These are tips to help out with your source of funds report preparation. If you are new to Source of funds reports, see our other post about EB-5 Visa Source of Funds Report Basics
This sounds simple but many EB-5 investors don’t think too far ahead when it comes to actually filing the I-526 petition and completing the source of funds report. EB-5 Investors naturally know where their money is and just kind of address it when it is time to transfer funds to invest in an EB-5 visa. This can cause substantial delays for the EB-5 visa I-526 petition process. Here are some considerations for EB-5 investors on how to choose which funds should go into your EB-5 investment and I-526 source of funds report:
1. Plan Ahead for Which EB-5 Sources You Can or Would Like to Use
Simply going through which funds you have available and figuring out which sources are easy to use will help a lot. Pick sources that are high value, have the easiest documentation to collect, least amount of complication and least amount of translation. Sometimes, the largest sources of revenue have hidden complications so it is best to talk to a knowledgeable consultant that can help you strategize. Also, you need to plan ahead to notify other people who may be involved in your sources. Sometimes EB-5 investors need to talk to partners who may share equity in a business, a property or a family member who is planning on providing a gift. A lot of coordination can really smooth out this process and reduce stress.
2. Pick Sources with a Simple History.
The EB-5 investor may say, “I own a house and it is worth $800,000, I’m done!” However, this could be just the beginning. We can see how it might get very complicated from there by sharing a real example of what was uncovered when talking to an actual investor from one of our earlier projects:
- To buy that house, the EB-5 investor obtained a bank mortgage loan that needs to be repaid;
- The down payment for the mortgage came from several sources:
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- Selling stocks, but the stocks originally bought with savings from salary and earnings;
- The EB-5 Investor saved his salary over multiple years;
- The EB-5 investor obtained a small “quiet” loan that was undocumented from a friend;
- The EB-5 investor received a gift from their parents living outside of the country.
In this case, the EB-5 investor doesn’t have $800,000 of proceeds, as the EB-5 investor needed to repay the mortgage loan. The EB-5 investor needs to gather the full history and documentation on four different sources of funds used to purchase the home. Two of these sources have no documentation (the “quiet” loan from a friend and the gift from their parents).
A lesson from this example is to focus on Selecting a single source of funds with a simple history is always the best option when applying for an EB-5 visa. For example, throughout all our years as a USCIS accredited EB-5 Regional Center, the easiest EB-5 cases are H1-B visa holders that work in the U.S. who can compile a few years of U.S. tax returns.
3. Translations. Translate the Entire Source of Funds Report
In general, anything the EB-5 investor is submitting in a source of funds report needs to be translated for USCIS. For this reason, EB-5 investors should work with a qualified EB-5 consultant (attorney or accounting firm experienced in EB-5) and plan exactly which items the EB-5 investor will include in their report. After making the final selection of which funds to include, send the related documents off for translation.
A Real EB-5 Investor Source of Funds Report Example:
An EB-5 investor earned money by operating their own company. The EB-5 investor did not have a salary but the EB-5 investor took distributions from their company when cash was available. To prove the funds for the EB-5 investment were lawfully sourced, we needed to utilize five years of company bank statements, the individual transfer receipts for each distribution (over 90 transactions), and 5 years of personal bank statements to clearly show the source and path of funds from the investor’s company all the way to EB-5 escrow account. Each page needed to be translated to get approved for the EB-5 visa. Translation in this case took about 15 business days. Plan ahead…
4. START NOW, Don’t Underestimate the Time it Takes to Finish a Source of Funds Report
To begin the EB-5 investment process, EB-5 investors need to:
- Identify the sources of funds to be used
- identify which documents are needed for those sources
- Translate the documents if necessary
- Clearly write the report.
This can be a daunting task if the report contains multiple sources, especially if all the documents need translation. EB-5 Investors should know that to get an EB-5 visa, the source of funds report needs to be substantial, backed by clear evidence and organized efficiently so USCIS can offer a swift approval. Insufficiently thorough EB-5 source of funds reports are the most common reason that EB-5 Investors I-526 petitions are denied and they fail to obtain an EB-5 visa. Source of funds reports take time, so remember to plan ahead. If EB-5 policy is expiring and the EB-5 investor knows that they do not want to take the risk of being exposed to new EB-5 policy, the EB-5 investor should be motivated to move as quickly as possible. Also if children are nearing age 21 and they are at risk of aging out, the EB-5 Investor should move as quick as possible.
5. Ask for Help Early on Your Source of Funds Report
If you need help, ask for it. Start by asking us! Ultimately, all parties in the EB-5 investment process (the EB-5 immigration attorney, EB-5 agent, EB-5 source of funds consultant and the EB-5 regional center) are motivated to provide assistance to the EB-5 investor so they can complete filing an I-526 petition, get USCIS approval and earn an EB-5 Visa. Typically, each of these parties’ work on fixed fees and not an hourly rate. If you ask for their help, they are likely to provide it. It will save you significant time. We at Behring Companies and the Behring Regional Center are extremely generous with our time if we believe an investor sincerely wants to work with us as their EB-5 partner.
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[1]8 CFR § 204.6(j)