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E2 Visa Requirements for Investors

CONTENT NAVIGATION

E2 Visa Requirements for Investors
E2 Visa Requirement: Qualifying Treaty or Equivalent for an E2 Visa
Exceptions and Words of Caution for E2 Visa Requirements
E2 Visa Requirement: Nationality
E2 Visa Requires that the Individual is 100% Owner of the Business
E2 Visa Requires that the Individual is the Majority Owner of the Business
E2 Visa Requirements for an Individual Owner of Dual Nationality
E2 Visa Requirements for Multiple Owners of Multiple Nationalities
E2 Visa Requirements for a Fifty Percent Ownership (Heading 3)
E2 Visa Requirement: Intent to Depart Upon Termination of Status
Immigrant Petition Pending for an E2 Visa
E2 Visa Requirement: E2 Visa Applicant Must Have Invested or Be in Process of Investing
Source of Funds for an E2 Visa
Where’d You Get the Cash for the E2 Visa?
E2 Visa Requirement: Money Must be at Risk for an E2 Visa
Investor Required to be in Possession of / In Control of the Money
Evidence of Investment is Required for an E2 Visa
Substantiality of Investment is Required for an E2 Visa
Proportionality Test for an E2 Visa
Sufficient to Show Commitment for an E2 Visa
Likelihood of Success of an E2 Visa
E2 Visa Requirement: Commercial Enterprise Must Be Real and Active (Sometimes called “Real and Operating”)
Timing of an E2 Visa
Nature of the Business for an E2 Visa
E2 Visa Requirement: Enterprise Must Be More than Marginal
Employees Working for a Business with an E2 Visa
E2 Visa Requirement: Applicant is in a Position to Develop and Direct the Enterprise
E2 Visa Application Requirement: Minimum 50% Ownership
E2 Visa Application Requirement: Direct and Develop
E2 Visa Application Requirement: Negative Control
E2 Visa Application Requirement: Control by Management
Notes about Control with Less Ownership for an E2 Visa
Conclusion: Your E2 Visa Requirements for Investors

E2 Visa Requirements for Investors

The E2 visa can be one of the most flexible visas offered to those who are interested in starting a business in the US.
The average wait time for a visa is several weeks, many visas are good for 2-5 years, and many visas allow for frequent
international travel.  So, what are the E2 visa requirements for an investor?  We’re glad you asked.  (For information
regarding an E2 investing company or E2 visa for employees, please check out these more specific articles.)

E2 Visa Requirement: Qualifying Treaty or Equivalent for an E2 Visa

In order to be eligible for the E2 visa, you are required to be a national of a treaty country.  This means that you
must have a legal, valid passport from one of the countries with which the United States has an agreement.  You don’t
need to live in that country. You may have additional passports.  You may have received your passport two weeks ago. 
You may have been born in a non-treaty country. Your spouse and kids may have passports from non-treaty countries.  Rest
assured that none of this matters when it comes to meeting this particular visa requirement. If you have a
legally-issued, valid passport from a treaty country, consider this requirement met!

The main question is about the passport you currently have.  Since the agreements with all treaty countries are
different, the visas are different as well.  Each visa will allow entry to the US, and each visa allows you, as an E2
visa investor, to enter the US with permission to live and work in the US. However, the length of visa validity and the
number of times you can come and go from the US varies considerably.

Countries like Canada, UK, France, Pakistan, and others allow for the most flexibility.  Those visas are typically good
for five years and allow unlimited trips into and out of the US.  On the other end of visa flexibility are countries
like Egypt and Jordan, which allow for only one entry within three months of issuance.  To check on the visa flexibility
for your country, see the Department
of State “Visa Reciprocity
” page.

Exceptions and Words of Caution for E2 Visa Requirements

I can hear your sighs now.  Yes, there are some exceptions and things to look out for when figuring out if you meet this
E2 visa requirement.

  • Are you from the UK? And by UK, I mean the British Isles (except Ireland, which is a treaty country, but under a
    different treaty), the Channel Islands, and Gibraltar.  If you have a UK passport but don’t reside in the
    British Isles, the Channel Islands, or Gibraltar, you likely won’t qualify as a UK national unless you live in
    the British Isles.

The great news? You don’t have to live there for long.  However, you will have to provide a lease/mortgage or other
residential proof that at the time of the visa application you were living on the British Isles.

