The EB-5 Visa enables foreign investors, their spouses, and unmarried dependents under the age of 21 to acquire a U.S. visa once they meet the eligibility standards. The EB5 Visa requires a minimum fund of $800,000 to be invested in a new commercial entity and to generate ten full-time jobs for qualified United States citizens. The investor must demonstrate the lawful source of the EB 5 Visa fund.
There are 8 qualified funding sources for the EB-5 Visa.
- A loan is a debt obligation where the lender may be a financial institution or an individual.
- A gift is something that is given freely and without payment.
- Inheritance is the transfer of a deceased individual’s possessions to his or her loved ones.
- A bank statement is a document sent to the account holder by the bank on a monthly basis. It summarizes the account’s transactions from the preceding month.
- A business venture is a new enterprise or any commercial activity involving risk.
- Real estate assets are real estate-related assets, improved or unimproved real property, as well as any indirect or direct interest therein.
- Employment earnings are the income earned via employment.
- Stock is a security that represents ownership of a portion of the issuing company.
1. Loan
A loan is a type of debt that a person or other entity incurs. The lender, typically a company, financial institution, or government, provides the borrower with a cash advance. In exchange, the borrower agrees to a set of conditions, which may include finance charges, interest, a due date, and others.
There are 2 kinds of loans that qualify as acceptable EB 5 financing sources, an institutional loan; and a personal loan. The whole loan amount must be guaranteed by your personal assets. For instance, you can use the house you own to secure the loan. The loan cannot be secured by the assets of the EB5 business, nor can it be made without collateral.
When you get a loan from a person, you must carefully document how that person received the funds. This can be demonstrated by statements, tax returns, and other applicable proof.
2. Gift
A gift is a thing given voluntarily and without payment. A gift from a wealthy relative or an individual is another option as a funding source for the EB-5 Visa. There are 4 conditions to follow when using “gift” as your EB 5 Visa investment, which are listed below:
- Include a signed statement from the donor.
- Emphasize that the recipient of the gift is not expected to reimburse the money.
- Provide details on how the donor acquired the assets being gifted.
- Include the donor’s tax returns for multiple years if the money was originally received through job income.
- Documentation of registering the gift with tax authorities.
3. Inheritance
An inheritance is the transfer of assets that a deceased person leaves to his or her loved ones. Cash, investments such as bonds or stocks, and other assets such as real estate, antiques, jewelry, art, and automobiles may be included in an inheritance. The use of inheritance for EB5 funding has 3 conditions that are listed below.
- Establish evidence of the relationship between the deceased and the heir.
- Submit proof of the inheritance, such as bank records, court documents, estate settlements of the deceased, and other direct documentation.
- Present detailed declarations from individuals with firsthand knowledge of the inheritance if direct evidence is unavailable. These individuals include the executor’s attorney, the devisor’s kin, and the EB-5 investor.
4. Bank Statements
A bank statement (account statement) is a monthly document sent by a bank to the account holder. An account statement contains the account holder’s name, account number, and a comprehensive list of deposits and withdrawals from the previous month. The 3 requirements when using bank statements as an EB 5 source of funds are listed below.
- Submit up to three years of bank statements for all bank accounts.
- Contain records of withdrawals from one account and deposits into another
- Submit letters from the bank confirming the transaction.
5. Business Ventures
Business ventures refer to a new business or any business activity that includes risk. The 2 requirements for using business ventures for the EB5 Visa are listed below.
- Submit proof of ownership/officership and the business registration papers.
- Present and an accountant’s valuation of all firms in which the individual has a controlling or major interest (this applies to all businesses in or outside the United States)
6. Real Estate Assets
Real estate assets refer to real estate-related assets, improved or unimproved real property, and any indirect or direct interest therein. There are 3 conditions to using real estate assets as funding for the EB-5 Visa that are listed below.
Submit appraisals for any pledged real estate.
- Present titles and mortgage paperwork for all owned properties, including proof of all purchases and transactions.
- Submit lease documents for all assets that generate lease or rental revenue.
