Proving EB-5 Source of Funds from a Loan Secured by Assets

An Analysis of Loan-Based Capital in the EB-5 I-526 Petition Process

For EB-5 applicants, the provision of evidence that investment capital derives from proper sources is one of the first requirements of the Form I-526 petition. Where the capital derives from a loan—particularly one collateralized by personal property—the documentation must not only be exhaustive, but clearly defined and logically sequential in order to comply with U.S. Citizenship and Immigration Services (USCIS) policy.

Asset-based loans, for example, business shares or real estate, are acceptable under EB-5 regulation. Nevertheless, USCIS insists that the applicant establish both the ownership of the collateral and the lawful source of the money from which the loan was issued by the lender. All Aspects of the financial transaction should be documented and proven with valid evidence.

Understanding USCIS Regulations on Asset-Based Loans

In filing Form I-526, the applicants utilizing asset-secured loans have to establish the following:

• The applicant alone owns the collateralized property
• The loan was legally entered into with enforceable conditions and valid security
• The lender legally acquired the funds used in the loan
• The invested capital can be traced from the lender to the EB-5 project

USCIS not just looks at whether there is a loan, but also the legitimacy of all parties and the origin of all funds.

Case Structure: Loan Secured Against Ownership of Hotel

Use the following specimen example:

A 40% interest in a privately-owned hotel, which was inherited and transferred in part by family, was appraised at $1,000,000 on an independent basis. The investor pledged the asset as collateral for a private individual to advance the applicant $900,000. The loan was secured by a mortgage deed and personal guarantee, and the proceeds were deposited into a TEA-EB-5 project.

In such a situation, the petition by the applicant had documentation to prove:

• Legal ownership of the hotel share
• Valid signing of the loan agreement
• Legal origin of the lender‘s funds (in this case, profits from a consulting business)
• Clean deposit of loan proceeds into the EB-5 investment

Document Checklist: Key Evidence Categories

To support an I-526 petition on a loan secured by assets, USCIS typically requires three categories of evidence:

1. Evidence of Asset Ownership and Value

• Title deeds or shareholder accounts
• Inheritance and gift records
• Valuation letters or appraisals
• Operational proof of the asset (e.g., live business website, photos, invoices)

2. Evidence of Legal Loan Structure

• Signed loan agreement
• Mortgage deed or security document
• Personal guaranty
• Tax declaration or registration relating to the loan instrument (if applicable)
• Disbursement of funds on bank statements

3. Evidence of Lender‘s Lawful Source of Funds

• Lender identity documents and tax returns
• Business incorporation files
• Company bank statements and accounts
• Auditor reports confirming the payment of dividend or profits
• Invoice and agreement showing the income streams of the company
• Bank statements of an individual showing the lender had access to provide the loan

Each document should be accompanied by a certified translation (if not in English) and presented such that it shows a reasonable flow of funds and ownership.

Presenting the Source of Funds: Structuring the Petition

The I-526 petition has a cover letter that briefly outlines the source-of-funds history in its entirety. In the case of a loan secured by an asset, the letter should:

• Explain how the asset was acquired
• Dismember the lender-asset structure of the loan
• Provide a chronology of fund transfers
• Reference attached exhibits clearly and consistently

This description should be uniform with the evidence offered so as not to confuse and avoid any potential red flags in advance.

Understanding how to set up the legal source of funds for an EB-5 investment is perhaps the most significant part of the I-526 petition process. In the case of loans and collateral on property, precision in documentation and explanation is paramount. Explore more guides, checklists, and examples to make the process easy and confident.

Work with trusted experts

Managing EB-5 investments is complex, but you don’t have to do it by yourself. Dealing with experienced professionals—immigration attorneys, financial advisors, and registered regional centers—can make it a reassuring experience and reduce the possibility of costly mistakes.

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Whether you’re new to EB-5 or down to your last few project possibilities, we’re here to help. Call to schedule a consultation.