Does a loan from a friend’s 401k qualify as a source of funds?

A loan from a friend’s 401(k) funds held in a self-directed IRA custodian account can be a viable source of funds for an EB-5 investment, provided several conditions are met. The loan must be structured properly, with documented terms including interest and repayment schedules, to meet USCIS standards of credibility. Importantly, you must also provide clear evidence that the funds were obtained lawfully by your friend and that their self-directed IRA custodian permits such loans. Documentation will need to trace the funds from your friend’s account through their 401(k) investment activities to ensure a transparent and legal source. USCIS requires third-party verifications, such as tax returns, earnings records, and investment account statements, rather than relying solely on self-serving declarations. Additionally, the terms of the loan must comply with EB-5 guidelines, meaning it should not be secured by the assets of the EB-5 commercial enterprise, and you must show that you have the financial means to repay it. Working with an experienced EB-5 attorney is highly advisable to ensure compliance with USCIS documentation requirements and to navigate any complexities involving self-directed IRA lending rules.

Loans must be made in good faith and if this is a legitimate loan, that makes sense, its possible they will accept it.

You will need to show then that his funds were lawfully sourced, but otherwise yes this is usable.