7. Employment Earnings
Employment earnings are income generated from being employed. These include wages, salaries, overtime pay, allowances, annuities, pensions, bonuses, extra salaries, director’s fees, management fees, retiring allowances, gratuities, and any other fringe benefits associated with the taxpayer’s job. The investor must submit these 3 conditions to effectively document employment earnings as an EB5 Visa fund.
- Submit tax returns. Your annual income will determine the number of years of tax returns to include. A tax return from the previous year is sufficient if your earnings for the past year were $1,000,000.
- Submit tax records from the past several years. Tax returns from the past several years are necessary if your annual income is $200,000. This will prove that your EB5 investment was amassed over the years.
- Provide documentation of employment. This includes copies of employment contracts, confirmations of employment, or professional licenses.
8. Stocks
A stock, or equity, is a security that signifies partial ownership of the issuing corporation. Shares of stock entitle the owner to a proportional share of the assets and profits of a corporation proportional to the number of stocks owned. The 2 conditions when using stocks for an EB 5 Visa source of funds are listed below.
- Present supporting paperwork if the investor generated substantial capital gains on investments prior to the past three years.
- Provide documents like securities account statements or stock certificates for the last three years.
What is EB-5 Visa?
The EB5 Visa program allows offshore investors, their spouses, and unmarried children under the age of 21 to obtain a green card if they meet the EB5 requirements. The Visa EB 5 requires the applicant to start a new business with a minimum investment of at least $800,000. The new business must create 10 full-time jobs for U.S. workers. The investor must demonstrate and prove the legitimacy of the source to qualify for the EB5 Immigrant Investor Program.
What is EB-5 Loan?
The EB-5 loan is a loan that the petitioner takes out to fund the application. Individual and institutional loans are eligible for the EB 5 fund. The investors must comply with three conditions for the loans to qualify as an EB5 Visa source of funds. These conditions are listed below.
- Secured by the investor’s assets. The value of the asset must be approximately equivalent to the loan amount. The mortgage must be documented in the government’s property records.
- Liable solely for the loan’s repayment. The investor must bear complete responsibility for its repayment. The loan must be in the investor’s name.
- Cannot use the EB-5 investment company’s property or assets. The investor can only use his or her personal property as collateral for the loan.
The current market interest rate should apply when using a loan for EB5 visa, regardless of whether the loan is among friends.
What are the rules of the EB-5 Source of Funds?
The rules of the EB-5 source of funds require that the initial outlay be made in a new commercial venture. The new commercial venture must be made either in a targeted employment area (TEA) or outside of a TEA. The investors must present evidence in their I-526 petition that the funds for their EB5 investment were obtained lawfully.
Anti-money laundering (AML) is a problem, so the USCIS examines the investor’s source of funds rigorously. The Bank Secrecy Act (BSA) is the primary anti-money laundering law in the United States. Money laundering is the activity of concealing the origin and ownership of ill-gotten gains obtained through criminal conduct. Money laundering is frequently accomplished by combining unlawful funds with legal funds. Lawbreakers use gray zones by establishing bogus firms, misrepresenting transactions, and more.
A dynamic anti-money laundering procedure is essential for the EB-5 Visa investment. It is best practice to follow the 4 anti-money laundering rules listed below.
- Designate a Compliance Officer Chief (COO)
The Chief Compliance Officer (COO) should be familiar with Bank Secrecy Act obligations and any AML concerns and hazards to perform his responsibilities effectively. The responsibilities of a CCO include overseeing the Anti-Money Laundering program and enforcing internal procedures to prevent policy violations. The COO should also be authorized to develop and apply systems and procedures. - Delegation
Investors must constantly adhere to the Anti-Money Laundering (AML) regulations. They should be able to subcontract the supervision of their AML program to other parties. The other party must consent to examination and inspection by federal assessors. Delegation is essential for investors dealing with regional centers. The multi-entity framework under which EB-5 regional centers can operate may raise suspicions of money laundering. - Currency Transaction Report (CTR)
Any person or business receiving cash of more than $10,000 in a single transaction or two or more related transactions will have to disclose the transaction on IRS Form 8300. Cashier’s checks, bank drafts, money orders, and other cash-equivalent instruments received in the course of business are “cash”. EB5 investors should refrain from interacting with cash or cash equivalents as much as possible. They should follow clear written protocols to accurately document and report cash transactions as required by law if “cash or cash equivalents” is required in the project,
It is crucial for investors and their visa attorneys to make smart choices regarding which sources to utilize. It is necessary to ensure that all paperwork proving the source of the EB 5 investment funds is accessible, legitimate, and accurate.
