The EB-5 immigrant investor program allows foreign investors and their dependents to obtain lawful permanent residency in the U.S. It requires at least a $900,000 investment creating 10 jobs for U.S. workers. However, one of the most critical aspects of the EB-5 visa process is proving the legitimacy of investment funds.
This guide will walk you through the EB-5 source of funds requirement, discussing valid sources of funds and how to demonstrate their legality effectively.
EB-5 Visa Overview
The EB-5 (employment-based fifth preference) visa is an immigrant visa requiring applicants to invest in a new commercial enterprise (NCE) or a regional center project, which must lead to the creation or preservation of at least ten full-time jobs for U.S. workers. The investment requirement is a minimum of $800,000 in a targeted employment area or $1.05 million in a non-targeted employment area. In addition, this investment capital must have been obtained or earned legally.
Click here to read our more in-depth EB-5 visa requirements guide.
Lawful EB-5 Source of Funds
The EB-5 source of funds requirement is designed to ensure that the investment capital used by foreign investors has been obtained through lawful means. The U.S. Citizenship and Immigration Services (USCIS) seeks to prevent money laundering, fraud, and other illicit activities by requiring investors to demonstrate the source of their investment capital. Regardless of the EB-5 source of funds source, tracing its origin and showing a clear path is vital.
Though it may seem simple enough at first glance, the EB-5 visa can get complicated depending on the complexity of your EB-5 source of funds. The requirement to demonstrate the legal means by which you have obtained these funds can be daunting.
For this reason, we recommend you work with an experienced EB-5 immigration attorney to ensure strategic decisions on which EB-5 source of funds to use and verify that all documentation is accurate, valid, and effective at demonstrating where the capital originated from and how it was transferred for your NCE or regional center project investment in the U.S.
Eligible EB-5 Source of Funds and Evidence
The invested capital must originate from lawful sources to satisfy the EB-5 source of funds requirement. These sources can include and be evidenced by the following:
Personal savings or earnings from employment
Suppose you have diligently saved portions of your net earnings from previous employments and intend to use these savings to cover your investment. In that case, you can provide evidence such as employment records, bank statements, official salary advice or pay stubs, and tax returns for at least five years. Overall, you must demonstrate a consistent history of fund accumulation and a legitimate and clear EB-5 source of funds, such as your employment records, to demonstrate a legal source of these funds.
Business income
Similar to personal savings or employment earnings, you can also use your business’s income. Present audited financial statements showing your business’s revenue and profits. Provide bank statements that demonstrate the incoming funds from your business operations. Invoices and contracts can further substantiate the legitimacy of the income as well as tax returns and business licenses.
Sale of property or asset
Say you have a property or asset you have sold to use for your investment capital. To provide sufficient evidence, you can use sales agreements or documentation of sales transactions, purchase receipts, transfer of asset ownership, proof of property or deed tax payments, and bank statements evidencing the receipt of sale proceeds and deposit or transfer of funds from the sale to the NCE or project investment.
Inheritance and divorce proceedings
You can also use your inheritance to fund your investment. You must provide evidence of your relationship to the deceased. For instance, if you have inherited funds from your parent, provide their death certificate and your birth certificate to prove your relationship. You can also use a copy of their will and bank statements showing the funds transfer from their account to you as their heir.
If they have recently passed away, it will be easier to obtain evidence that these funds were originally obtained legitimately, with evidence such as the deceased’s pay stubs and tax returns proving the funds were lawfully obtained. It could be complicated if they have passed on a long time ago, making obtaining evidence of the fund’s origin difficult. In this case, it is best to work with your immigration attorney to ensure a clear EB-5 source of funds and path.
Funds obtained via divorce settlements can be proved via copies of the alimony, civil lawsuit, and other legal proceedings. This can be utilized as long as supported by official court judgment evidence.
Sale of stock
If you have sold part of your company or business in the form of stocks to a third-party investor, you can prove the stock sale by tracing the money trail back to the company’s founding. You can provide evidence of ownership of the business, the source of the initial seed capital, evidence that the company’s valuation during the sale was reasonable at market value, and a five-year income tax return.
Gift
If your investment capital comes from a gift, you can prove its legitimacy by establishing your relationship with the donor. You can use documents such as a gift affidavit explaining the gifted fund’s source, intent to gift the fund, and the relationship between donor and gift recipient. Bank statements should show the withdrawal of funds and documentation of fund transfers.
Be prepared to prove the donor’s fund being gifted to you was also lawfully obtained, e.g., via employment income demonstrated through the donor’s tax returns for several years. Ensure a notarized statement proves there is no expectation for you to repay this gift.
Loan
You can use loans issued by an institutional lender or an individual. We recommend loans secured by collateral, for example, your home. It is best to avoid unsecured loans.
Provide a comprehensive loan agreement outlining the terms, conditions, and collateral. Include promissory notes and any legal documents securing the loan. If it is a personal loan, provide the lender’s bank statements showing the loan transfer and document how this individual obtained the funds they are lending you. Prove repayment through bank statements or other records.
Consult or Hire an Immigration Attorney
The EB-5 visa is one of the most complex visa categories. We recommend hiring an experienced immigration attorney, especially one specializing in the EB-5 visa, for you to navigate the process smoothly and ensure a successful application.
Immigration Business Plan’s network of reliable and experienced immigration attorneys and business plan writers is here to help guide you. Message us for a free consultation today!