EB5 Source of Funds Requirements

The EB-5 Visa has 6 qualified sources of funds requirements. First, a minimum investment amount; second, the records of business; third, the tax returns or similar documents; fourth, the evidence of additional capital sources; fifth, the certified copies of court decisions; and sixth, the government administration proceedings in or outside the U.S. throughout the last 15 years. The investor must invest a minimum of $1.05 M or $800,000 in a Targeted Employment Area (TEA) in a new business entity for the EB5 funding. The business must be established in a  (TEA) and produce 10 full-time jobs for certified US citizens.

There are 5 types of EB 5 funding that are acceptable. First, the legal employment income; second, the proceeds from the sale of a property; third, the inherited wealth; fourth, the gift from a wealthy relative/individual; and fifth, loans.

There are 4 tips on how to determine the EB-5 funding requirements. First, be cautious when choosing the EB5 source of funds; second, submit the requested documentation; third, indicate the collateral for the loan application; and fourth, submit tax returns and other paperwork.

What are the EB5 Source of Funds Requirements?

The EB 5 Visa program requires the applicant to invest a minimum amount before submitting an application. The 6 main sources of EB-5 fund requirements and their definitions are listed below.

1. Investment Amount: The investor must invest a minimum amount of $800,000.
2. Records of Business Registration: The investor must show records of business registration as proof of its existence.
3. Tax Returns or Similar Documents Filed within the Preceding Five-Year Period: These documents will form part of the evidence in authenticating the legitimacy of the business.
4. Evidence of Additional Capital Resources: The investor must provide documents if the funds were from a third party.
5. Certified Copies of Court Decisions: The investor must submit certified copies of court decisions as proof of any impending administrative legal actions and/or private lawsuits.
6. Government Administrative Proceedings in or outside the U.S. throughout the last 15 years:  The investor must submit administrative proceedings both in and outside the U.S. as part of the requirements for an EB 5 visa. This is a non-judicial determination of wrongdoing or fault. It may also include, in some cases, penalties of various forms. They are typically conducted by government or military institutions.

1. Applicant Must Invest a Minimum of $800,000

An applicant must invest a minimum of $800,000 in a targeted employment area (TEA) when applying for an EB-5 investor visa. A targeted employment area is a rural community or a community with a high unemployment rate. Direct investments also require the same capital amount. The petitioner may diversify among a portfolio of firms or projects, but only after placing the required investment amount in a single new business enterprise.

The EB5 funding can be in the form of cash, cash equivalents, equipment, tangible property, inventory, and the indebtedness secured by the investor’s assets. The source of funds can also come from the applicant’s bank account deposits, securities, salary, or revenue-generating assets like stocks and patents. The EB-5 funds must come from a legitimate source.

2. Records of Business Registration

The investor must submit records of business organizations to prove the lawful source of the EB 5 money. These include documentation of business ownership or directorship; documentation showing the sale of the business; a certified accountant’s assessment of the business; and more.

3. Tax Returns or Similar Documents Filed within the Preceding Five-Year Period

The tax returns or similar documents filed within the preceding 5-year period are part of the evidence to prove the legitimacy of the capital investment. Listed below are the documents that must be submitted to comply with the EB 5 funding requirements.

1. Salaries and wages.
2. Income or royalties from published books, articles, photographs, or other sources.
3. Income from labor and service or business activities.
4. Income from property transfers.
5. Dividends, interest, and bonuses
6. Royalties or income from patents or special rights.
7. Rental income
8. Any incidental or additional taxable income, as decided by the applicable financial department.

The 5-year documented taxes as evidence rule will substantiate whether you have complied with your tax responsibilities for the past five years.

4. Evidence of Additional Capital Sources

The investor must submit evidence of additional capital sources if the funds were acquired from a third party. The most common example is a financial institution or bank loan. Credit usage requires documentation of the collateral against which the loan was provided.

5. Certified Copies of Court Decisions

The investor immigrant must submit a facsimile of any court decisions. All such judgments include impending governmental criminal or legal actions, governmental administrative proceedings, and private civil suits (pending or not), including financial judgments against the investor immigrant from any court inside or outside the US within the previous fifteen years.

6. Government Administrative Proceedings in or outside the United States throughout the last 15 years

A government administrative proceeding refers to an assessment of culpability or misconduct conducted by the government or a military institution. This action may entail a variety of sanctions in some instances. The petitioner must submit documentation of any government administrative proceedings in the last 15 years, both outside and inside the US. This documentation is part of the evidence needed to prove the legality of the capital investment in EB5 financing.

What is the Importance of EB5 Source of Funds Requirements?

The importance of the EB5 source of funds requirements is that they lead to a more successful application for the EB-5 visa. Inadequate documentation may result in delays or a denial of the investor’s EB 5 visa application. The entire EB5 process may slow down if the USCIS requests additional evidence from the investor. The time required to become a lawful permanent resident will be significantly extended, too. The EB5 requirement for a source of funds confirms that the petitioner is putting his or her own money at risk.

What is EB5 Funding?

EB5 funding is the process of raising a specified sum or more for the purpose of launching a business. The US government openly employs this strategy to promote the American economy and generate additional employment possibilities (10 relevant full-time positions) through foreign investment.

