From Documentation to Approval: EB-5 Source of Funds Explained

Posted on Feb 13, 2024 by Rakesh Patel and Jacqueline Trevino

The EB-5 Immigrant Investor Program is one of the fastest ways to obtain permanent residency in the United States. An integral part of the process is the requirement to demonstrate the lawful source and path of funds used for the investment. While proving the source of funds may seem daunting at first glance, it is essential to recognize it as a necessary step that requires meticulous attention to detail and is vital to securing a green card.

Lawful Source of Funds

To qualify for the EB-5 program, investors must show that the funds they use towards their investment were obtained legally. This requirement ensures that the investment capital was not obtained from illegal activities such as money laundering, drug trafficking, or other criminal activities.

Comprehensive documentation proving the source of investment funds may include bank statements, complete tax returns, pay stubs, business ownership records, property sale agreements, loan agreements, inheritance records, and other relevant financial documents. Tax returns for at least five consecutive years must be provided unless the funds utilized are more than five years old.  In which case, additional tax returns will need to be provided to establish the source of funds.

Path of Funds

Additionally, investors must be able to prove the path of funds from their original source to the EB-5 investment project. This involves drawing attention to the relevant transfer of funds between bank accounts or entities and specifying the dates of such transfers.

It is vital that the EB-5 petition provides the needed documents to effectively trace funds. Thus, the investors must be prepared to furnish comprehensive financial documentation.

Hypothetical Case Scenario

To demonstrate the volume and type of documentation required, let’s consider a hypothetical case: A petitioner is in the United States on an H-1B visa and has had a salaried job here for 10 years. He plans to invest in an EB-5 project that requires an $800,000 investment. His funds are derived from the following sources:

  • $300,000 accumulated from earnings over the past ten years.
  • $100,000 from investments in US stocks funded by savings.
  • $100,000 obtained through a home equity loan on his home located in the US
  • $300,000 as gift from parents located in India.
    • $150,000 from parents’ business savings in India.
    • $150,000 from sale of parents’ ancestral land in India.

To trace the above-mentioned funds, the Petitioner must provide:

  • Resume/CV;
  • Complete tax returns for the ten-year period;
  • Bank statements showing consistent salary deposits into their personal account spanning the same ten-year time frame;
  • Bank statements evidencing purchase of US stocks;
  • Records of stock portfolio evidencing ownership and subsequent sale of the stocks;
  • Bank statements evidencing deposits of stock sale proceeds;
  • Bank statements showing withdrawal of money to purchase home;
  • Home purchase agreement;
  • Home loan equity agreement;
  • Notarized gift affidavit between Petitioner and his parents; and
  • Evidence of transfer of $800,000 to EB-5 project.

His parents must provide:

  • Business ownership records;
  • Bank statements showing business earnings being accumulated in their personal or business accounts;
  • Title deed or ownership records of ancestral land;
  • Ancestral land sale agreement;
  • Bank statements evidencing deposit of land sale proceeds into parents’ bank accounts; and
  • Bank statements evidencing transfer of funds to Petitioner.

This hypothetical case underscores the compressive documentation required to establish a clear and traceable trail of how the investor acquired the funds for investment. It is easy to see how the source of funds documentation may exceed 1,000 pages, excluding personal documentation and EB-5 petition forms.

Immigration attorneys bear the responsibility of presenting these details to USCIS in a narrative format that the adjudicating officer can easily comprehend. This responsibility also entails crafting a visual diagram to aid in tracing the source and path of funds. With adherence to the stringent source of fund requirements, investors can navigate the EB-5 process successfully and secure a green card.

Be sure to check out our video explanation about EB-5 source of funds here.

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