Things You Need to Know About Funding Sources When Using Loans for EB-5 Investment

The EB-5 investment program opens up opportunities for foreign investors to obtain U.S. residency by contributing capital to the American economy. However, not everyone has the large amount of capital readily available to make the minimum investment of $800,000 or $1,050,000. Therefore, using loans to participate in the EB-5 program has become a financial solution of interest to many people. This article from Newland USA will provide important information about funding sources when you decide to use an investment loan for an EB-5 project, helping you understand the legal requirements, necessary conditions, and potential risks.

1. Does the EB-5 Program Accept Funding from Loans?

The answer is absolutely yes. U.S. Citizenship and Immigration Services (USCIS) allows investors to use loans as part or all of the investment capital for the EB-5 investment program. This provides significant flexibility for those who don’t have sufficient available capital but still wish to take advantage of residency opportunities through the investment route.

However, accepting investment loans doesn’t mean you can borrow from any source without explanation. USCIS sets strict standards regarding the legality and origin of borrowed funds. All loans used for the EB-5 program must be proven transparently and completely.

The key point investors need to understand is: whether you use savings, inherited assets, or loans, everything must meet the requirements for lawful funding sources. This ensures that your capital doesn’t come from any illegal or unlawful activities.

2. Types of Loans Accepted in the EB-5 Investment Program

When deciding to use a loan to participate in EB-5 investment, you can choose from many different sources. Each type of investment loan has its own advantages and specific requirements that you need to carefully consider.

2.1. Loans from Credit Institutions and Banks

This is the most common and preferred form of loan when making EB-5 investments. Borrowing from banks or mainstream financial institutions brings many advantages to your application.

The advantage of bank loans is high transparency. Banks typically have strict credit evaluation processes, creating clear financial records with complete supporting documents. When you use an investment loan from a bank, USCIS can easily verify the origin and legality of the funding source.

To get approval for a bank loan to serve the EB-5 investment program, you need to prepare important documents. The credit agreement must be formally drafted, clearly showing the loan amount, interest rate, term, and repayment conditions. Additionally, you need to provide proof of financial capacity to get bank approval for the loan.

Another important factor is that you must prove that the collateral assets (if any) also have a lawful origin. This ensures the integrity of the entire chain of funding from start to finish.

2.2. Real Estate Mortgage Loans

Many investors choose to mortgage property to obtain loans to serve EB-5 investment. This is a viable option when you own high-value real estate such as homes, land, or commercial properties.

Investment loans secured by real estate mortgages typically have more favorable interest rates compared to other unsecured loan forms. Banks and credit institutions are willing to lend large amounts when there’s collateral, helping you easily mobilize sufficient investment capital needed for the EB-5 program.

However, when using real estate mortgage loans, you must prove lawful ownership of that property. USCIS requires you to provide ownership certificates, payment receipts when purchasing real estate, and evidence of the source of funds used to initially purchase the property.

This is to ensure that not only the investment loan but also the collateral assets have transparent origins. This is an important requirement for your EB-5 investment application to be approved.

2.3. Loans from Relatives or Friends

Some investors choose to borrow from family members or friends to obtain funding for the EB-5 investment program. Although this is a form of loan accepted by USCIS, it requires a significantly more complex verification process.

When using investment loans from relatives, you need a formal notarized loan agreement. This agreement must clearly specify the loan amount, interest rate (if any), term, and repayment method. USCIS doesn’t accept verbal agreements or simple documents without legal validity.

What’s particularly important is that you must prove the funding source of the lender is also completely lawful. This means you need to provide financial records, income proof, and assets of the person lending you money. This process can become complicated because you’re having to prove two different funding sources.

Additionally, you need evidence of money transfer from the lender to your account. All transactions must be conducted through banks with complete documentation, avoiding forms of cash transfer without paperwork.

3. Legal Requirements for Funding Sources from Loans

Regardless of which type of loan you choose to make EB-5 investment, USCIS applies strict standards regarding the legality of funding sources. Understanding these requirements will help you prepare accurate applications and avoid rejection.

3.1. Proving the Lawful Origin of the Loan

The first and most important requirement is that you must prove your loan has a completely lawful origin. USCIS will carefully examine every aspect of the investment loan to ensure there are no unusual signs.

