Insights from Phuong Le, Partner at KLDP LLP, Hallie Schehter, Associate Attorney at KLDP LLP, and Jenny Zhan, CFA, Founder and CEO of Beyond International Group.
On April 25, 2026, Beyond International Group hosted a live webinar with KLDP LLP — a firm that has advised on more than $2.5 billion in EB-5 transactions and over 5,000 investor petitions — to walk investors through the adjudication trends shaping filings right now. The session covered the path-versus-source distinction triggering most RFEs, 2026 RFE and NOID patterns across SDIRAs, gifts, and unsecured lending, and the capital structures and NCE Manager obligations that determine how investor capital is actually protected. This article summarizes the key takeaways.
What Is the Difference Between Source of Funds and Path of Funds in EB-5?
Source of funds is how an EB-5 investor lawfully earned or acquired the capital used for the $800,000 investment — wages, business income, asset sales, gifts, loans. Path of funds is how that capital then traveled across accounts and instruments before reaching the EB-5 investment. USCIS evaluates both, and Phuong Le confirmed that confusing the two — or leaving gaps in the path — is the single most common reason EB-5 petitions receive Requests for Evidence in 2026.
Hallie Schehter described a well-prepared file as having no material gaps in documentation. The seven-year scope that USCIS applies to source of funds also applies to path of funds: investors should expect to produce roughly seven years of bank statements, brokerage records, and supporting documents tracing how money moved from earnings into the final investment account. As Le put it, source of funds is as much art as it is law — the goal is to prove one lawful source of $800,000 as simply as possible, then close the door.
Schehter offered a useful framing: source of funds is a puzzle, and the documents are the pieces. The diagram or written explanation of how funds moved — from RSU brokerage account, to checking, to high-yield savings, to the EB-5 escrow — is the picture on the box. With it, the narrative is clear before any officer asks a question.
Why Are EB-5 RFEs and NOIDs Increasing in 2026?
USCIS, at its core, is a benefits-driven agency. But adjudication priorities shift with administrations, and Le was direct: the current administration has approached EB-5 cases with notable scrutiny, and adjudicators are leaning into the regulatory discretion already written into the statute. The fundamental EB-5 law has not changed; what has changed is what the agency chooses to ask about.
One example: tax returns. In prior cycles, an investor showing one or two years of W-2 income sufficient to fund the investment — supported by an RSU sale and tax filing — would typically satisfy source-of-funds documentation. In 2026, USCIS is increasingly invoking its regulatory authority to demand up to seven years of returns, regardless of whether the early years are necessary. Investors should assume seven years of returns and supporting documents will be requested. This pattern tracks with the broader USCIS shift toward stricter project-level scrutiny and RFE issuance.
Schehter highlighted a parallel trend on the path-of-funds side: commingled funds. USCIS is flagging deposits even when the investment capital itself comes from clean, well-documented W-2 income. Zelle transfers, Venmo reimbursements, Cash App deposits, gifts from family — any third-party transaction touching the same account as the investment funds becomes a question the file must answer. Her practical threshold for review: any single deposit over $500 deserves a documented explanation.
How Should EB-5 Investors Document Bank Account Activity to Avoid RFEs?
In a perfect world, an investor's checking account would show salary deposited and bills paid. In reality, the same account holds a decade of incidental transactions — group trip reimbursements, family transfers, app-based payments, and reimbursements from friends. None of these are inherently disqualifying. What matters is whether the file preempts the question before USCIS asks it.
Le's advice: a sworn declaration explaining the account's normal activity — and confirming that the EB-5 investment funds came from a specific, separately documented source — is often the difference between a clean approval and a multi-month RFE response. He shared a real client example where 20 small monthly deposits turned out to be longstanding T-Mobile family-plan reimbursements from friends and family. Once explained, the issue closed.
Six steps EB-5 investors can take before engaging counsel:
- Comb through 7 years of bank statements and highlight any single deposit over $500 for which you do not already have documentation.
- Gather supporting receipts, reimbursement records, and Venmo/Zelle/Cash App memos before they are needed.
- If primary documentation is unavailable for older transactions, prepare a sworn declaration explaining the source and purpose.
- Map the path from earnings to the EB-5 investment account in a flowchart or written narrative.
- Identify which accounts your investment capital will draw from, and flag any that have liquidity restrictions (stock trading windows, SDIRA rollovers, pending HELOCs).
