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their funds, unless the company issuing the loan happens to be a
licensed lending institution. Finally, if passed, the new law may
provide USCIS with statutory authority to deny cases where
the investor uses loan proceeds from a home-equity loan using
a third party’s property as collateral.
FUNDS
Restrictions on Gifts
Currently, neither the regulations nor the INA place any restrictions on gifted funds as the EB-5 investment. Instead, under
USCIS policy, investors only have to document the source of the
gifted funds and provide an affidavit confirming that the investor
has no obligation to repay. Investors could use funds gifted by
any relative, friend, or employer as their EB-5 investment.
Restrictions on Home-Equity
and Company-Equity Loans
Under the proposed bill introduced by Senators Grassley and
Leahy, “[c]apital that is derived from indebtedness can only be
counted toward the minimum capital investment requirement
only if such capital is (i) secured by assets owned by the investor.” Further, the lender must be either a “reputable” bank or
licensed lending institution.
It appears that the legislation is allowing for a scenario wherein USCIS has the power to determine the reputability of a bank
after I-526 filing, when the investor has already obtained the
loan and investe d the capital.
If the bill passes as-is, it appears that investors would no
longer be able to use a company-equity loan as the source of
Under the proposed bill, an investor may only use gifted
funds for EB-5 investment if the funds are gifted by a spouse,
parent, child, sibling or grandparent. Additionally, if a “significant portion” of the EB-5 funds are gifted, the giftor must also
provide seven years of tax returns prior to the I-526 filing and
documentation of any monetary judgments against the giftor.
The amount of funds that would constitute a “significant portion” of EB-5 funds is not defined.
Unfortunately, the bill does not take into account cultural differences that exist in other countries. For example, in many Asian
countries, especially China and India, the concept of a “nuclear
family” is non-existent. Instead, a family unit can include multiple generations, many of whom may live together or co-mingle
finances, and co-raise children. Accordingly, in such countries it
is common for relatives, such as cousins, aunts, uncles, nephews
and nieces, who are considered to be distant relatives in the
United States, to gift large sums of money to each other.
Conclusion
The recent and proposed changes in SPOF adjudications are
causing uncertainty in the EB-5 space at a time when, with
the establishment of the IPO, it is reasonable to expect more
transparency and consistency with no changes in policy.
With processing times of over 14 months and a visa backlog
of two years, consistency in EB-5 adjudication is vital. Investors
do not have the luxury of awaiting a decision based on new
policy changes, or of re-packaging the source of funds and
waiting another 14 months for adjudication.
★
Anusree Nair (Anu) is an associate at the Klasko Immigration Law Partners
LLP Philadelphia office. She leads the investor division of the firm’s EB-5
practice, which includes the preparation and filing of I-526 petitions, consular
processing and adjustment of status applications and I-829 petitions. Nair
is responsible for the preparation and filing of
all I-526 petitions, both through the regional
center investments and individual investment
opportunities. She has extensive experience
working with investors to document complex
source and path of funds; Nair’s command
of source and path of funds issues has been
recognized within the field and she is called on
frequently to review I-526 petitions prepared by
other firms engaged in EB-5 practice to ensure
their own compliance with the extremely rigorous
USCIS standards. She routinely represents clients
at their visa interviews at the U.S. Consulates
Anusree Nair
overseas or with the Citizenship and Immigration
Services in the United States.
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EB5 INVESTORS MAGAZINE