Some personal borrowing can count, but debt secured by the enterprise’s assets cannot be counted under State Department guidance. The borrower, collateral and actual risk must be examined rather than treating every loan alike.
Read the entire financing arrangement
The FAM recognizes qualifying personal-asset-secured or unsecured personal borrowing in appropriate circumstances. A business-secured loan is not transformed simply by adding personal collateral or a guarantee. Review the executed documents and separate potentially qualifying proceeds from other financing.
The remaining E-2 elements, including substantiality relative to enterprise cost and development and direction, still require their own evidence. Loan proceeds can form part of an investment, and whether they do depends on the structure rather than on the fact of borrowing. Read the entire arrangement.
Establish who is named as borrower, who is personally liable, what has been given as security, and whether any of the enterprise's own assets stand behind the debt. Borrowing for which the investor is personally liable and which is secured by the investor's own assets is generally treated differently from indebtedness secured by the assets of the enterprise. Beyond that, the ordinary requirements are unchanged: treaty nationality, capital irrevocably committed and at risk, an enterprise more than marginal, and the investor's ability to develop and direct it.
A financed purchase price is not the same as a substantial investment, and the two should not be presented as though they were.