- Begin source-of-funds preparation 3–6 months before the intended filing date.
Are Self-Directed IRAs Still a Viable EB-5 Funding Source in 2026?
Yes. Self-Directed IRAs remain a viable EB-5 funding source, and recent USCIS pushback has not invalidated the structure. Le confirmed that KLDP, which helped pioneer the SDIRA strategy for EB-5 investors, has continued to receive approvals through 2026 — including on petitions that drew RFEs and NOIDs questioning the SDIRA framework.
The instructive detail is what those RFEs actually asked. They were not questioning whether SDIRAs are legal or whether retirement assets can fund EB-5. They were asking custodians like Alto IRA to prove they were licensed to open custodial accounts — a question Le compared to asking Fidelity or Schwab to prove their right to operate brokerage accounts. The answer was a documentation exercise: business licenses, regulatory registrations, and a clear explanation of the custodian's role. Every petition responded with that documentation has been approved.
The structural advantages remain. Retirement assets — held in a personal IRA or an old employer's 401(k) — can be rolled into an SDIRA tax-deferred and invested into an EB-5 project without triggering distribution penalties or taxes. Interest and principal repayment flow back to the SDIRA. For investors with limited liquid capital outside retirement accounts, this remains one of the highest-leverage funding strategies available.
What Should EB-5 Investors Look for in an NCE Manager?
The NCE Manager is the entity that actually manages investor capital, negotiates the loan terms with the Job Creating Entity (JCE), monitors construction, controls fund disbursements, and holds the fiduciary obligation to return capital. The Regional Center holds the USCIS designation. These are different roles, and on most rural projects they are different entities. Jenny Zhan was emphatic: investors who direct due diligence questions to the Regional Center are often asking the wrong party. For a deeper treatment of this distinction, see The Risk of Overlooking the NCE Manager in EB-5 Due Diligence.
Three criteria define a strong NCE Manager:
- Demonstrated desire to return investor capital. Redeployment policy is a useful test — an NCE Manager motivated to keep capital deployed indefinitely is structurally misaligned with investor exit interests. Beyond International Group's stated policy is to return capital as soon as the project repays the loan, rather than re-deploying for additional management fees.
- Operational capacity to manage development and operating phases. The NCE Manager must have real estate experience that can step in if a project requires refinancing, lease-up management, or asset operation — particularly for asset classes with specialized requirements like senior housing, hotels, or shopping centers.
- Proven track record raising non-EB-5 institutional capital. Developers and JCEs prefer capital partners who can supplement EB-5 with committed institutional capital. An NCE Manager who can only raise EB-5 funds creates structural project risk if the EB-5 raise underperforms.
How Should EB-5 Investors Evaluate Real Estate and Capital Stack Risk?
Zhan presented a risk framework ranking commercial real estate by how easy a property is to operate and liquidate if a project requires intervention. Speculative developments — ski resorts, senior housing, and operationally complex asset classes — sit at the top of the risk curve, and the EB-5 industry's loss history disproportionately concentrates there. Hotels and hospitality follow, sensitive to economic cycles and operational volatility. At the lower end sit multifamily and for-sale residential housing, the latter offering the cleanest exit because individual unit sales generate cash returns directly, without dependence on stabilized rental income or refinancing market timing. For the full asset-class evaluation framework, see Vetting Asset Class and Market Value in EB-5 Due Diligence.
How Should EB-5 Investors Evaluate Real Estate and Capital Stack Risk?
Zhan presented a risk framework ranking commercial real estate by how easy a property is to operate and liquidate if a project requires intervention. Speculative developments — ski resorts, senior housing, and operationally complex asset classes — sit at the top of the risk curve, and the EB-5 industry's loss history disproportionately concentrates there. Hotels and hospitality follow, sensitive to economic cycles and operational volatility. At the lower end sit multifamily and for-sale residential housing, the latter offering the cleanest exit because individual unit sales generate cash returns directly, without dependence on stabilized rental income or refinancing market timing. For the full asset-class evaluation framework, see Vetting Asset Class and Market Value in EB-5 Due Diligence.
How Should EB-5 Investors Evaluate Real Estate and Capital Stack Risk?
