Two Different Uses of the Word “Loan”
Yes: an EB-5 investor may fund their $800,000 or $1,050,000 investment with borrowed money, and USCIS has permitted this for decades, provided the loan is genuine, properly documented, and lawfully obtained. What has changed is the scope. For years, conventional guidance held that only loans secured by the investor’s own assets, a home equity line, a brokerage-secured loan, a pledge of business interests, would qualify. A 2020 federal appeals ruling, Zhang v. USCIS, expanded that: loan proceeds, the court held, are simply cash, and unsecured loans can now qualify as well, under their own documentary standard. This whitepaper treats both paths, the collateral and paperwork each requires, and closes with the question investors ask most often: does repaying that personal loan early create any problem for the EB-5 case itself.
1. Two different uses of the word “loan”
Before going further, one distinction matters enough to state plainly.
This article addresses an investor’s own personal borrowing, a HELOC, a margin loan, a loan from a relative, used to raise the $800,000 or $1,050,000 an investor commits to an EB-5 enterprise. It is a source-of-funds question, governed by 8 CFR § 204.6(e) and (j).
That is a separate concept from HC2’s own EB-5 Senior Loan structures, in which HC2, acting as the regional center sponsor, deploys pooled investor capital into a project as senior, secured debt ahead of developer equity, discussed throughout our EB-5 program overview.
The two uses of “loan” sit on opposite sides of the same transaction: this article is about how an investor may raise their own capital; HC2’s senior-loan structuring describes what happens to that capital once invested. Keeping the two separate avoids a common point of confusion in EB-5 research.
2. The legal basis: from Soffici and Izummi to Zhang
EB-5 capital must be the investor’s own, in the sense that it is at the investor’s own risk and lawfully theirs to invest, but it need not be capital the investor already possessed free and clear.
Two Administrative Appeals Office precedent decisions, Matter of Soffici and Matter of Izummi, established the framework: borrowed funds can count as EB-5 capital, but the debt must be a genuine, recourse obligation of the investor, not an arrangement that shifts the ultimate risk elsewhere or that guarantees the investor’s own return.
For years, USCIS’s practical application of that framework favored loans secured by assets the investor already owned, treating unsecured personal borrowing with more skepticism. That changed with Huashan Zhang v. USCIS, decided by the U.S. Court of Appeals for the D.C. Circuit in October 2020.
The court held that loan proceeds are simply cash under the regulatory text, and that an unsecured, third-party loan’s proceeds qualify as EB-5 capital on the same footing as any other cash contribution, provided the loan itself is lawfully obtained and genuinely the investor’s debt. USCIS approved the underlying petition and updated its practice accordingly.
The upshot: both secured and unsecured loans are viable today, though the documentary path for each differs, treated in Sections 3 and 4.
3. Secured loans: the traditional path
A loan secured by the investor’s own assets, home equity, a brokerage account, business interests, remains the most straightforward and best-understood route. USCIS generally expects:
- The collateral belongs to the investor and was itself lawfully acquired, tracing back to a legitimate underlying source. A HELOC secured by a home the investor purchased with untraceable or undocumented funds does not solve the source-of-funds problem; it relocates it to the property’s own history.
- Commercially reasonable terms. An interest rate, repayment schedule, and structure consistent with an arm’s-length lending relationship, not an arrangement designed to look like debt while functioning as something else.
- A genuine, documented lender-borrower relationship, whether the lender is a bank, a brokerage, or a private party, with a signed loan agreement and evidence the funds were actually disbursed to the investor.
The home equity line of credit is, in practice, the most common instrument in this category: it is well-documented by the lending institution, secured by a specific, appraised asset, and produces a clean paper trail from origination to disbursement, which is precisely the kind of record an adjudicator can verify quickly.
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4. Unsecured loans post-Zhang
Following Zhang, an unsecured loan, including one from a family member or private individual rather than an institution, can also fund an EB-5 investment. Because the loan is unsecured, there is no collateral history to document, but the burden shifts entirely onto proving the loan is genuine debt rather than a disguised gift or an undocumented cash transfer dressed up as a loan after the fact. Expect USCIS to look for:
- A contemporaneous, signed loan agreement predating or coinciding with the transfer of funds, not one drafted after the fact to characterize an earlier transfer.
- A genuine repayment obligation, with terms that make economic sense between the parties, even where the lender is a relative.
- Evidence of the lender’s own lawful source of funds for the amount loaned, the same source-of-the-source logic that governs gifts, detailed in our source-of-funds guide for the I-526E.
This last point deserves emphasis: an unsecured loan from a family member sits close to a gift in practical terms, and adjudicators scrutinize the distinction carefully.
A loan that is never actually expected to be repaid, or that has no commercially sensible terms, risks being recharacterized, with consequences for both the source-of-funds showing and the “at risk” analysis in Section 2.
5. Can the loan be repaid early?
This is one of the most common practical questions, and the answer turns on keeping two separate things separate.
