EB-5 FAQ

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Can I use a loan for EB-5?

Yes, you may use loans to finance your EB-5 investment.

Loans are commonly used as one of the sources to meet the minimum EB-5 investment amount. The loan may be secured or unsecured. Loans are traditionally secured by the EB-5 investor’s personal assets, such as real estate, for a home mortgage loan or a home equity line of credit (HELOC). But as a result of the ruling in the Matter of Zhang case, a federal court decision in October 2020, unsecured loans are now permitted, too.

Loans may be through a bank or finance lender, or a private lender.

In the latter case, substantial documentation is necessary, including the written loan agreement, the lender’s income tax returns, and documentation on how the lender accumulated the loaned funds. Additionally, USCIS may want to see evidence of a lawful source of funds used to purchase the asset providing security for a loan.

Secured vs. unsecured loans for EB-5 investment

Both secured and unsecured loans can be used for EB-5 investment, each with its own advantages and drawbacks.

A secured loan requires collateral, typically an asset such as real estate or other valuable property. These loans often come with lower interest rates and a smoother approval process since the lender has a security interest in the collateral. However, the primary risk is that if the borrower defaults, the lender may seize the asset to recover the loan amount.

An unsecured loan, on the other hand, does not require collateral. Borrowers avoid the risk of losing an asset, but unsecured loans typically come with higher interest rates and stricter eligibility criteria due to the increased risk for lenders. Additionally, for EB-5 purposes, it is essential to ensure that the source of funds for an unsecured loan complies with USCIS requirements, including proper documentation of the loan’s legitimacy and repayment terms.

Loans and length of EB-5 investment

Your choice to take out a loan for an EB-5 investment can also be influenced by the timeline of the project. A shorter-term project can correlate with a shorter loan term and in turn lower interest expense over time. Conversely, taking loans to finance an EB-5 investment for a longer-term project would cost more in interest expenses over time.

Key Considerations for Using a Loan for an EB-5 Investment

Lawful Source and Path of Funds

USCIS mandates that all investment funds, including those obtained through loans, must come from a lawful source and follow a traceable path. Investors must provide substantial documentation, such as bank statements, loan agreements, tax returns, and evidence of how the lender lawfully acquired the loaned funds. For secured loans, this includes proof of ownership and the lawful acquisition of the collateralized asset.

Loan Structure and Documentation

Proper documentation of the loan agreement is essential. The agreement should clearly outline the loan amount, repayment terms, interest rates, and security (if applicable). If the loan is obtained from a private lender rather than a financial institution, USCIS may scrutinize the transaction more closely to ensure transparency and legitimacy.

Personal Liability and Financial Risk

Investors must assess their ability to repay the loan without jeopardizing their financial stability. While secured loans may offer lower interest rates, they put personal assets at risk. Conversely, unsecured loans, though they do not require collateral, often carry higher interest rates and stricter eligibility requirements, impacting overall affordability.

Loan Repayment

Since the EB-5 process can take several years, investors should ensure they have a reliable repayment plan that does not depend on the return of capital from the EB-5 project. Failure to make timely loan payments could lead to financial distress and potential loss of collateral (for secured loans).

USCIS Scrutiny and Compliance Risks

USCIS has specific requirements for loans used in EB-5 investments, including that the loan must be the investor’s personal liability. Investors cannot use loans secured by the EB-5 investment itself, meaning the investment in the EB-5 project cannot serve as collateral. Additionally, improperly documented loans or loans from questionable sources could lead to an EB-5 petition denial.

Choosing a lender for an EB-5 investment loan

When selecting a lender for your EB-5 investment loan, it’s crucial to choose an institution that not only offers favorable terms but also ensures compliance with USCIS regulations. Behring’s Unity Lender was the EB-5 industry’s first licensed financing lending company providing unsecured loans for EB-5 investors.

Unity Lender: Simplifying EB-5 Investment Loans

As a Behring-owned entity, Unity Lender brings a decade of experience in the EB-5 industry, boasting a 100% approval history on all adjudicated EB-5 petitions utilizing Unity Lender loans as part of the source of funds.

Key Features of Unity Lender’s EB-5 Loans:

  • Loan Amounts: Investors can obtain unsecured personal loans ranging from $50,000 to $300,000 to fund their EB-5 investment.
  • Fixed Terms and Rates: These loans come with fixed terms, fixed interest rates, and a regular monthly payment schedule.
  • No Collateral Required: No collateral is needed, allowing investors to secure financing without risking personal assets.
  • USCIS Compliance: Unity Lender ensures that all loans meet USCIS requirements by providing necessary source of funds documentation

By partnering with Unity Lender, EB-5 investors can access specialized financing solutions designed to meet the unique requirements of the EB-5 program, ensuring a compliant and efficient investment process. Visit https://unitylender.com/ to learn more.

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