Should EB5 Investors Accept Loans from Regional Centers? The Risk of I-526E Denial

On the path to U.S. immigration through the EB5 program, the I-526E petition is viewed as a decisive legal milestone. This is also the stage where USCIS scrutinizes each file most strictly, particularly regarding the origin and path of the investment capital. Recently, many EB5 regional centers have actively offered loans to investors to cover the gap in the minimum required investment of USD 800,000. On the surface this looks like a convenient solution, but in reality this approach carries enormous EB5 investment risk and can lead to an immediate denial, causing the investor to lose both their capital and their chance at a Green Card. The following article from Newland USA provides a detailed analysis of the issue and practical guidance for families who are considering the EB5 program.

1. I-526E review standards and the importance of the EB5 source of funds

USCIS applies a very high standard of proof to the I-526E petition – the opening file in the EB5 immigration process. The core purpose of this petition is to confirm that the investor has made a qualifying investment and that every document demonstrating the flow of funds has been prepared in a methodical way. When a file fails to meet the standard or lacks evidence, the agency has the authority to issue a Request for Evidence (RFE), a Notice of Intent to Deny (NOID), or go straight to a denial.

The consequences of an RFE or a denial go beyond a longer processing time. The investor also faces rising legal costs, prolonged financial pressure, and the risk that the entire family loses the chance of obtaining a permanent Green Card. For this reason, ensuring that the EB5 source of funds is established lawfully, has a clear path, and is disbursed according to regulations before filing the I-526E is extremely important. This is also why investors need to be maximally alert to any proposal involving a loan from an EB5 regional center or its affiliated entities.

2. An alarming trend from some EB5 regional centers

In recent years, the EB5 industry has witnessed a worrying reality: some EB5 regional centers have actively offered investors a loan for part or all of the investment capital required. These loans are often routed through an intermediary organization, but after close review, it is not hard to see that this organization is legally or operationally controlled by the very same EB5 regional center behind the project.

When a loan from an EB5 regional center is granted to the very investor participating in that center’s project, the transaction forms a closed loop. Immigration experts call this the “internal capital recycling” phenomenon – meaning that money from earlier investors is used to fund new investors. This arrangement shares features with a Ponzi scheme, where capital does not truly flow into job-creating activity but simply circulates back and forth among the parties involved.

3. Two fundamental requirements: capital at risk and proving the EB5 source of funds

3.1 The “capital at risk” requirement

Under the EB5 program structure, the investor transfers money into the escrow account of a New Commercial Enterprise (NCE) belonging to an EB5 regional center. This capital is then disbursed to the Job Creating Entity (JCE) to carry out the project. USCIS clearly requires that the invested capital must genuinely face the possibility of loss for a minimum period of two years and must not be guaranteed to be returned in any form.

This means the investor must use assets that they legally own, while accepting both financial risk and immigration risk. The capital must be put into actual use in the project and carry the potential to be partially or fully lost. At the same time, that investment must contribute to creating at least 10 full-time jobs for U.S. workers. If the project fails to create jobs, the investor and their family will not be eligible for a permanent Green Card.

3.2 The requirement to prove the EB5 source of funds

The I-526E petition requires the investor to prove that the entire EB5 source of funds, along with related fees, comes from lawful activities and can be traced clearly. USCIS requires the file to fully show the process of how the money was formed and how it moved, from its starting point to the moment it is disbursed to the EB5 project.

Some important principles related to the EB5 source of funds include:

• Lawfulness: The investor must prove that the money was formed from lawful activities such as employment income, business profits, dividends, inheritance, or the sale of assets.
• Traceability: The file must show the entire journey of the funds, from the original source to the escrow account of the New Commercial Enterprise or the project belonging to the EB5 regional center.
• Completeness: If the investor uses several different sources, each source needs its own independent set of supporting documents.
• Ownership: The investor must be the full legal owner of the EB5 source of funds before the money is transferred to the project.

The core point is this: the investor is required to use capital that they own and to clearly prove where that money came from. This is the first line of defense against mistakes that could cause a file to be rejected.

4. The case of borrowed funds and gifted funds in the EB5 source of funds

EB5 law allows the use of borrowed money or gifted money as part of the EB5 source of funds in certain situations, but subject to many strict conditions. The money must be transferred in a transparent manner and not with the purpose of dodging program rules.

The investor must prove that the lender or the giver has a lawful EB5 source of funds. After receiving the money, the investor must become the full legal owner of that amount. Loans without collateral, carrying an unusually low interest rate compared with the market, or not coming from a licensed financial institution will all be reviewed very carefully by USCIS and often lead to an RFE.

Still, a clear distinction must be drawn: a loan from a mainstream commercial bank, a licensed credit institution, or a family member with lawful income is completely different from a loan from an EB5 regional center. The former may be accepted if the conditions are met, while the latter is almost certain to be rejected by the authorities.

5. Why a loan from an EB5 regional center is not accepted

EB5 law clearly states that qualifying investment capital does not include any debts or financial obligations arising between the investor and the New Commercial Enterprise. This rule also extends to every organization that is affiliated with or controlled by the EB5 regional center. Below are the serious problems that arise when an investor accepts a loan from an EB5 regional center:

First, the flow of funds is circular and closed. When the investor borrows from an entity controlled by the EB5 regional center, the money essentially still belongs to that very business. The transaction is only a paper conversion, not a real new injection of capital into the project.

Second, no new jobs are created. Because no real new EB5 source of funds is added, the project cannot create enough job opportunities to meet the minimum requirement of 10 full-time positions. This is the decisive factor in every investor’s EB5 eligibility.

Third, the “capital at risk” requirement is not met. Because the money was never truly owned by the investor, USCIS will conclude that the EB5 source of funds has not actually been placed at risk as required by the regulations.