  • Are you from Svalbard or Greenland? You may have a problem here, as well. Although Norway and Denmark are both
    treaty countries, the treaty doesn’t extend to Svalbard or Greenland.
  • Are you from Bolivia or Ecuador and currently have no E2 visa? Unfortunately, they are not issuing any new E2
    visas.
  • Are you from New Zealand? Good news! A treaty
    between the US and New Zealand has been established
    .
  • Are you from Israel? Our sources say that you will soon be able to apply for an E2 visa!  This one has been in
    the works for some time and is supposed to open up officially any day now…

E2 Visa Requirement: Nationality

The next E2 visa requirement is that of nationality.  Since you have already met the treaty requirement, it seems like
nationality should be a slam dunk, right?  The truth is that this requirement has to do with the nationality of the
business, not the nationality of the applicant.  That said, in many cases, the two are one and the same.  Let’s look at
a couple of examples.

E2 Visa Where the Individual is 100% Owner of the Business

Betsy the barber is from Mexico.  She has always dreamed of opening a barber shop in Hastings, Nebraska.  It seems like
a heavenly place, what with the Bigfoot Crossroads of America
Museum
in such close proximity.  She decides that she would like to be the sole owner of this business.  She
files a Nebraska LLC for Betsy’s Bigfoot Barber, LLC and is the sole member of that LLC.  When she applies (through her
lawyer, of course) for the E2 visa, the nationality requirement is easily met with one copy of her Mexico passport.  The
company, Betsy’s Bigfoot Barber, LLC, is 100% owned by a Mexico national.  Betsy’s Mexico passport proves not only her
nationality, but also the nationality of the company.  The nationality requirement is met.

E2 Visa Requires that the Individual is the Majority Owner of the Business

Let’s take a quick look at Betsy again.  This time, she decides that having a US citizen business partner will help grow
the business faster.  She talks with her cousin, Steve, who was born in Nebraska and knows many of the high rollers in
Hastings.  Steve agrees to go into business with Betsy as a 40 percent partner. Great!  This partnership still easily
shows Mexico nationality and control.  No problems here.

What if Steve and Betsy decide to go into business 50/50?  This should also work, but there may be a little more
explanation needed regarding Betsy’s duties and control over the business.  (We’ll discuss this later in this same
article under the “Direct and Develop” portion).

E2 Visa Requirements for an Individual Owner of Dual Nationality

Are you a dual national? In many cases, that is no problem. However, please keep in mind which passport you are using to
come to the US (particularly in the case of E2 change of status).  If you have two passports, you should only enter the
US with the passport you’re going to rely upon for the E2 visa.  If you don’t, and you eventually decide that you would
like to change status to E2 visa investor, you will have a problem.  Furthermore, if you are granted the E2 visa with
one nationality and you later enter the US using a different passport, you could run into unauthorized work issues. 
Let’s take a look at a couple of examples:

Bobby the baker owns 100% of his business, Bobby’s Buns, LLC.  He has two passports: one from Russia and one from
Canada. Russia is a non-treaty country, while Canada is a treaty country.  Bobby enters the US with the Russia passport
containing a B1/B2 visa.  He is admitted for 180 days.  During this time, he decides he wants to open a bakery in Minot,
North Dakota (he feels more comfortable in snow), and starts
getting his business together.  He obtains a lease for his baking space, and he buys both a truck and equipment.

About five months after he enters the US, he decides that he wants to change status through USCIS instead of going to
Toronto to apply for a visa through the Department of State.  He contacts Rupert Law Group to help.  The answer? No can
do. He is here as a Russian national, a non-treaty country, which means he doesn’t meet this E2 visa requirement.  He
would need to leave the US and apply as a Canadian through the Department of State in Toronto.

Let’s take another look at Bobby.  He has the same business and the same passports.  However, this time he leaves the US
and gets an E2 visa in Toronto through the Department of State.  He enters the US using both his Canadian passport and
E2 visa and gets to work.  About six months later, he decides to visit his cousins in St. Petersburg.  He leaves the US
and enjoys a couple of weeks of even more snow than what is found in North Dakota.

When Bobby returns to the US, he uses his Russian passport.  He is admitted with his B1/B2 visa.  Oh no!  As a holder of
a B1/B2 visa, he will be ineligible to work. If he works after being admitted with a B1/B2 visa, he may have problems
down the road since he will be considered to be working without authorization. So, what should Bobby do? Leave again and
come back with the Canadian passport.

