EB-5 Financing Alert: Affiliated Lender Loans Under Fire
In recent months, USCIS has significantly increased scrutiny of EB-5 petitions involving investor loans from affiliated lenders. This shift has triggered a notable rise in Requests for Evidence (RFEs), Notices of Intent to Deny (NOIDs), and outright denials of Form I-526E petitions.
If you are an EB-5 investor using a loan from a lender connected to the regional center, new commercial enterprise (NCE), or another project-related entity, your petition may face elevated adjudication risk.
This update explains what USCIS is reviewing, why it matters, and how investors and attorneys can strengthen petitions involving affiliated lenders.
What Is an Affiliated Lender in EB-5?
An affiliated lender is typically a company with ownership or operational ties to the EB-5 project. This may include the:
- Regional Center
- NCE
- Job-Creating Entity (JCE)
- Other related entities
While investor loans remain a valid source of EB-5 capital, USCIS is increasingly questioning whether affiliated loans are properly structured to meet legal requirements. Key concerns include investor control, at-risk compliance, and the legitimacy of the funding structure.
What USCIS Is Challenging
USCIS is raising four primary concerns in affiliated lender adjudications:
1. Lack of Investor Control
USCIS has denied petitions where:
- Loan proceeds never passed through an investor-controlled bank account
- Loan agreements or escrow arrangements gave affiliates discretion over the use of proceeds
- Transactions resembled circular funding without true investor ownership of the capital
2. Failure to Meet “At-Risk” Requirement
Issues arise when:
- Repayment of the loan appears guaranteed or collateralized
- Redemption rights or other features suggest the investor’s capital is not at genuine risk
These violate EB-5 regulations requiring real financial exposure.
3. Unlawful or Unclear Source of Lender Funds
USCIS questions the legality of the lender’s funds when documentation is insufficient, including:
- Missing financial statements or tax records
- Lack of formation documents or licensing details
- Inability to trace capital flow from lender to NCE
4. Conflicts of Interest and Integrity Concerns
USCIS has flagged transactions that appear structured to benefit the EB-5 project, not the investor. Questions often include:
- Why was affiliated lending used instead of conventional project financing
- Does the loan compromise the independence of the investor’s decision
- Was the loan designed solely to bypass EB-5 funding rules
Compliance Strategies for Investors and Attorneys
To strengthen an EB-5 petition that involves an affiliated lender, USCIS expects clear documentation and legal reasoning. Focus on the following strategies:
Demonstrate Investor Control
- Provide wire confirmations and bank statements showing proceeds deposited into an account owned and controlled by the investor
- If funds were sent directly to escrow or the NCE, provide documentation authorizing the transaction and outlining the investor’s authority over the process
Prove the Investment Is At-Risk
- Explain that loan repayment depends solely on project performance
- Eliminate or explain any redemption rights or risk-mitigating language in documentation
Document the Lender’s Source of Funds
- Submit lender formation documents, financials, tax returns, and bank statements
- Trace capital flow clearly from lender source to loan disbursement
Address Integrity Concerns
- Clarify the commercial rationale for the loan structure, especially for investors in countries with currency controls
- Provide market-rate interest terms and board resolutions supporting the loan transaction
- Demonstrate that the arrangement is consistent with good faith commercial practices
Guidance for Investors Moving Forward
EB-5 investors using affiliated lenders are not prohibited from doing so. However, they must understand that USCIS currently views these structures as high risk. A petition that lacks strong documentation or clarity may face delay or denial.
Attorneys should:
- Fully explain fund flow and legal basis in the I-526E cover letter
- Warn clients about risks and challenges associated with affiliated lender loans
- Prepare thorough, well-sourced documentation from both the investor and lender
Conclusion
The message from USCIS is clear. While affiliated lender loans are not automatically impermissible, they are under heightened scrutiny. Investors and attorneys must approach these structures with caution, transparency, and detailed preparation.
At Ahluwalia Law Offices, we advise global investors and regional centers on compliant EB-5 strategies. If your petition involves an affiliated lender or has received an RFE or NOID, we can help you assess risk, evaluate options, and submit a robust petition response.
