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John Burson  edited Friday, April 5, 2024

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When considering the EB-5 Immigrant Investor Program, a common question among investors is whether financing their investment through a loan or a gift is acceptable. The short answer is yes, it's possible, but there are essential details and requirements you need to be aware of, especially concerning the source of funds.

The U.S. Citizenship and Immigration Services (USCIS) mandates that all funds used in the EB-5 program must be lawfully obtained. This requirement is critical and is known as the source of funds analysis.

It's pretty standard for investors to finance EB5 investments through loans. However, there's a crucial condition: if loan proceeds are used, the loan for the EB5 visa must be secured by the investor's personal property. The most typical form of such a loan is a mortgage, where real estate is collateral. Business owners might opt for a shareholder loan, using their ownership interests in a company as collateral.

When using personal assets as collateral, investors must also demonstrate the lawful acquisition of these assets. Although assets owned for over five years were previously exempt from detailed scrutiny, policy changes three years ago tightened this requirement. Investors now need to explain, to a certain extent, the history of how they acquired their collateral.

Using gifts to finance an EB-5 investment has also become increasingly popular, especially among parents gifting funds to their children studying in the U.S. In this scenario, the source of funds analysis applies to the donor as if they were the investor. If you're financing your EB-5 investment through a gift, the USCIS will require documentation from the donor, treating them as the leading investor.

In cases where the investment funds are both a gift and a loan—for example, if a parent gifts loan-secured funds to their child—the donor's personal property must secure the eb5 investment loan. This process involves treating the donor as the investor to analyze the source of funds.

While there are no explicit restrictions that gifts must come exclusively from family members, the gift must be bona fide. For gifts from non-family members, the relationship and the rationale behind the gift must be clear and make sense to the USCIS.

Financing an EB-5 investment through loans or gifts is viable, provided all requirements related to the source of funds are met. Whether using personal assets as collateral for a loan or receiving a gift, ensuring that the funds are lawfully obtained and adequately documented is crucial. An experienced EB-5 immigration attorney can guide you through this complex process, ensuring compliance with USCIS requirements.

VIDEO by @Julia Park at @Advantage America EB-5 Group