In a very significant decision for EB-5 investors, the United States Court of Appeals just ruled in favor of allowing EB-5 investors to use unsecured loans as a legal source of funds. This will make securing the necessary investment funds for a $900,000 EB-5 investment much easier for future EB-5 visa applicants.

In case No. 19-5021, Huashan Zhang and Masayuki Hagiwara vs. United States Citizenship and Immigration Services (USCIS), the court ruled in favor of EB-5 investors Huashan Zhang, a Chinese EB-5 investor, and Masayuki Hagiwara, a Japanese EB-5 investor. As part of their source of funds, these two EB-5 investors used unsecured loans from their companies to fund their EB-5 investments. USCIS had argued in court that the any loan proceeds used to fund an EB-5 visa investment needs to be secured by the EB-5 investor’s personal assets. This went back to policy guidance that USCIS issued in 2015 that said the same. However, the US Court of Appeals judge ruled in favor of the EB-5 investors in this case, arguing that the EB-5 investment project would be able to use the loan proceeds regardless of whether or not the EB-5 investor defaulted on the unsecured loan. In other words, the specific terms of the loan used to fund the EB-5 investment, whether secured or unsecured by the EB-5 investor’s personal assets, has no impact on the EB-5 project and its ability to deploy those funds into job creating activity.

With the EB-5 investment amount now at $900,000, this is a very significant and positive development for EB-5 investors. One of the biggest challenges in preparing an EB-5 application can be the lawful source of funds. Now being able to use unsecured loans to fund EB-5 investments, this greatly reduces the burden on the EB-5 investor to gather the EB-5 investment funds in a manner compliant with EB-5 regulations.

View the official court ruling here: https://www.cadc.uscourts.gov/internet/opinions.nsf/76AD769A0CB2B0938525860E004D5986/$file/19-5021-1868245.pdf 

What is EB-5?

The EB-5 program is the fastest and most convenient path to obtaining a United States green card for foreign investor. With an investment of only $900,000, an EB-5 investor can obtain a green card within a couple years, and then receive their $900,000 back after approximately 5 years. The core requirement of the EB-5 program is that the EB-5 investment create at least 10 direct or indirect jobs for US workers. The EB-5 program was created by the US Congress in 1990 and since then has provided a path to a green card and/or citizenship for tens of thousands of immigrant investors.