for EB-5 investment, as USCIS requirements unambiguously identify cash as the proceeds from third-party loans obtained lawfully. 

Before filing your EB-5 application, the best approach is to consult with an experienced immigration attorney to assess your case and find a winning strategy. 

Waste no Time with Uncertainty – Immediately Contact an Expert Immigration Attorney 

With years of experience in US immigration and business law, Attorney Romy B. Jurado willingly wants you to succeed. Contact us by calling (305) 921-0976 or emailing Romy@juradolawfirm.com for an individual consultation.

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