With bank loans, you need to provide an official credit agreement. This document must fully display information about the loan amount, purpose of use, interest rate, and repayment terms. At the same time, you need bank statements proving the loan amount has been disbursed into your account.

If the loan has collateral, you must prove lawful ownership of that property. USCIS requires you to provide documents proving the purchase or inheritance of the property, along with evidence of the funds used to initially acquire the property.

3.2. Transparency in Using the Funding Source

USCIS is not only concerned with the loan’s origin but also closely monitors how you use the funding. The entire investment loan must be transferred directly to the USCIS-approved EB-5 project.

You need clear transaction records showing the path of the loan from origin to final destination. Bank statements must show the money flow transparently, without any suspicious or unclear transactions.

Using the loan for any purpose other than EB-5 investment can lead to visa application rejection. Therefore, you need to manage the funding seriously and comply properly with regulations.

3.3. Ability to Repay the Loan

Another important factor USCIS considers is your ability to repay the loan. Although not a mandatory requirement, proving you have the financial capacity to repay debt will increase your application’s credibility.

When you use an investment loan, USCIS wants to ensure this is a genuine investment rather than a form of money laundering or financial fraud. If you have stable income, other assets, or reliable financial sources to repay the loan, this will make your EB-5 investment application stronger.

4. Important Conditions When Using Loans for EB-5 Investment

Besides proving lawful origin, using loans for the EB-5 investment program also requires you to meet certain specific conditions. These conditions are established to protect both investors and the integrity of the program.

4.1. The Loan Must Not Have Conditions Tied to Immigration Results

USCIS requires that your investment loan must be an independent financial obligation, not tied to the results of the visa application. This means the loan cannot have clauses allowing you to cancel or waive the repayment obligation if the EB-5 application is rejected.

The loan agreement must clearly show that you have the responsibility to fully repay regardless of your immigration status. If the contract has clauses like “refund when visa is not obtained” or similar, USCIS may consider this a sign of an investment that’s not genuine and reject your application.

This principle ensures that your funding truly creates economic risk, a core requirement of the EB-5 investment program. You must commit to this loan regardless of immigration results.

4.2. Not Using Loans with EB-5 Project Assets as Collateral

Another important condition is that your investment loan cannot have any assets from the EB-5 project as collateral. USCIS considers this a conflict of interest and a violation of the “at-risk” investment principle.

If you mortgage assets from the very EB-5 project to get a loan to invest in that project, this creates a closed loop without real risk. USCIS requires that your investment capital must be “at-risk,” meaning there’s a possibility of complete loss if the project fails.

Therefore, collateral for the loan must be your own property, independent of the EB-5 investment project. This ensures that your funding truly contributes to the U.S. economy in a meaningful way.

4.3. Supporting Documents Must Be Complete and Accurate

When using a loan for EB-5 investment, you need to prepare a comprehensive set of documents. Each investment loan requires specific documents depending on the origin and form of borrowing.

With bank loans, you need a credit agreement, account statements, mortgage documents (if any), and proof of your income. With personal loans, you need a notarized loan agreement, money transfer documents, and also the lender’s financial records.

All documents related to the funding source must be translated into English (if in another language) and properly notarized. Any deficiencies in the application can lead to your EB-5 investment application being delayed or rejected.

5. Risks When Using Loans for EB-5 Investment

Although loans provide opportunities to participate in the EB-5 investment program for those who don’t have sufficient available capital, this option also comes with significant risks that you need to carefully consider.

5.1. Financial Risk from Debt Obligations

The first and most obvious risk is the financial burden of having to repay the investment loan. Regardless of the visa application results or how effective the EB-5 project is, you still must fully repay the loan according to the signed contract.

If your EB-5 investment application is rejected, you still have to bear the large debt without achieving your immigration goal. Even if the application is approved, the EB-5 project may fail or not generate expected profits, while you still have to repay the loan plus interest.

For real estate mortgage loans, the risk is even higher. If you don’t have the ability to repay debt, you could lose the mortgaged property. Therefore, before deciding to use a loan for EB-5 investment, you need to thoroughly assess your long-term financial capacity.

