When can an EB-5 investment come from unsecured loans?

It is unlikely that USCIS would approve an I-526 petition where the source of funds included unsecured personal loans, regardless of the country where the loan was made. Qualified and documented capital lawfully obtained in the United States may be used in an EB-5 investment.

Based upon current EB-5 policy, the source of funds cannot be unsecured. That is, the personal funds from one investor are the basis to obtain a conditional permanent residency status.

You must show that you are at risk for the funds. "The loans used must be indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness." Depending on whether you or your wife will submit the initial application, one of you will have to gift the other the difference to add up to the investment amount. It also appears that you are preparing to invest in a regional center. [The $500,000 is separate from fees such as buy-ins, administrative, legal, etc.] The money is allowed to come from a legal source which must be fully documented.

The investment fund needs to come from sources outside the United States. Since the source of the unsecured loan is from the United States, the combination of the loans would not qualify for EB-5 purposes.

According to 8 C.F.R. 204.6(e), capital for investment "means cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien entrepreneur [immigrant investor], provided that the alien entrepreneur [immigrant investor] is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness." USCIS, in a recent stakeholders meeting few weeks ago, stated that they will be enforcing this rule when adjudicating the case. Thus, your plan to obtain your investment funds by an unsecured loan will not work.

The money may come from U.S. citizens. Unsecured loans are problematic. I would check with an attorney versed in EB-5 to get the latest administrative ruling on the matter. It changes.

In the past, USCIS permitted unsecured loans as an investment source. Regrettably, the current policy is that any loan must be secured with personal property and you must provide documentation related to the loan and the value of the security (which must be at least the value of the loan).

Why not at least draw up a promissory note with each of them?

The funds are allowed to be from U.S. citizens. However, unsecured loans are prohibited. They must be either gifted, or loans based on secured collateral.

Unsecured loans are not acceptable as finance for an EB-5 investment. The funds must either be an unconditional gift, or, if a loan, the loan must be secured for value on assets owned by the investor.