Zhan presented a risk framework ranking commercial real estate by how easy a property is to operate and liquidate if a project requires intervention. Speculative developments — ski resorts, senior housing, and operationally complex asset classes — sit at the top of the risk curve, and the EB-5 industry's loss history disproportionately concentrates there. Hotels and hospitality follow, sensitive to economic cycles and operational volatility. At the lower end sit multifamily and for-sale residential housing, the latter offering the cleanest exit because individual unit sales generate cash returns directly, without dependence on stabilized rental income or refinancing market timing. For the full asset-class evaluation framework, see Vetting Asset Class and Market Value in EB-5 Due Diligence.
On capital stack, Zhan delivered the line investors most need to internalize: not all senior loans are the same. The same designation can produce very different recovery outcomes depending on the property type, market liquidity, exit timing, and whether other instruments — most notably C-PACE financing — sit ahead of the loan in priority. C-PACE assessments attach to property tax obligations and are functionally senior to most mortgage debt; many banks will not refinance a senior loan when an active C-PACE assessment exists, complicating EB-5 exit timing materially.
Zhan walked through four levers investors can use to move a project from higher to lower risk, regardless of asset class:
- Regulatory: Prefer projects that are fully entitled, fully permitted, and already under construction.
- Construction: Require a Completion Guarantee and Maximum Cost Guarantee from the developer.
- Financial: Avoid projects that depend on EB-5 capital alone to complete; structurally diversified capital sources reduce execution risk.
- Market: Validate that the projected exit price is supported by comparable sales and a defensible valuation methodology.
On valuation, Zhan flagged the most overlooked risk in the capital stack: future real estate value is the single biggest guesstimate in any EB-5 project. Income capitalization — the workhorse method for stabilized commercial real estate — depends on net operating income divided by a cap rate, and cap rates move sharply with interest rates and asset type. A project that can refinance comfortably at one cap-rate environment may not refinance at all in another. For-sale residential, by contrast, exits unit-by-unit through liquid comparable sales, which is part of why it sits at the lower end of the EB-5 risk curve.
Beyond Paradise 1: A 2026 Filing Strategy in Practice
The webinar closed with a walkthrough of Beyond Paradise 1 as a live application of the principles above — rural TEA, I-956F approval, NCE Manager alignment, and a capital structure designed to survive the questions adjudicators are now asking. Immigration protections built into the offering:
- I-956F project approval — adjudicated and confirmed, allowing investor petitions to enter the rural priority queue.
- I-526E denial refund — capital returned within 3 months if USCIS denies an investor's petition.
- Withdrawal provision — capital returned within 6 months if an investor voluntarily withdraws from the immigration process. This second protection is uncommon and is particularly relevant for investors hedging EB-5 against an existing EB-2 or EB-3 priority date.
- Job creation buffer — 41+ jobs per investor, against a USCIS minimum of 10. As of January 2026, more than 100 jobs had already been created.
Project and capital structure: Kainani Townhomes is a 120-unit, for-sale residential community on a 24.5-acre oceanfront site in Kailua-Kona, on Hawaii's Big Island. Units range from 2-to-4 bedrooms, with average pricing around $1.5 million. The developer, Watt Capital Developers, has more than 70 years of operating history and has completed two prior resort communities in the same Kona submarket — the more recent of which sold out at launch and quadrupled its capital. EB-5 capital is structured as a $24 million senior collateralized loan at 13.7% of the $174.7 million total project budget, with a 3-year term and two 1-year extension options. Beyond International Group committed more than $20 million in bridge capital before any EB-5 dollars were deployed. As Le emphasized during the Q&A, the test of a real senior position is not the label — it is whether a recorded UCC lien, a pledge agreement, and an ownership certificate exist on file. Beyond Paradise 1's filings include all three.
The project qualifies as Rural TEA with priority processing, with reserved visas currently current for all nationalities including India and China. The first investor I-526E petition was approved in 7 months — consistent with the rural priority adjudication framework USCIS has signaled it will continue to apply.
Drone footage captured April 21, 2026 — vertical construction underway on Beyond Paradise 1, Big Island, Hawaii.
Ready to Discuss Your EB-5 Filing Strategy?
Source of funds preparation takes 3 to 6 months. The September 30, 2026 grandfathering deadline is approximately 5 months away. Investors who begin documentation now give themselves the runway to file before the deadline — under a fully I-956F approved, rural TEA project with a recorded senior position. For a complete framework on rural filing strategy, see the recap of our prior session with KLDP.
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Contact us at info@eb5beyond.com.