Borrowed funds can be permissible under applicable conditions, but the actual transaction needs review. The analysis should distinguish cash loan proceeds from contributing indebtedness and address ownership, lawful source and the capital’s investment.
Describe the structure precisely
Give counsel the executed or proposed loan, collateral terms and any side agreement. Identify the lender and how funds will be disbursed. Avoid assuming that a secured loan is automatically acceptable or that a private loan requires no source explanation.
Separately evaluate repayment capacity with a qualified financial professional; the immigration process offers no guarantee of project returns. Describe the structure precisely rather than in summary, because the details are what the analysis turns on. Identify the lender and their relationship to the investor, the amount, the term, the interest basis, whether the investor is personally and primarily liable, what security has been taken and over which assets, and whether any guarantee has been given by another person.
The applicable rules generally contemplate that capital may include indebtedness where the investor is personally and primarily liable and the assets of the new commercial enterprise are not used to secure it, so a loan secured against the enterprise itself raises a structural issue rather than a documentary one. Where the lender is a family member or a company connected to the investor, expect the arrangement to be examined closely, and prepare the source of the lender's own funds as well.