Fourth, the source of funds file is nearly impossible to prove. The trail of the money leads back to earlier EB5 investors – something USCIS does not accept at all. As a result, the file can be denied outright, sometimes without even going through an RFE stage.

Fifth, it resembles a Ponzi scheme. According to the U.S. Securities and Exchange Commission (SEC) definition, a Ponzi scheme is a form of fraud in which money from new investors is used to pay earlier investors. Transactions involving a loan from an EB5 regional center run the risk of falling into this category, pushing the investor into a severe level of EB5 investment risk that can lead to the loss of all the capital already disbursed.

6. USCIS has issued multiple I-526E denials

In the 2025–2026 period, EB5 experts have recorded a string of cases in which investors were denied the I-526E without even going through an RFE or NOID. According to immigration attorneys, these denials “leave no room for interpretation” – if any portion of the EB5 capital comes from a loan tied to the regional center, the file does not pass.

The shift in USCIS’s approach shows that the agency has clearly identified the closed-loop capital recycling model and is ready to take strong action. Even if similar files were previously approved, the current practice is that any loan from an EB5 regional center is treated as a clear policy violation. This significantly raises EB5 investment risk for anyone who is not careful when choosing a partner.

Beyond the risk of a denial, regional centers that use this loan model also face the possibility of being barred from the program (debarment) under the EB5 Reform and Integrity Act of 2022 (RIA). When an EB5 regional center has its designation terminated, the related investors face not only immigration consequences but also the risk of losing the capital they already contributed. This is the kind of EB5 investment risk that no family wants to go through.

7. Spotting warning signs to reduce EB5 investment risk

To protect themselves from EB5 investment risk, investors need to actively spot unusual signs from the very moment they approach an EB5 regional center. Below are some important warnings:

• A direct loan offer: Any EB5 regional center that proactively offers to lend money to the investor to reach the USD 800,000 level is a suspicious sign.
• Time pressure: When an advisor pushes the investor to transfer money in a hurry and file the I-526E quickly using a loan, it is very possible they are trying to use the investor’s money for their own purposes.
• Unclear intermediary organizations: Lending entities that share the same management, the same address, or the same shareholders as the EB5 regional center need to be reviewed especially carefully.
• Unusual interest rates: Loans with rates well below market levels or without collateral are often flagged by USCIS for further clarification.
• Lack of clear project documentation: Reputable EB5 regional centers always make public their approved Form I-956F, transparent financial reports, and compliance track record.

Along with spotting warning signs, investors should prioritize EB5 regional centers with a high I-526E approval rate, a team of experienced attorneys, and projects with a transparent capital structure. Obtaining independent advice from an immigration attorney experienced in EB5 is an essential step before signing any agreement. It is also the most effective way to reduce EB5 investment risk in the long run.

8. How to handle the situation when you have already joined a project with an internal loan

If the investor has already signed on to a project that uses a loan from an EB5 regional center and received a denial of the I-526E, not every door is closed. However, the options are limited and require urgent action.

The first step is to work right away with an immigration attorney who has experience handling I-526E appeals. The attorney will assess the feasibility of a motion to reopen the file or the option of filing a new petition. In many cases, the best solution is to shift the investment to a project that fully complies with the regulations, rather than trying to defend an old file that has already been denied.

Under Section 203(b)(5)(M) of the Immigration and Nationality Act (INA), as amended by the RIA 2022, good-faith investors may receive a certain level of protection when an EB5 regional center has its designation terminated or the New Commercial Enterprise is barred from the program. The investor may amend their file to re-associate with another approved EB5 regional center, or make a qualifying investment in a different New Commercial Enterprise. However, this process is very complex and requires in-depth legal advice from the start.

9. Do not trade your Green Card and assets for short-term convenience

The EB5 program is a long-term journey that demands careful preparation both financially and legally. Quick loan offers from less reputable EB5 regional centers may feel convenient in the moment, but they put the investor in a position where they may lose both their capital and their family’s entire future in the U.S. The EB5 investment risk arising from these arrangements is far greater than the small time savings they offer.

The most important principle for investors is this: only work with EB5 regional centers that put the client’s interests first, strictly follow USCIS policy, and have a clear compliance record. When you spot any sign related to capital recycling or internal lending, that is the moment to stop and consult an independent expert before going further.

Beyond that, investors need to actively build an EB5 source of funds that is truly their own, backed by complete documentation proving lawfulness and a transparent path. This is not only a legal requirement but also the foundation that allows the I-526E petition to stand firm under USCIS’s increasingly strict review process.

10. Conclusion

The question “Should EB5 investors accept loans from Regional Centers?” has a firm answer: no. Loans from EB5 regional centers not only violate USCIS policy but also lead to severe consequences, including I-526E denial, loss of investment capital, and the loss of the chance to settle in the U.S. As USCIS grows increasingly strict with closed-loop capital recycling models, investors need to stay more alert than ever when selecting partners. Prioritizing transparency, regulatory compliance, and partnerships with verified entities are the three key factors. A lawful EB5 source of funds, a trustworthy EB5 regional center, and the support of a professional immigration attorney together form the trio that decides the success of the EB5 journey. Do not let short-term convenient offers trade away your entire family’s Green Card dream.

Learn more:

• Why Is 2026 the Critical Time to Invest in EB5?
• Ways to Ensure Your EB5 Capital is Safe When Investing in a Project
• The Most Effective EB5 Visa Solution in the Context of Trump Launching Gold Card
• What is Form I-829? Guide to Filing a Petition to Remove Conditions on 2-Year Green Card for EB5 Immigrant Investor Program
• The Optimal Choice for EB5 Investors to Manage a Green Card Investment Project