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Can I borrow $250,000 from a relative for my EB-5 application?

I want to make an EB-5 direct investment in a TEA. I have $250,000 to invest as a gift from my parents in India. Can I borrow $250,000 from a relative in the U.S. and make him a silent partner in the business? He is a U.S. citizen, so he does not need any immigration benefit from the investment. The new company will be formed on a 50/50 profit-sharing basis. Can this arrangement work?

Answers

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    Phuong Le

    Immigration Attorney
    Answered on

    Generally, yes, as long as you can show what personal assets/collateral you put up for the loan.

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    Barbara Suri

    Immigration Attorney
    Answered on

    You must be responsible for the entire amount, which must be placed at-risk. (Note that you are going to require more than just $500,000. There will also be administrative fees, attorney fees and other fees in addition to the investment amount.)

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    No, you must invest the amount, so unless the U.S. citizen gifts you the money, you may not be eligible.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    The borrowed funds should go to you first, not loaned to the company on your behalf. There's going to be a lot more to it than this, so please consult with an immigration attorney.

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    Marko Issever

    EB-5 Broker Dealer
    Answered on

    You can certainly "use" your friends' $250,000, but there is no way of avoiding the source of funds scrutiny. If he lends it to you unsecured, then you cannot use it. If he lends it to you secured with your assets, then you can use the funds but you will need to prove how you acquired the asset you pledged your friend who lent you the funds. Alternatively, your friend could gift you the funds but then your friend will need to prove lawful source of the funds he is gifting you. He cannot simply invest in the business to "round-up" your $250,000 deficit. If you go the loan route, you cannot pledge him your share of the EB-5 business as collateral, either.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    A loan arrangement can be done if a loan is secured by collateral (asset) you personally own. The asset must be appraised with a fair-market value to be equal to or in excess of the loan proceeds amount. Personal loan arrangements are disfavored and should be from an accredited financial institution. Otherwise, consider documenting the missing $250,000 as a gift. You must invest $500,000 to qualify for EB-5 and the business must be in a designated TEA to qualify for a lower investment amount. Profit sharing with a partner is acceptable structure, such as LLC or LP. I am not sure what you mean by silent partner. Hire an experienced EB-5 immigration attorney to consult you, properly structure the business and competently prepare your I-526 petition to avoid mistakes.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    The loan is OK, but not if secured by the business it is being invested in.

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    Charles Foster

    Immigration Attorney
    Answered on

    Yes, you may accept the gift from your parents in India for $250,000 and borrow $250,000 from a relative in the U.S. Yes, you invest on a 50/50 profit=sharing basis, and for that matter, your investment can represent any appropriate percentage of the business. There's no need to have a particular percentage.

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    Belma Chinchoy

    Immigration Attorney
    Answered on

    Your investment must be $500,000. And if the funds are borrowed, they must be secured by an asset you own.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    No. Sorry, but a loan can only be used if you put up 100 percent collateral (other than the assets or ownership interest in the EB-5 investment). The money needs to be a gift, unless you can put up other assets. Maybe your family can borrow the money from him and put up their own assets as collateral.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    The arrangement can work. However, make sure that all necessary steps are taken to document the loan arrangement. Also, the lender must document how he obtained the funds and the source(s) must be legal. There is nothing wrong in borrowing money for EB-5 investment. It is regularly done.

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    Stephanie Lee

    Immigration Attorney
    Answered on

    What do you mean by a silent partner? You can borrow the funds but you must prove the lawful source of the funds. You must invest the requisite amount. You can have a profit sharing but you must prove you invested a minimum amount of the funds, which currently is $500,000.

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