The E-2 Visa, also called the Treaty Investor visa, is issued to a foreign national who has invested in and has at least 50 percent ownership of a US business. The investor must be a citizen of a country engaged in an economic treaty with the US (full list of treaty countries here).
One of the key requirements for an investor visa is that the US investment must be “substantial”. There is no minimum investment amount to satisfy this rule. However, the US Citizenship and Immigration Services (USCIS) has guidelines on what “substantial investment” or “substantial amount of capital” means:
The investment must be substantial in relationship to the total cost of establishing or purchasing the enterprise.
Reviewing officers who examine E-2 visa applications use a “proportionality test”. This test is largely subjective and has no set numbers, but it has a rule of thumb that is an inverted sliding scale: the lower the cost of starting up or purchasing the business, the higher the investment percentage must be, and vice versa.
For instance, if a business cost $100,000 or less to start up, the investment amount must be at least 100 percent of that value. On the other hand, if the business is valued at $100 million, 10 percent of that value is likely enough to qualify as an E-2 investment.
The investment must be sufficient to ensure that the investor is financially committed to the success of the enterprise.
To put it conversely, the investor must have risked enough so that they as well would suffer a loss if the enterprise fails. This also means that the investment must have already been spent towards the enterprise.
An example of an investment that does not satisfy this criteria is a loan that the investor secured with the assets of the business itself. This loan would not represent a risk for the investor. Instead, what would qualify is a loan the investor secured with his own personal assets.
The investment must be size-able enough to support the likelihood that the investor will successfully develop and direct the enterprise.
For E-2 visa purposes, “develop and direct” means managing the business and having a level of operational control. In other words, the investor must intend to be an active participant in the business. Passive investments, such as undeveloped land and idle stock, are not allowed.
Owning at least 50 percent of the business is a primary indicator for this criteria. It may also help an E-2 visa applicant to show a letter of credit or other form of financial commitment proving they can afford to continue developing the business in the US.
With these three guidelines, it must be emphasized that the E-2 visa application process tends to be subjective when it comes to assessing the investment amount. If you hope to succeed in your E-2 application, it is best to be highly prepared for the investment review.
Don’t hesitate to consult with us at Richards & Jurusik. We have been advising visa applicants for many years, and we are well-acquainted with successful strategies for foreign investors applying for a visa. Call us today at 716-970-4007