5.2. Risk Regarding Application Processing Time

Using investment loans typically complicates the application and may extend processing time. USCIS needs more time to verify the origin of the funding source when it comes from a loan, especially if the loan comes from an individual.

During the waiting period, the loan interest continues to accumulate. If processing time extends, the total amount you have to pay can increase significantly. This creates additional financial pressure for investors using loans for the EB-5 investment program.

5.3. Risk from Not Meeting Verification Requirements

Many EB-5 investment applications are rejected because investors cannot fully prove the lawful origin of the loan. This is a significant risk, especially when the investment loan comes from complex or unclear sources.

If you borrow from relatives but cannot provide evidence of their funding source, USCIS will reject your application. Similarly, if the collateral assets for the loan don’t have a clear origin, your application also risks being rejected.

In these cases, you not only lose the immigration opportunity but also have to bear the debt from the loan without achieving any benefits. Therefore, thorough application preparation and professional consultation are extremely important.

6. Important Notes When Deciding to Use Loans

Before deciding to use a loan to participate in the EB-5 investment program, you should carefully consider several important factors. These notes will help you make wise decisions and minimize risks.

6.1. Comprehensive Financial Capacity Assessment

The first thing you need to do is honestly assess your financial capacity. The investment loan for the EB-5 program is typically a large amount, from $800,000 to $1,050,000, not including interest.

You need to calculate whether your current income and financial sources are sufficient to repay the loan over a long period. Remember that the EB-5 investment program requires you to maintain investment capital for at least 2 years, during which time you still have to repay the loan.

Additionally, you need a contingency plan in case your financial situation changes. If income decreases or you encounter unexpected difficulties, you still must ensure the ability to repay the investment loan to avoid losing collateral assets or affecting your credit.

6.2. Choosing Reputable EB-5 Projects

When using a loan for EB-5 investment, choosing the investment project becomes doubly important. You need to find projects with good reputations, USCIS approval, and good track records.

A quality EB-5 project not only helps increase visa approval chances but can also generate profits, helping you reduce the burden of repaying the loan. Conversely, poor-quality projects can cause you to lose both the investment capital and immigration opportunity.

Before committing an investment loan to any project, you should thoroughly research the project developer, business model, financial projections, and success rate of previous projects. Seeking advice from immigration attorneys and financial experts is recommended.

6.3. Preparing Detailed Supporting Documents

Documents proving the funding source from loans need to be prepared meticulously and in detail. Any deficiencies can lead to application rejection or requests for additional documents, extending processing time.

For bank loans, you need a complete credit agreement, account statements from receiving the loan to transferring into the project, and all documents related to collateral assets. Each step in the transaction chain must be clearly documented.

For investment loans from individuals, you need both the loan agreement and evidence of the lender’s funding source. This means you need to collect bank statements, income proof, and documents proving their assets. This process can take a lot of time so you should start early.

6.4. Seeking Professional Consultation

Using a loan for the EB-5 investment program is a complex decision with many legal and financial aspects. Seeking support from experts is extremely necessary.

Immigration attorneys experienced in EB-5 investment will help you clearly understand USCIS requirements for funding sources from loans. They can evaluate your application, point out weaknesses, and help you prepare documents as completely as possible.

Financial experts can advise on which type of loan is most suitable for your situation, how to manage risks, and plan effective debt repayment. They can also help you assess whether using an investment loan is truly the best choice.

7. Conclusion

Using loans to participate in the EB-5 investment program is a very reasonable choice and accepted by USCIS. However, this option requires thorough preparation in terms of documentation and legality. You need to clearly prove the lawful origin of the investment loan, fully meet the conditions regarding funding sources, and be aware of the accompanying risks.

Whether you choose a loan from a bank, real estate mortgage, or borrowing from relatives, the most important principle is transparency and legality. Each type of loan has its own advantages and challenges, and the appropriate choice depends on each investor’s specific situation.

Newland USA, with our team of experienced experts and the motto “Stable settlement – Lifelong prosperity,” is ready to advise and support you with information related to the EB-5 investment program. Please contact Newland USA immediately via hotline 0785591988 or email: newsletter@newlandusa.asia for detailed and free consultation.

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• 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
• Paying Taxes and What EB5 Investors Need to Know