The investor’s personal loan, the HELOC, the family loan, the margin loan, used to raise the $800,000, is a private financial obligation between the investor and their lender. Repaying that personal loan early, using funds unrelated to the EB-5 enterprise, generally has no bearing on the EB-5 case, because it does not touch the capital actually invested in the new commercial enterprise.
What must remain untouched is the EB-5 investment itself: the capital placed into the enterprise must stay genuinely at risk, with no early or guaranteed return from the enterprise to the investor, through the required sustainment period.
An investor can therefore pay off the HELOC that funded their investment ahead of schedule using their own separate income, while the $800,000 sitting in the EB-5 enterprise remains fully at risk and untouched. The two obligations run on independent tracks; confusing them, treating the personal loan and the EB-5 capital as the same pool of money, is the error to avoid, not the early repayment itself.
6. A stylized comparison: secured vs. unsecured
| Dimension | Secured loan (e.g., HELOC) | Unsecured loan |
|---|---|---|
| Legal basis | Matter of Soffici / Matter of Izummi | Zhang v. USCIS (2020) treats proceeds as cash |
| Collateral documentation | Required: ownership, lawful acquisition, valuation | None required |
| Key risk | Collateral’s own source-of-funds history | Loan being recharacterized as an undocumented gift |
| Typical lender | Bank or brokerage | Family member, private individual, or institution |
| Core documentary burden | Collateral ownership and origin | Genuineness of the debt and lender’s own lawful source |
7. Building the documentation file
Whichever path applies, a defensible EB-5 loan file generally includes:
- A signed, dated loan agreement with commercially reasonable terms.
- Bank records showing the loan proceeds were actually disbursed to the investor and subsequently transferred to the EB-5 enterprise, an unbroken path consistent with the standard covered in our source-of-funds guide.
- For secured loans, documentation of the collateral’s ownership and lawful origin.
- For unsecured loans, documentation of the lender’s own lawful source of funds for the amount loaned.
None of this is materially different in rigor from documenting any other EB-5 source; a loan simply adds the lender relationship itself as an additional link in the chain that must be evidenced.
8. HC2’s approach
As an SEC-registered investment adviser (RIA) acting in a fiduciary capacity and independent of the developers it finances, HC2 evaluates each investor’s source-of-funds file, loan-funded or otherwise, against the same rigorous standard before capital is accepted into a transaction.
HC2 has been structuring and funding EB-5 capital since 2023, while its senior partners have been involved in the program since 2011, with a track record from June 2023 through June 2026 spanning $409 million in total transaction value, $188 million in loans committed and funded across seven EB-5 funds, and a 100% EB-5 project approval rate, a record that reflects discipline on exactly this kind of documentary review.
Investors are supported with institutional-grade reporting, third-party appraisals and market studies, quarterly reports, and annual audited financials throughout the investment. Review our EB-5 Regional Center program, or contact us to discuss how a loan-funded investment fits your source-of-funds strategy.
Have Questions About This Opportunity?
Our team can walk you through eligibility, timelines and next steps, no obligation.
Frequently asked questions
Can I use a HELOC to fund my EB-5 investment?
Yes. A home equity line of credit is one of the most common and best-documented ways to fund an EB-5 investment, provided the underlying property was lawfully acquired and the loan carries commercially reasonable terms. USCIS treats the collateral’s own source-of-funds history as part of the required documentation.
Can I borrow the money from a family member instead of a bank?
Yes, whether the loan is secured or unsecured. An unsecured family loan is permissible following Zhang v. USCIS, but it requires a contemporaneous, signed loan agreement with genuine repayment terms, plus documentation of the family member’s own lawful source of the funds loaned, since an unsecured loan that isn’t clearly genuine debt risks being treated as an undocumented gift.
Does the loan have to be secured to qualify?
No, not any longer. USCIS historically favored loans secured by the investor’s own assets, but the 2020 D.C. Circuit decision in Zhang v. USCIS confirmed that unsecured loan proceeds also qualify as EB-5 capital, treated as cash, provided the loan itself is genuine and properly documented.
If I pay off my HELOC early, does that affect my EB-5 petition?
Generally, no. The personal loan used to raise the investment capital is separate from the EB-5 investment itself. Paying it off early using unrelated funds does not affect the EB-5 case, as long as the actual capital invested in the EB-5 enterprise remains genuinely at risk through the required sustainment period.
Sources
- USCIS — EB-5 Questions and Answers
- U.S. Court of Appeals for the D.C. Circuit — Huashan Zhang v. USCIS, No. 19-5021 (Oct. 27, 2020)
Loan structuring for EB-5 purposes is fact-specific and depends on the lender relationship, collateral, and the investor’s individual circumstances. This article is not an assessment of any specific loan arrangement; investors should have their loan documentation reviewed by immigration counsel before relying on it to fund an EB-5 investment.
Investment opportunities are offered only through official offering documents. All investments involve risk, including loss of principal. Past performance is not indicative of future results. EB-5 investments carry additional financial and immigration risks. Nothing on this website constitutes investment, legal, or tax advice. HC2 Capital is an SEC registered investment adviser. Registration does not imply a certain level of skill or training. Read our Risk Disclosures and Terms and Conditions.
