Can the EB-5 Investment Capital Be Acquired Through a Gift or Loan?

Written by: Taher Kameli, Esq.

The EB-5 Immigrant Investor Program dating back to 1990 continues to be an attractive route to U.S. citizenship and the participation rate for the program has remained high among foreign investors. Importantly, almost 40,000 EB-5 petitions have been filed with the United States Citizenship and Immigration Services (USCIS) over the past three years. Since its inception, the EB-5 program has proven to be beneficial to the U.S. economy as well. It has truly emerged as a vital source for job creation and has helped stimulate the U.S. economy.

The EB-5 program requires the applicant to make a minimum investment of $500,000 within a Targeted Employment Area (TEA) in the United States (The minimum investment amount is $1 million if investment is made in non-TEA regions). Assuming that the investment amount can solely be obtained through one’s income or the sale of real estate and business, some foreign investors may find the financing process challenging and lose their enthusiasm for investment. However, in light of a wide array of financing options, foreign investors may take advantage of other non-traditional alternatives including loan and gift as well.

Investors’ funds may come from gifts provided that a gift letter confirms the gift; the lawfulness of the source of funds is verified; the gift is bona fide; and no conditions whatsoever is placed on the gift. Fortunately, nothing precludes unrelated (non-relative) third-parties from gifting funds to the investor as long as the foregoing requirements are met.

The investment capital may also be accumulated through a loan. Yet, the investor’s indebtedness needs to be secured by his/her personal asset(s) other than those of the commercial enterprise in which he/she is investing. Without the foreign investor being personally and primarily liable for the loan, the EB-5 petition would be subject to denial. This is also the case when the value of the collateral is insufficient to secure the amount of indebtedness. Similar to the gift option, the lawfulness of the source of funds should be demonstrated.

Having represented hundreds of EB-5 clients successfully over the past two decades and being aware of the challenges of the EB-5 program, the Law Offices of Kameli and Associates stands at the forefront of the EB-5 industry. We find immense satisfaction in delivering quality immigration services and will continue to respond to clients’ evolving needs to the utmost of our ability. For further information on the EB-5 program, please drop us an email at taher@kameli.com or 001.312.427.0139.

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