What are the requirements for the EB-5 Source of Funds?
The three main funding requirements for the EB-5 are capital; investment; and required capital investment amount. The three main requirements and conditions are listed below.
- Capital: The term “capital” encompasses tangible assets, cash, cash equivalents, inventory, equipment, inventory, and loans secured by the assets of the investor. The investor must be primarily and personally accountable for the debt and guarantee that the entity’s assets are not pledged as collateral for the debt. Salary or wages, bank account deposits, securities, or revenue-producing assets like equities and patents owned by the investor fall under this category. The immigrant must be able to provide proof of the EB5 source of funds requirements.
- Investment: The applicant must use their own money to start a new business and must genuinely risk capital in order to qualify as an investment. The business must be able to employ 10 Americans in a full-time capacity.
- Investment amount: The minimum investment amount for the new business in a TEA is $800,000 and $1,050,00 in a non-TEA.
What is the importance of source funds for EB-5 Visa?
The source fund for the EB-5 visa plays an important role because every application is subject to a thorough review by the United States government. There are 2 foundations for assessing the EB5 source of funds.
The 2 foundations are listed below.
- Background Investigation. USCIS conducts a thorough background investigation into the investor and his or her family. This includes a search of worldwide databases (such as OFAC and no-fly lists) for any indications of criminal activity, political exposure or pending litigation.
- Examination of the source of funds. The financial status of the investor undergoes a thorough “source of funds” examination. This comprehensive review is one of the most important necessities for any EB 5 candidate.
The screening and processing of EB-5 Visa petitions depend on these two foundations. Investors are advised by US Immigration Attorneys and EB5 fund managers on these processes before submitting any EB 5 application. It is ultimately the investor’s responsibility to provide a transparent source of funds for USCIS assessment.
The USCIS conducts a thorough review of the investor’s source and path for the EB-5 Visa fund from their country of origin. This is the reason why investors must provide detailed documentation of the source, use, and costs associated with the investment fund.
How Safe is an EB-5 Visa Investment?
The EB5 program requires the investor to make an “at-risk” investment. This means that there must be a risk of loss and a possibility of profit. All EB 5 initiatives are required to be risky. You can attempt to minimize the risks by gaining a deeper understanding of the project or by creating your own. Returns on investment are contingent on 2 outcomes: first, the job-creating enterprise’s (JCE) repayment of the loan; and second, the manager’s liquidation of the new commercial enterprise (NCE).
An investor must understand the terms of the loan to assess the timing of the JCE’s loan repayment. These terms are: first, when the loan commences; second, when the loans are repaid; and third, whether extensions are possible. There may be an opportunity for reinvestment when the funds are returned to the new commercial enterprise. The immigrant investor must understand the operating agreement they signed, which outlines the timetable of the NCE’s liquidation. It would be best for the investor to consult an Immigration Lawyer (Attorney) to avoid any confusion.
Can an Immigration Lawyer help you with your EB-5 Visa application?
Yes, an immigration lawyer can help with your EB-5 visa application. An EB5 immigration attorney is your best ally for a successful visa application. Here are some of the tasks of Visa Lawyers: first, they help you identify the right investment project; second, they help reduce processing times by using the appropriate strategies; third, they know the intricacies of a successful EB 5 application; and fourth, they help reduce immigration investment risk.
Investors can minimize the risks involved in EB5 financing and ensure that their chosen EB5 project matches their risk tolerance with the assistance of an EB-5 attorney.
Is my EB-5 Investment Guaranteed?
No, because the investment must be “at risk,” or un-guaranteed. There must be both the possibility of loss and the possibility of gain for the investor, and no assurances of return or redemption rights are permissible.