EB5 Source of Funds: 5 Valid Ways to Fund Your EB5 Investment

EB5 Source of Funds

 

If you are considering an EB5 visa, you should know about the EB5 source of funds requirement. Specifically, the EB5 visa regulations specify that an EB5 visa petition must include evidence “to show that the petitioner has invested, or is actively in the process of investing, capital obtained through lawful means…”

 

In practical terms, this means that your initial EB-5 petition (Form I-526) must include extensive documentation showing how you obtained the funds that you will be investing in the EB5 project. This is commonly referred to as the EB5 source of funds.

 

In addition to showing how your investment funds were obtained, you must also trace the path of the funds took from the time they are earned until they are deposited into the escrow account or EB5 company’s business bank account. This is referred to as the EB5 path of funds and is commonly overlooked.

 

In this guide, I will go over 5 potential ways to fund your EB5 investment. Each of the ways I will discuss can qualify as a valid EB5 source of funds.

 

If you have any questions, send me an email at Michael@AshooriLaw.com. I’d be happy to assist you.

 

1. Earnings from Employment

 

  • One of the most common ways for an EB5 investor to fund an EB5 investment is through lawful employment earnings.

 

  • To properly document employment earnings, a prospective EB5 investor should be prepared to provide multiple years of tax returns.

 

  • The number of years of tax returns you should include will depend on your annual earnings. For example, if your earnings for the previous year are $1,000,000, this alone may be enough to establish that your EB5 investment is coming from that year’s earnings alone. However, if your annual earnings are $200,000, you will have to include multiple years’ worth of tax returns to demonstrate that the EB5 investment is coming from accumulated earnings over a span of time.

 

  • Other documents you may need to include are pay-stubs and a letter from your employer verifying your job duties and salary.

 

2. Proceeds from the Sale of a Property

 

  • Another very common source of EB5 investment funds is capital obtained through selling a property.

 

  • If you are planning to use proceeds from the sale of a property, it is important that you keep a copy of the purchase and sale agreement.

 

  • You will also need to provide bank statements evidencing the transfer of the funds from the buyers account into your account.

 

  • Another very important point is that USCIS will want to see evidence of how you earned the funds to purchase the property.

 

  • USCIS wants proof that the property was originally purchased with lawfully obtained funds.

 

  • For example, if the property was purchased with accumulated employment earnings, USCIS will want evidence such as bank statements and tax returns reflecting the employment earnings.

 

  • If proof of the underlying purchase funds are unavailable, you should be prepared to provide a detailed statement explaining why the documentation is unavailable.

 

3. Gift from an Individual

 

  • Funds that are gifted from another person are another very common way for an EB5 investor to fund their EB5 investment.

 

  • If you will use gifted funds as the basis of your EB5 investment, you should include a signed declaration from the party gifting the funds. The statement should indicate that there is no expectation for the beneficiary of the gift to repay the funds.

 

  • You will also need to carefully document how the gifting party earned the funds that they are gifting. For example, if the funds were originally earned through employment income, you should include the gifting party’s tax returns for several years.

 

  • You should also include detailed information on the gifting party’s background (including a resume and employment verification letters)

 

4. Loan

 

  • There are 2 types of loans that can qualify as a valid source of EB5 funds: A loan issued by an institutional lender; 2. A loan issued by an individual.

 

  • Important: The entire loan amount should be secured by your personal An example would be if you own a home. The loan can be secured by the home.

 

  • The loan cannot be secured by the assets of the EB5 business nor can the loan be unsecured. While there are mixed opinions about unsecured loans for EB5, it is best practice to avoid unsecured loans.

 

  • If you are receiving the loan from an individual, you should be careful to clearly document how the individual obtained the funds that they are lending you. You can document this through tax returns, declarations, and other like evidence.

 

5. Inheritance

 

  • Another common source of EB5 investment funds is through inheritance.

 

  • One of the difficulties with using inherited funds it that the inheritance may have been received several years prior to applying for the EB5 visa.

 

  • In these situations, it is highly important to provide evidence demonstrating the relationship between the parties.

 

  • When possible, the will, probate court documents, bank statements, and other direct evidence should be provided to prove the source of the funds.

 

  • When direct evidence is unavailable, detailed declarations should be included from individuals with personal knowledge of the inheritance. Such individuals include the probate lawyer, the EB5 investor, and family members of the devisor.

 

Conclusion

 

The source of funds requirement is one of the most important aspects of the EB5 visa. If you are considering a green card through the EB5 visa program, you should make sure to carefully put together the documentation that explains your EB5 source of funds and path of funds.

 

As explained above, some of the most common ways to prove your source of funds include: 1. Earnings from employment; 2. Proceeds from the sale of a property; 3. Gift from an individual; 4. Loan; and 5. Inheritance.

 

By working with an immigration lawyer early on you can begin strategizing the best approach to demonstrate the source of your EB5 investment funds.

 

If you have any questions, or you would like my help to get your EB5 visa, email me at Michael@AshooriLaw.com. My immigration law firm is focused on helping investors and entrepreneurs and I would be happy to help you.

 

Resources:

 

 

 

 

  • Documenting an EB-5 Investor’s Source of Funds – Including Practical Tips and Review of Recent RFE Trends by Elsie Hui Arias

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