How to Source Funds for an EB-5 Investment

WRITTEN BY

EB-5 Insider Team

A group of professionals with years of experience helping people immigrate to the US

Note: This article is for informational purposes only. We are not providing legal advice or selling securities. The articles and content on this site are of a general informational nature only and should not be relied upon for individual circumstances.

One of the main requirements for an EB-5 visa application is possessing the sufficient capital necessary for legally acquired capital. The amount you invest will either be a minimum of $800,000 for projects in a Targeted Employment Area (TEA) or at least $1,050,000 in a non-TEA area. The USCIS requires extensive documentation to trace the source of funds as part of the I-526E petition. You must demonstrate how you obtained or earned the funds you’re using for this investment through legal means.

The USCIS requires what it describes as “a preponderance of evidence” for the source and path of your funds. The USCIS official must also be able to conclude that the documents you have provided are current and accurate. This step of the EB-5 visa process is one where you’ll want to have an immigration lawyer involved.

USCIS officers may require a higher standard of proof for your funds. Your documentation should be “clear and convincing”, showing “beyond a reasonable doubt” how your funds were legally obtained.

Failing to provide the right documentation can lead to your I-526E petition being rejected or delayed. We’re sharing everything you need to know about lawful sources of funds, the types of funds you can use for EB-5 investments, and why your application could be denied.

Lawful Sources of Funds

It’s not uncommon for EB-5 investors to have multiple sources of income. They might have a high-paying job at a corporation and own assets, such as stocks or real estate, that also generate regular income. These funds may come from the same bank account or other securities. Regardless of the number of sources, investors must be able to trace all their investment funds back to their origin.

The USCIS prioritizes anti-money laundering (AML) strategies and will take active steps to verify the source of funding for EB-5 visas. Investors should work with their immigration lawyers to choose the most suitable source of funds to use. All the documentation you provide to support your sources of funds must be verifiable, valid, accurate, and readily available. Documents that are not in English should be officially translated by a professional with extra care taken to ensure their accuracy.

Although the EB-5 program requires proof of the source of funds for investment, the USCIS may go further to ensure that your administrative fees are also paid by a verifiable lawful source of funds. While foreign investors will provide either $800,000 or $1,050,000 in funding for NCE, they will likely incur up to an additional $80,000 in administrative fees throughout the EB-5 visa process.

Source of Funds vs. Path of Funds

There are two separate requirements for showing the source of funds for EB-5 visas. The USCIS will want to see the source of funds, i.e. where the funds have come from, as well as the path of the funds. The path of funds shows the journey the funds take from their source through to being invested for an EB-5 visa.

You’ll need to be able to provide documentation for both the source of funds and the path of funds for your EB-5 investment and administrative fees.

Sources of Funds Acceptable for an EB-5 Investment Visa

There are various sources of funds you can use to make your $800,000 or $1,050,000 investment for your EB-5 visa. You’ll need to ensure you have the right documentation to prove that these funds were legally obtained and the path of funds.

Not all funding sources are easy to prove, and you’ll need to provide extensive documentation, especially if your funding source does not come directly from your employment earnings. We’re sharing seven of the most accepted sources of funds for EB-5 investment visas. 

1. Income

One of the most common sources for high-net-worth individuals is their employment earnings. It’s also one of the easiest to prove with employment contracts, professional licenses, and proof or confirmation of employment. An EB-5 investor will need to provide multiple years of tax returns to prove their employment earnings.

The number of years of tax returns you’ll have to provide will depend on your earnings. If your previous year’s earnings are $1,000,000 or more, that year’s tax return will usually be enough to establish that your EB-5 investment is coming solely from your earnings.

However, if your employment earnings are under the minimum investment threshold, you can expect to provide multiple years of tax returns that span the duration needed to accumulate earnings worth the value of the minimum investment. You may also include a letter from your employer or your pay slips as additional documentation.

What to consider when using income as a funding source:

You can use your bank statements to show the path of funds for employment earnings. It’s recommended to include bank statements for up to three years for all your bank accounts. You should also include documentation to highlight if your funds have been withdrawn from one account and deposited into another. You can also use a letter from your bank to confirm such transactions.

2. 401K

A 401(K) is a lawful source of funds that can be used for your EB-5 investment visa. It’s commonly used by those obtaining residency through investment to retire in the United States.

You’ll need to provide clear documentation showing the source of your 401k funds, including the rollover process. You may be expected to provide other relevant financial records that are associated with the funds in your 401K account.

What to consider when using 401k as a funding source:

While your 401k might be an appealing funding source, you’ll want to speak to your accountant or a financial advisor to discuss the fees and taxes you may incur by drawing from your 401k account.

3. Sale of a Business

If you’re planning on using an EB-5 visa to gain U.S. citizenship through investment, you might decide to sell an existing business. You’ll need to provide documentation relating to your business, including establishing its lawful nature. The company earnings will need to be supported by documentary evidence.

