A loan may be used as the source of part or all of an EB-5 investment as long as the loan is secured by the investor’s personal assets and the funds used to purchase those assets can be traced to a lawful source. Even though the Zhang v. USCIS ruling provides a precedent for using unsecured loans as a source of EB-5 capital, it will always be safer to use secured loans.
Typically, proving that the EB-5 funds were sourced legally is one of the most challenging aspects of compiling Form I-526, Immigrant Petition by Alien Investor. An investor and their immigration attorney must gather copious evidence showing that the loan agreement is legal, the loaned funds originated legally, and the investor owns the collateral used to secure the loan. Because investors who use loaned funds must provide information about the lender and the collateral used, they will likely have to submit more documentation than investors who use more straightforward sources such as salary payments.
EB-5 investors who use loaned funds should provide a capital source statement that shows where the invested funds originated as well as bank statements proving that the loan took place. Moreover, USCIS will need to see a detailed loan contract that identifies the collateral and the lender. The contract should also stipulate the loan’s interest rate and repayment period.
If the lender in question is not a bank but an individual, Form I-526 should include a capital source statement from the lender that explains how the loaned funds were obtained. It may be necessary to include the lender’s employment records or real estate contracts, depending on how they financed the loan.
Finally, the investor should prove that they own the collateral. If, for instance, the collateral is a real estate property that was inherited, the investor must provide a death certificate and the deceased’s will.