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Can the gifter of EB-5 funds use a personal loan?

My sibling wants to gift me a significant amount of money that I will use for an EB-5 investment. He does have a significant income and a thriving business, but he is taking out a huge personal loan for this. Does that loan automatically get vetted in the source of funds process? How do we declare the loan?

Answers

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    Absolutely, yes. His loan must be adequately secured by his own personal assets.

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    Daniel A Zeft

    Immigration Attorney
    Answered on

    Your sibling can gift you the funds that you would use to make an EB-5 investment. Your sibling and you must comply with all applicable laws of the foreign country and the United States concerning the gift, including payment of all applicable taxes.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    This will likely create issues. Best practice would be to have your donor (sibling) gift you the funds, which must be irrevocable and provide documentation that the gift from your sibling comes from his or her lawful source of funds, i.e., income from business earnings. If your sibling is taking out a loan to generate EB-5 funds to gift to you, loan documentation must be provided and USCIS may take a position that it is a personal loan rather than an irrevocable gift, which is not secured by the property you own as EB-5 investor. Thus, you are not primarily liable on the loan. Hire an experienced EB-5 immigration attorney to competently prepare your I-526 petition and avoid problems.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    The loan will be vetted by the U.S. Citizenship and Immigration Services (USCIS) as part of review of your source of funds. The loan must be declared showing all the relevant loan documentation and collateral associated with the loan. The purpose is to verify that the source of funds for your EB-5 petition is legal.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    USCIS seems to be looking further and further back in the chain of funds. If the loan was secured by personal assets, it would likely be OK. Please retain an immigration attorney to assist you.

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    Phuong Le

    Immigration Attorney
    Answered on

    Provided that your brother can show his collateral for the loan and etc., this is doable. Among other things, he would have to submit the loan document, a declaration and gift agreement, but it would be possible.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    USCIS may take the position that the loan from the donor is a direct part of the source of funds and that the investor is not personally and primarily liable for the indebtedness. That could be a fatal flaw for the petition. A gift is a legal source of funds for an EB-5 investment, but the donor's source of funds to make the gift is vetted as well. If it is from a loan, there likely will be a problem.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    While your sibling may give you a gift, the gift money cannot be a loan he took out. USCIS' indebtedness policy states that any loan proceeds that are being used for investment must be secured by assets the investor owns. While there is a litigation to clarify that a loan taken out and then cash given as gift is not indebtedness of the investor, there has not been a positive ruling on this, and the USCIS policy still stands.

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    Sarah Xiao Qian Mu

    Immigration Attorney
    Answered on

    What do you mean if the loan gets vetted in the process? The source of funding for the initial principal that gets the loan will need to be proven, in addition to the loan. Also, the loan will need to be lent against equity.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    He is allowed to give you a gift of the funds. But he will have to document how he got the money. If it were you borrowing the money, you could only use the borrowed funds in an EB-5 project if you put up collateral for the loan. It is not clear to me if your sibling would have to put up collateral for the loan. It probably would be OK, but we would want to research it before giving you an opinion.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    It will all need to be documented as to whether it is a gift or a loan to you, what is the security if a loan, and the source of his funds for the money.

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    Charles Foster

    Immigration Attorney
    Answered on

    Your sibling may gift you the funds, but you would still have to establish the source of funds. If they are a loan, it would have to be secured by collateral worth an equal amount. Yes, the loan will be vetted, given the fact that you must prove a lawful source of funds.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    Yes, it is possible for the lawful source of funds be traced to a personal loan obtained by the gifter. You will need to fully document all loan transactions as well as prepare a gift instrument between you and your sibling to document the gift, etc.

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