What to consider when using the sale of a business as a funding source:

It’s best to involve a lawyer in the sale of your business, as you’ll need to provide sufficient documentation for the sale, including the funding transfer to your bank account. Under the requirement to show the path of funds, you’ll need to provide evidence of how your company was originally acquired or started using lawful funds. If you are unable to provide documentation for this, you’ll need to provide other evidence for its foundation.

You should provide a letter from a financial professional or your accountant showing the financial health of the business at the time of the sale.

4. Loan

It’s possible to acquire the funding you need for your EB-5 investment through a third-party source, such as a bank loan. This source will be well documented and make the application process easier to navigate.

What to consider when using a loan as a funding source:

However, it’s worth considering the history of EB-5 applications made with loans as a funding source. From 2015, the USCIS was not approving EB-5 petitions that had unsecured loans as a source of funds. This eventually led to a legal case (Zhang v. USCIS, 2020) in federal court that found in favor of an investor using unsecured loans for their EB-5 application.

After a failed appeal, the USCIS approved the application with an unsecured loan in April 2021. It has created a precedent for unsecured loans being a source of funds for EB-5 investment, but it is not a guarantee that they will always be approved.

5. Gift from Family Members

It’s not uncommon for EB-5 investors to receive a financial gift from a family member to fund their application. You’ll need to register the financial gift with the relevant tax authorities or provide a report relating to the source of income used by the family member to provide the gift.

What to consider when using gifts as a funding source:

You’ll need to provide a signed declaration from the party gifting you the funds that states there is no expectation of the gift being repaid. Documentation should also include detailed information on the gift giver’s background, such as an employment verification letter.

6. Inheritance

Similarly, you may receive an inheritance from a family member that you want to use as a source of EB-5 investment funds. This source of funds can be difficult to prove, especially if you inherited the capital several years before your EB-5 application was made.

What to consider when using inheritance as a funding source:

You’ll need to provide evidence that showcases the relationship you had with the other party, including any bank statements, court documents, or other evidence that shows the source of funds.

If you are unable to provide direct evidence, you may be able to provide a detailed declaration from a lawyer or family member of the deceased.

7. Real Estate Sales

If you’re planning to permanently reside in the United States, you may decide to sell your property or real estate investments to fund your investment. Similarly to other sources of funds, you’ll need to provide detailed documentation, including bank records demonstrating the deposit of the sale earnings and that your property was lawfully owned and sold.

What to consider when using real estate sales as a funding source:

USCIS will want to see evidence of how you purchased the property initially as part of the path of funds requirement. You should be able to show that the property was originally purchased with lawfully obtained funds, such as employment earnings. You’ll also need to provide bank statements and a copy of the purchase and sale agreement. If you are unable to provide proof of funds for the initial purchase, you may need to provide a detailed statement explaining why.

EB-5 Applications Denied Due to Source of Funds

Anti-money laundering (AML) rules are why the USCIS is strict about verifying the source and path of funds used for investments relating to EB-5 visas. The Bank Secrecy Act is the main legislation for anti-money laundering regulations in the United States.

Money laundering is determined to have occurred where there is an intention to hide the source of investing funds, evade paying taxes, or cover up audit trails to create the false impression that funds have been obtained lawfully. Anti-money laundering schemes are designed to prevent illicit funds from being used for programs such as the EB-5 investment visa. 

Rejections typically occur when the investor has not provided adequate documentation for the source and path of funds used for their investment. Foreign investors and their immigration lawyers should do their due diligence to choose the best funding source and to fully vet the project they’re investing in to ensure it qualifies for an EB-5 visa.

Applicants must be able to show the source and path of funds when they submit Form I-526E, the first stage to obtaining an EB-5 visa and permanent residency. Failing to prove the lawful nature of funds is one of the main reasons why I-526E petitions are rejected, usually because the form is incomplete or lacks proper supporting documentation.

If your I-526E is rejected, it can be reapplied for, but you’ll start the process from the back of the queue. If you’ve utilized concurrent filing, your work authorization may be at risk if your I-526E is declined. The most important step in your EB-5 visa application is to ensure that you are using the best source of funds that you can provide adequate documentation for, including the path of funds.

Gain U.S. Permanent Residence Through Investment

An EB-5 visa is the most efficient way to achieve permanent residency and U.S. citizenship if you have the necessary capital to make the required $800,000 investment.

EB-5 Insider simplifies your path to U.S. residency and citizenship through investment, working with foreign nationals internationally to streamline the application process. We’ll help you obtain a permanent U.S. green card for yourself, your spouse, and any unmarried children under 21 years of age for an investment of $800,000.

Start the process of applying for an EB-5 visa today, or contact our team for more information.

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