What if you are a dual national of two treaty countries?  In this case, you may be able to choose which passport you
use.  Some things to consider and discuss with your attorney are the following:

  • Which E2 visa is more flexible? If you are a dual national of Pakistan and Egypt, for example, you may want to
    pick Pakistan.  It has a much longer and much more flexible visa than the visa for Egyptian nationals.
  • Where do you spend the most time? This may be at least a consideration for you.  If you possess passports for
    both France and Italy, and you live full-time in Italy, the choice is easy.  The flexibility is the same, and so
    Italy is the most convenient choice.  But what if you are a passport holder of Australia and Canada, and you
    live full-time in Australia?  You may still consider using the Canada passport because it’s more flexible
    (Canada offers a visa for five years instead of Australia’s four-year visa). But then again, it may not be worth
    acquiring the extra year of visa if you can show ties to Australia and you have virtually no ties to
    Canada—except for a passport. There is no right answer here, it will completely depend on you and your
    attorneys’ decision.
  • Do you have employees you’d like to eventually bring to the US? If so, the passport you choose will be crucial. 
    The employee will have to have the same national passport as you in order to be employed in the US as an E2 visa
    employee.

E2 Visa Requirements for Multiple Owners of Multiple Nationalities

For those of you who are oh-so-cosmopolitan, there is always the option of opening a business with a partner from yet
another country.  To make this portion easier to follow, we will lay out another example.

Dave and Diane are long-time friends.  Dave has a France passport, while Diane has a Chile passport.  They met at
a Finnish vocational school while studying “Cleaning and Property Services
.” After school, they parted ways –
Dave returned to France and Diane returned to Chile – but they always kept in touch via email and Facebook.  Upon
reading news of Diane’s finalized divorce on Facebook one day, Dave saw his chance.  He got on WhatsApp and called Diane
immediately.  The two decided they were ready for a new adventure: opening a property management business in Jackson,
Mississippi.  The two pooled some money together and initiated their new venture, Dave and Diane’s Dusters, Inc.

How will this work though? Dave and Diane are each from different countries!  In this narrow area of 50/50 ownership and
control, this partnership can work. The company is considered a dual nationality, of sorts.  If Dave and Diane wish to
hire one person from Chile and one person from France as E2 employees, they may do so.

E2 Visa Requirements for a Fifty Percent Ownership

In almost all cases, the E2 visa investor needs to show that he/she owns a minimum of 50% of the business. So, in what
scenario may the investor own less than 50% of the business and still meet the national requirement?

If you are an individual investor, you must only show that you control (or will control) the business.  An easy way (and
the most typical way), is to show you own 50% or more of the business.  (E2 visa tip: If you’re going for ease,
and your partner is flexible, own 51% of the business.  It eliminates all confusion and additional explanation).
However, you can also demonstrate control by “possession of operational control.”

In other words, you must explain your job duties in exquisite detail and emphasize the controlling nature of your
duties.  Maybe you are the CEO and will be the sole partner in charge of the business.  The others are simply silent
partners who will have no say over the running or direction of the business.   This could work.  Note that the title
alone means nothing.  You really need to show the job duties and be as detailed as possible in your report.

E2 Visa Requirement: Intent to Depart Upon Termination of Status

You must intend to depart the US at the end of your authorization. Period. That’s pretty simple to understand, and both
USCIS and the Department of State take this E2 visa requirement very seriously.  In fact, not meeting this requirement
is one of the more frequent denials for
the E2 visa
.

Generally speaking, this is an easy requirement to meet.  In most cases, you simply have to tell the officer that you
intend to leave the US when your authorization expires.  Some consulates require a signed letter stating the same.  You
typically do not need to show anything else.  In fact, the regulations state that you can sell your house and all your
possessions in your home country and still meet this requirement.  So where is the “sticky” area for the E2 visa
investor when it comes to the intent requirement?

Immigrant Petition Pending for an E2 Visa

The regulation language is clear that you must intend to depart the US when you no longer have E2 status.  So, what if
you have an immigrant petition pending?  (An immigrant petition is a document that, if approved, may eventually lead to
a US green card.)  For the most part, you need to assure the consulate officer during the interview that you have no
intent of staying beyond your authorization for the E2 visa.  You must also assure him or her that you intend to come
back to the Department of State for an interview instead of adjusting status through USCIS.

