Understanding the EB-5 Immigrant Investor Visa

The Employment-Based Fifth Preference (EB-5) immigrant visa category was conceived by Congress in 1990 to help stimulate the U.S. economy through creating jobs and inviting capital investment by foreign investors.

In order to qualify, an EB-5 investor must invest at least USD 500,000 into a new commercial undertaking, which would create at least 10 full-time jobs for U.S. workers. EB-5 investments are divided into two categories: direct investment and regional center investment.

The EB-5 regulations require investors to prove that the investment funds were obtained through lawful means. This means there must be legitimacy to these funds and they cannot have been obtained through illegal means. Lawful source of funds can be proved by:

  • Foreign business registration records;
  • Corporate, partnership, and personal tax returns or similar documents filed within the past five years;
  • Evidence identifying other sources of capital; or
  • Certified copies of court judgments, pending court cases, and administrative proceedings within the past 15 years.

This may seem easy, but USCIS requests a substantial amount of documentation to prove lawful source of funds beyond these specified categories. While USD 500,000 is required as the investment, the investor is required to prove source of funds to the amount of about USD 550,000. This is because many projects charge an administrative fee to cover operational costs and marketing expenses. For example, if an investor invests $500,000 in a new real estate development enterprise and the project in charge of this undertaking charges an additional $50,000 administrative fee, the investor should provide documentation to prove that the total $550,000 was obtained from a lawful source.

In addition to proving a lawful source of funds, investors must also prove a lawful path of funds. The path of funds is the method used to document that the investor has possession of the funds and transferred the money to the new commercial enterprise in the United States. USCIS requires investors to properly document the path of funds to show that the funds arrived in the investment enterprise by lawful means.

Standard of Proof

The standard of proof for investors’ source and path of funds specified in the EB-5 regulations is the “preponderance of the evidence” standard, which means the USCIS officer must determine that it is “more likely than not” that the claims in the petition are true. This is a lower standard of proof than the “clear and convincing” and “beyond a reasonable doubt” standards used in other circumstances. However, USCIS adjudicators often apply these higher standards of proof when adjudicating investors’ source and path of funds. Failure to adhere to the USCIS standards would result in the denial of the investors’ I-526 petition. Thus, EB-5 investors must be prepared to provide detailed documentation to prove the lawful source and path of funds to survive USCIS scrutiny.

Methods of Proof

There are a many of ways by which an investor may prove lawful source of funds. To determine the best strategies to prove an investor’s source of funds when multiple options are available, investors and their attorneys should look into:

Current Place of Funds. Investors may have the investment funds deposited in their bank accounts. Others may have the funds in the form of stocks, real estate, or business. This is the most important question to ask first, as the next question gets more complex.

Source of Actual Funds. Investment funds may come from multiple sources. This is where scrutiny gets intense by USCIS and we must ask this question over and over until the funds can be traced back to the original source.

Some examples of the source of funds are listed below. These are the usual common sources.

  • Employment earnings and bonuses
  • Earnings from investor’s business
  • Sale of business assets
  • Inheritance
  • Gift
  • Stocks
  • Retirement funds
  • Proceeds from a real estate transaction

Loan Funds. The next category is loan funds and special attention must be paid to them. This is because the loan MUST be secured by collateral assets. Furthermore, you must explain how you secured the funds to OBTAIN that collateral asset. Therefore this is a two-prong requirement and must be construed very specifically.

  • Home equity loan
  • Loan obtained from the investor’s business
  • Loan obtained through a financial institution
  • Loan obtained from a friend or family

Each of these categories would be accompanied by a specific list of documents. For example, investment funds obtained from loans should provide loan contracts, financial statements, collateral (with appraisal of value), and bank statements showing the deposit of the loan. Investors who received the funds as gifts from family members or friends should provide gift letters, gift tax certificates, and bank statements showing the deposit of the funds into the investor’s account. For earnings from income or business, investors should provide employment contracts, company profiles, bank statement showing the total accumulated income, and tax returns showing that the proper taxes had been paid.

Selecting the Source

Investors and attorneys must make strategic decisions regarding which source to use. For example, if an investor’s accumulated earnings from income have been commingled with other sources, it is often extremely difficult to trace. In that case, the investor should consider using alternative sources to prove the lawfulness of his/her source of funds.

Contact us today for a confidential case evaluation—let our team guide you on the path to residency through investment.

USCIS looks to the legitimacy of the source very seriously. With this in mind, investors need to make sure they have an airtight paper trail of documentation. I can help. As an experienced EB-5 immigrant visa lawyer, I know what the adjudicators are looking for.