Skip to main content

Can the EB-5 investment be proceeds from a loan?

By May 9, 2023EB-5 Visa
A business professional handing money to another as a loan


The EB-5 Immigrant Investor Visa requires an investment of either $800,000 or $1,050,000 into the EB-5 business. The lower, $800,000 amount is reserved for businesses that are located in a rural or high unemployment area – also called a targeted employment area or TEA. For more information on the EB-5 visa requirements, see here.

Can loan proceeds count as a cash investment for purposes of the EB-5 green card?

Given the large investment amount required for an EB-5 visa, it is not surprising that many people ask what can count toward the required investment amount. In this blog post, we consider one option applicants have: to take out a loan and invest the proceeds from the loan into the EB-5 business as cash.

Loan Proceeds as EB-5 Investment in Practice: Zhang v. USCIS

A 2020 case before the U.S. Court of Appeals for the District of Columbia Circuit, Zhang v. USCIS, dealt squarely with the issue of loan proceeds in EB-5 petitions. This case holds a number of important lessons for anyone who wants to use loan proceeds toward an EB-5 investment.

In Zhang, two EB-5 applicants whose applications were denied sued USCIS. Both applicants had invested into the EB-5 business funds that they borrowed from other businesses that they controlled – businesses that had nothing to do with the EB-5 business. USCIS denied their EB-5 applications, saying that the loans were not a cash investment, but were instead indebtedness.

Cash vs. Indebtedness

The distinction between cash and indebtedness is particularly important in the context of an EB-5 application. So long as the cash was lawfully acquired, a cash investment automatically qualifies as capital under the EB-5 regulations. Capital is automatically counted toward the required investment amount.

Indebtedness, in contrast, can only qualify as capital and count toward the required investment amount if it is secured by the applicant’s assets. Since the applicants in the Zhang case could not show that the loan was secured by their assets, USCIS refused to count the loan proceeds toward the investment amount and denied the applications.

Loan Proceeds are Cash

The court disagreed with USCIS and overturned the denial. The court held that loan proceeds that are invested into the EB-5 business are cash and are not indebtedness. As a result, loan proceeds should automatically count as capital toward the required investment amount, so long as they are acquired lawfully.

The court’s analysis as to why gives us better insight into how USCIS approaches these applications.

Indebtedness, in the context of an EB-5 application, is when the applicant promises to give something to the EB-5 business. An example of this would be a promissory note, in which the applicant promises to pay the business some amount of money in the future. If the applicant were not required to secure this promise with their assets, the EB-5 business would have no recourse if the applicant were to default on the note, which would mean that the business would have no money to create jobs.

This is also why the law does not allow an EB-5 applicant to secure indebtedness with the assets of the EB-5 business. As with an unsecured indebtedness, a debt to the EB-5 business that is secured by the business’s assets could rob the EB-5 business of the benefit of the investment if it fails to materialize.

In contrast to indebtedness, when proceeds from a loan are invested into the EB-5 business, they are as good as cash. Once the proceeds from the loan are invested into the EB-5 business, the business has the cash to use as it wishes. This is not a debt to the business – it is cash.


While loan proceeds are considered a cash investment for EB-5 investment purposes, any EB-5 applicant who wishes to use loan proceeds toward the EB-5 investment should remember to closely document the loan agreement and all transactions. USCIS will still require a full accounting of exactly where the invested funds came from, even if they are proceeds from a loan.

FREE EB-5 Visa Resources

Click on the buttons below in order to claim your free EB-5 Visa Guide, sign up for our free EB-5 Visa Webinar, or watch our EB-5 Visa videos.

Download Our EB-5 Visa Guide
Sign Up For Our EB-5 Visa Webinar
Watch Our EB-5 Visa Videos

Set up an EB-5 Visa Consultation

For a dedicated one-on-one EB-5 Visa consultation with one of our lawyers, click on the button below to schedule your consultation.

Schedule a consultation

This website and blog constitutes attorney advertising. Do not consider anything in this website or blog legal advice and nothing in this website constitutes an attorney-client relationship being formed. Set up a one-hour consultation with us before acting on anything you read here. Past results are no guarantee of future results and prior results do not imply or predict future results. Each case is different and must be judged on its own merits.

Leave a Reply