Are you considering the E2 visa as a way to live and work in the United States?
If so, you should know that selecting the right E2 visa business is very important for success in your visa application.
While there is not 1 particular type of business that is best for an E2 visa, there are businesses that should be avoided when possible.
In this guide, I’ll go through 3 E2 visa requirements relating to the E2 business. I’ll then discuss how these requirements can impact different types of businesses.
If you have any questions regarding your particular case, feel free to email me directly at Michael@AshooriLaw.com. I’d be happy to help you.
1. Substantial Investment that is At-Risk
The E2 visa requirements state that you must make a “substantial investment” in a US business. While the regulations do not specify a specific dollar amount that is considered substantial, I typically recommend that you invest at least $100,000 or more.
The regulations further go on to specify that your investment must be “at-risk.” This means that your funds cannot simply be held in the US business bank account. The funds must actually be spent prior to applying for the E2 visa.
E2 Visa Business to Avoid: Service-Oriented Business (Start-Up)
In light of the 2 requirements above, it is important to avoid businesses with low start-up costs. An example of a business type to avoid is a service-oriented business start-up (such as a consultancy). E2 Investors looking to start a service-oriented business have a difficult time spending $100,000. Other than the lease payments, office furniture, and computers, there’s not much else needed to start a service-based business. For this reason, it’s difficult to meet the “substantial investment” and “at-risk” requirements of the E2 visa.
If you are set on running a service-oriented business, it may be better to purchase an existing business. By purchasing an existing business, you can satisfy both the “substantial investment” and “at risk” requirements (assuming the business is priced over $100,000).
E2 Visa Businesses to Consider: Businesses with High Startup Costs or Existing Businesses
In light of the requirements discussed above, you may wish to consider investing in a business with high startup costs. Businesses involving inventory or expensive equipment typically have an easier time satisfying the “substantial investment” and “at-risk” requirements. By purchasing inventory and/or necessary equipment, the E2 investor can reach the necessary threshold of committed funds.
2. E2 Visa Business Must be Active For-Profit Business
The E2 visa regulations require that your E2 business be an active for-profit business. This means that the E2 company cannot be a non-profit business. Similarly, the E2 company cannot be a passive business, such as an investment in real estate. Investing in real estate is generally considered a passive business activity and does not qualify for an E2 visa.
Businesses to Avoid: Non-Profit Businesses and Passive Investments
- Not-for-profit businesses
- Passive Investments in Real Estate and Other Assets
3. E2 Visa Business Cannot be a Marginal Enterprise
The E2 visa regulations state that the E2 business cannot be a marginal enterprise. A marginal enterprise is a business that does not have the “capacity to generate more than enough income to provide a minimal living for the treaty investor and his or her family.”
A business can overcome classification as a marginal enterprise in 2 ways:
- Generating more than enough income to provide a minimal living for the treaty investor and his or her family;
- Making a significant economic contribution by hiring employees.
In light of the above “marginality” requirement, it is important to choose an E2 business that will generate more than enough income to provide for the E2 investor and his/her family. Therefore, businesses with low earning-potential should be avoided.
Additionally, it may be wise to choose a business that requires you to hire employees. As specified above, hiring employees can show that the business is making a “significant economic contribution” which would overcome a finding that the E2 company is marginal.
Selecting the right E2 visa business is very important to have success with your visa application. While there are many different types of businesses that can be approved for an E2 visa, certain businesses are better suited for the E2 visa.
The business you decide on should ideally conform to the below guidelines:
- High start-up costs or purchase price over $100,000
- Active/for-profit business
- High profit-earning potential and need for employees