Yes, you can invest funds obtained from a loan; however, you must meet strict requirements regarding the loan.
First, the loan has to be secured by an asset owned by the EB-5 investor, the asset securing the loan must have a value the same as, or greater than, the amount of the loan, and the lender’s security interest must be perfected, i.e., the mortgage must be recorded in the government’s property records. Second, the EB-5 investor must be the principal borrower on the loan and must be personally liable for repayment of the loan. Third, EB-5 investor cannot offer any assets of the EB-5 investment entity as security for the loan, nor can he offer his ownership share in the EB-5 investment entity as security.
Can I use a loan from a person or a company that is not a lending institution? Yes, a private loan can be used, but, in addition to the strict requirements mentioned above, it is necessary to document how the lender earned the loan funds legally, and trace the funds from the legal source to the borrower/EB-5 investor, and then from the EB-5 investor to the EB-5 project. The requirements for documenting the source of the lender’s funds are the same as for an investor. For an explanation of those requirements, please click here.
It is very important to note that any loan that is used as a source of EB-5 investment funds must be secured. USCIS has reversed it previous policy of accepting unsecured loans as an acceptable source of funds. To USCIS it makes no difference whether the unsecured loan comes from a private party or a lending institution, they categorically reject unsecured loans.