The EB5 Visa program requires the investor to invest at least $1.05 million or $800,000 in a new business or regional center project. The business must be located in a targeted employment area (TEA) and create 10 permanent full-time jobs for qualified Americans. You, your spouse, and dependents under 21 years of age will obtain a green card upon completing the EB5 program requirements.

What Types of EB5 Funding are Acceptable?

There are 5 types of EB5 funding that are acceptable. The 5 acceptable types of EB5 funding and their definitions are listed below.

1. Legal Employment Income: You can use legal employment income for EB 5 investment funds if you have worked for a number of years and have savings. Prepare your income tax returns from past employment to effectively document your earnings. Include your payslips and a certificate of employment indicating your job position and salary.
2. Sale Proceeds of a Property: The sale proceeds from a property, such as land or a house, are acceptable EB5 funding. Submit a duplicate of the sale agreement and the deed of sale, and bank statements to confirm the transmission of money from the buyer’s account to yours. Provide documentation of funding sources of how you acquired the property. Submit bank statements and tax records if it was purchased with cumulative employment earnings.
3. Inherited Wealth: Submit evidence to establish the relationship between you and the executor. There are 4 kinds of evidence to establish that the inheritance is from a legal source. The first is the will; the second is the bank records; the third is the court documents, and the fourth is other direct documentation. Provide comprehensive declarations from individuals with direct knowledge of the inheritance if direct evidence is not available. The comprehensive declarations may come from the Inheritor’s relatives and the executor’s attorney.
4. Gift from a Wealthy Relative/Individual: Submit a signed statement from the benefactor. The signed statement must emphasize that the recipient of the gift is not expected to reimburse the money. You must meticulously explain how the donor acquired the assets being gifted. The donor’s tax returns for multiple years must be included if the money was obtained from employment.
5. Loan: There are 2 types of loans that qualify as acceptable EB5 funding sources. These are individual loans and loans issued by an institution. Secure the loans with your real property. Do not secure the loan with the assets of the EB5 business or your stocks in the EB 5 company. Submit proof of how the funds were received if the loan is from an individual. Tax returns, tax statements, and other proofs of documents can demonstrate the authenticity of an individual loan.

How to Determine the EB5 Funding Requirements?

An EB-5 applicant’s investment capital may come from a variety of sources. Salary income is one possibility. Stocks, securities, and bank account deposits are additional sources that may be lawful. All investment funds must explicitly indicate their originating source for all sources. Listed below are 4 tips on how to determine the EB5 requirements.

1. Choose the source of funds with caution. You must exercise caution when choosing the EB-5 sources of funds. It can be crucial for investors and their immigration attorneys to decide which funds to use and which to avoid. Documentation must be valid and exhaustive. The investor must ensure that a translation is included if the documents are not in English.
2. Submit the required documents and proof. The USCIS requires documents that will prove the legitimacy of the EB 5 source of funds requirement.
3. Specify the loan’s collateral. The collateral value of an EB5 investment loan from a bank or financial institution must exceed or equal the amount of the loan. The USCIS will likely issue a request for evidence (RFE) if the value of the collateral is close to the amount loaned. Best practices suggest that the loan amount should not exceed 70 percent of the collateral’s value.
4. Submit tax returns and other financial paperwork. Individual and corporate/partnership tax returns must have been filed with any authority within the past five years. The applicant must also submit tax returns for the 3 years with the highest income if the tax returns from the previous years indicate a higher income. EB-5 tax planning should ideally be conducted by an expert prior to filing.

 Who Needs Proof of EB5 Funding?

The proof of EB5 funding is required by USCIS to verify if the EB5 source of funds is legal. A petitioner must produce a “preponderance of proof” on the origin and destination of his or her investment capital. A USCIS official reviewing the documentation must conclude that its contents are “more likely than not” what is stated in the documentation. The inability to provide proof of EB-5 funds or incomplete evidence documentation can delay the petition application process or the rejection of the application.

How Long Does It Take to Get an EB-5 Visa?

The EB-5 processing period varies based on the number of pending applications and the number of applications filed annually. The processing period for the Form I-526 immigrant petitions is between 29.5 and 66 months, per USCIS estimate. The processing period for Form I-485 (Adjust Status) depends on the service center, which is around 7 to 29 months. The National Visa Center and consular process for investors outside the US is approximately 6 to 12 months. It is important for the petitioner to understand what EB 5 funding is and what the requirements are, as this speeds up the whole process.

According to the EB-5 Reform and Integrity Act of 2021, with the rule changes with EB-5 Reauthorization in March 2022, the EB-5 application Form I-526 and I-485 may be filed concurrently if the applicant is legally present in the USA. EB-5 Reform and Integrity Act of 2021 saves a few months to years on getting the EB-5 Green Card, if the applicant is present in the USA.

Is it Necessary to Meet All of the Requirements for an EB5 Source of Funds?

Yes, it is necessary for the immigrant investor to meet all of the requirements for an EB5 source of funds. Completing the requirements along with the evidence will remove the stress involved in the process and lead to the success of the petitioner investor’s application.