There are several instances when you may have an immigrant petition pending.  (And yes, they know.  They always know.)

  • Diversity Lottery: They may know that you have applied for this even if you haven’t been
    chosen. This shouldn’t be an issue as long as you are honest, and as long as you can convince the officer that
    even if you are chosen in the lottery, you will not attempt to adjust status without leaving the United States.
  • Family Petition: Your parent or sibling submitted an I-130 to petition you. This could be an
    incredibly lengthy wait.  In some instances, the process takes 25 years; and in most instances it takes at least
    a decade.  So, this is a common situation.  Again, please be honest when discussing this petition; and be sure
    to speak with your attorney about how to approach this during the interview.
  • Child Petition: US citizen child petitions parent. If your child is a US citizen and is 21
    years old or older, and they want to petition you for a green card, just wait.  These petitions go through
    rather quickly (usually a year or so), and it will be here before you know it.
  • Work Petition: This one could be a bit tricky, considering that in order to get this petition,
    a company is petitioning you to work for them. As a result, there will likely be a lot of questions at the
    interview about your true intent of where you will be working and how you are going to make a successful
    business when you will likely be taking another job in 1-2 years.  Best to consider your options if you have an
    I-140 pending.
  • Investor Green Card: If you are from China, Vietnam, or even India, you know how long the
    process may take to get the investment green card. In some instances, investors determine that they will apply
    for the E2 first, add investment, and then apply for the EB-5 visa (investor green card).  Note that in the case
    of a Chinese, Vietnamese, or Indian national, you will likely have to renew the E2 before your number becomes
    current for the EB-5.  (And yes, I realize that none of these countries are treaty countries.  It may be
    possible to get a second citizenship that is E2 eligible, like Grenada for instance).

E2 Visa Requirement: E2 Visa Applicant Must Have Invested or Be in Process of Investing

And now, the information you have all been waiting for… the investment portion!  This is probably the area with the most
frequently asked questions.  Since this topic is so loaded with information, I like to break this section up into three
parts: the source of funds, the investment itself, and the substantiality of the investment.

To address the “elephant in the room” up front – there is no minimum investment amount.  That said, don’t celebrate too
early.  There is also no such thing as an approved $25,000 investment.  We will cover this shortly. Now onto the more
nuanced portion of investment.

Source of Funds for an E2 Visa

In other words, “Where did you get the money you have invested?” And after you answer that question, you need to show
that the money is at risk or that you have possession/control of the money.  Easy as pie, right? Let’s take a closer
look.

Where’d You Get the Cash for the E2 Visa?

The great news is that almost every legal way to get money is OK.  You can inherit, win the lottery, use personal
savings, receive a divorce settlement, receive a monetary gift, sell your personal items or real estate property, or
even get a secure signature loan. Almost everything is on the table … except a couple of small things.  What is it with
the law?  There are always exceptions!

E2 Visa Requirement: Money Must be at Risk for an E2 Visa

Once you show where you get the cash, you need to show that the money is at risk.  In the government’s words, “If the
funds are not subject to partial or total loss if business fortunes reverse, then it is not an ‘investment.’”

E2 Visa Funding Risk: Inheriting the Business

You can’t get an E2 visa with a business you inherited.  Sorry, can’t do it.  So, what are you supposed to do if you
inherit a business in the US and you can’t work in it?  You may have a couple of options – sell it and use the proceeds
to start a different business. You could get an E2 visa on a new business.  Or, you simply let the current employees run
the day-to-day and you are simply a silent, foreign investor.  You could never work in the business, but you could own a
business in the US without a visa.  (Tip: never do this without speaking with an attorney first.  On the surface,
it seems simple enough; but you need to have an attorney review the intricacies of your specific situation before you
can know for sure that you aren’t causing future immigration trouble for yourself.)

E2 Visa Funding Risk: Loan Based On the Business

Again, this is a no-go.  The reason? The point of the E2 visa is “inherent risk.”  If you are using the business itself
as collateral for a loan, the inherent risk is gone.  Translation – you don’t have enough skin in the game.  And,
another warning – please note that if you get a loan based on the business assets and some personal assets, the loan
can’t be used to show investment!

So now it’s everyone’s favorite time – super fun examples of how this requirement may play out.

Jake, an Ireland national, decided it was time to fulfill his life-long dream of opening a shave ice stand in
Haliimaile, Hawaii.  He went there once as a kid and can’t get it out of his mind.  The tropical climate, the beautiful
sunsets, the shaved ice, which, for some reason, has no “d” on the end once you get to
Hawaii
. (And please don’t show your cultural ignorance and call them “snow cones.” There’s no snow in Hawaii!)

Anyway, Jake has decided to move himself, his wife, and his two lovely kids to Hawaii through the wonder and magic of
the E2 visa.  The one problem?  He has very little money.  But, being the ever-resourceful guy he is, Jake has decided
to launch a crowdfunding page.  Jake wrote an incredibly compelling pitch and has raised $65,000 USD within the first
week! Wow, with this and his personal savings of $31,000, he is in a much better position!  But, can he use these funds
as an investment?  Maybe… Let’s ask a few questions regarding the crowdfunding page itself.

  • Did Jake pitch his business and promise to pay every lender back? If so, this looks like a loan based on the
    business, doesn’t it?  This may not work.
  • Did Jake write that funds were considered “pre-orders”? (Something like “Donate $10 today and get 10 shave ice:
    a 20% savings over your order at the stand.”) This looks a lot better.  It not only shows that Jake already has
    many purchase orders (which helps him to meet the “real and operating” section discussed later in this piece),
    but that people believe in the product.  Looking better.
  • Did Jake promise to give shares of the business to anyone who donated? This may be an issue if he no longer owns
    a majority of the business.

Investor Required to be in Possession of / In Control of the Money

Put simply, you need to be in control of the money.  The money needs to be yours.  You must show that you were
given/won/earned the money.  It’s in your account.  You also need to show how it got to your account.  There are
literally an infinite number of ways to do this, and each of them depends on how you got the money.  So, I won’t go into
all of the possibilities here.  Just know that you need to show that the money is yours and that you are free to do with
it what you will.

Evidence of Investment is Required for an E2 Visa

Now we get to the second-most-frequently asked question: Does the money have to be spent before I get the visa?  With
very few exceptions – yes.  The regulations dictate that the funds must be “irrevocably committed.”  In other words,
there is no way to get the money back. It’s gone. Also, as the regulations specifically state, signed agreements alone
do not constitute irrevocable commitment. However, if you have a signed agreement and money is put in escrow, you may
have an irrevocable commitment.  But even in this instance, there are restrictions.

Let’s take Mikey, an Austria national, who is ready to open his water treatment business in Flint, Michigan.  He is anticipating amazing profits
He came to Michigan to check out the town, negotiate contracts, and file for corporate documents.  When he got to Flint,
he immediately found a facility that would be perfect for his operations.  He entered into a purchase agreement for the
building and all contents.  The sales price was for $185,000 USD.  Mikey put down a deposit of $30,000 and he put the
remaining $155,000 in escrow.

There were three contingencies in order to release the money from escrow, including (1) approval of the E2 visa, (2) a
clean termite inspection, and (3) the equipment is running perfectly.  Does this equal an investment?  No.  The only way
for Mikey to get the E2 visa is for the money in escrow to have only one contingency – approval of the E2 visa. The
other two contingencies are issues.  In this case, Mikey will have to either change the contract or he will have to wait
until the purchase has been completed and the money has been released from escrow.

The third-most common question regarding investment: Can I have my funds sitting in a business bank account ready to
spend after I get the visa?  No, sorry.  This doesn’t work.  The money needs to be “irrevocably committed,” and having
money in a bank account absolutely does not constitute an irrevocable commitment.

So, what types of things can be used to show investment?  The list is honestly too voluminous to list, since there are
so many different types of businesses and every business will require different things/services.  That said, there are a
few common investments E2 visa investors need.  The first of which is rent.

Let’s take a look at Abigail, a Norway national, who will be starting an ice cream parlor in Limon, Colorado.  Abigail
came to Limon and fell in love.  Who says Colorado has mountains? Nothing but the earth’s curvature between Abigail and
the horizon – just the way she always dreamed.  And only a little more than an hour away from western Kansas, this
location seemed ideal.  Abigail found the perfect place for her ice cream parlor, “Abby’s Scoops.” The place was on Main Street and the price was right – $1,500 per month. 
Abigail spoke with the landlord and signed a lease for two years.  She paid the deposit (which was the equivalent of one
month’s rent), and two months of rent.

A few days later, she returned to Norway to complete the E2 process and head to the interview.  As part of the evidence
of investment, Abigail, who thought she knew enough to file her own E2 visa application, included the lease and $36,000
in investment for that lease.  Of course, Abigail was denied.  Where did she go wrong?  She could only use the money
already spent on the lease as part of the investment.  As a result, she could’ve used $4,500 as the investment.

In addition to rent, equipment and inventory is a common investment. On the surface, it may seem pretty
straightforward.  You buy inventory or equipment and you have the investment.  However, there are two common issues with
inventory and equipment: (1) location of the inventory/equipment, and (2) payments on the inventory equipment.  As far
as payments, see the “rent” section, above.  If you have a $10,000 machine and you are leasing it, you can only use what
you’ve paid so far as part of the investment.  If you bought the machine and are paying it off, the same is true.  You
can use what you have paid so far.

As an example of how the location of the inventory/equipment is imperative, let’s take a look at Jordan’s situation.
 Jordan, a Poland national, is getting ready to start a rug wholesale company in Casper, Wyoming.  His father ran a rug
manufacturing business in Poland when he was a kid. And, although it sold years ago, rugs have always been in Jordan’s
blood.  He decides to start a rug wholesale business that sells Polish rugs.  He orders $50,000 of rugs from a Polish
factory.  These rugs are to be shipped to Wyoming as soon as they are complete – in 12 weeks.

Jordan sets up the rest of his business and hires someone who can meet the rugs when they arrive and get them into the
warehouse.  Then, Jordan returns to Poland for his E2 visa interview. Can Jordan use the $50,000 as part of the
investment? Yes, but not yet!  Once the rugs are in the United States, he can use the amount he spent as part of the
investment.  It is totally allowed to use the value of the goods transferred to the US.  But, the goods need to actually
be transferred to the United States.  En route doesn’t work. They need to be here.  (Usually you can show receipts from
the ports of entry and pictures of the inventory/equipment in your warehouse as proof.)

How about a slightly less cut-and-dried situation?  Oliver, a Canada national, is going to start a furniture delivery
business in Detroit, Michigan.  He will be helping a variety of stores in the Detroit area to deliver purchases to local
buyers.  Oliver is thrilled with this idea, since he loves to drive.  In preparation for the E2 visa application, Oliver
sells his only vehicle, a sporty purple
PT Cruiser (with the star decal kit)
in order to buy a van for $12,000.  Can Oliver use this $12,000 as the
investment?

He could only use some of the money.  Why only some? Because only some of it will be used for the business.  Since he
has no other vehicle, he will have to use the van for personal use, as well.  Therefore, Oliver and his attorney will
have to decide how frequently the van will be used for personal purposes and how frequently it will be used for business
purposes.  Whatever is used for the business purpose, he can use as part of the investment.

Substantiality of Investment is Required for an E2 Visa

The point of the “substantiality” E2 visa requirement is to show that this business can and will be successful.  In
other words, the government wants to see that the investor has enough skin in the game to ensure that this business will
work.  Money is a great motivator, and the more an investor has already spent to acquire this business, the more likely
he/she will be to work hard once the visa is approved.

With that in mind, we are now back to the most-commonly-asked question: How much do I need to invest?  The answer?
Unsatisfyingly: “a substantial amount.” Obviously, this vague answer begs a more precise way to calculate something
specific.  In order to do that (at least as much as possible), let’s look to the test that the adjudicators use – the
“proportionality test.”  From there, we’ll review the other points the adjudicators review when determining if the
investment is “substantial,” meaning sufficient enough to show commitment and a likelihood of success.

Proportionality Test for an E2 Visa

The proportionality test is written out specifically in the regulations that the adjudicators follow.  Essentially, they
are instructed to review the cost/value of the business; and they are to review the amount invested and come up with a
percentage.  The closer the numbers, the higher the percentage.  The higher the percentage, the more likely the approval
of the E2 visa. Let’s take a deeper dive into this test and see how it works in “real life.” (Or at least in these
hypotheticals.)

Spencer, a Suriname national, is interested in opening an embroidery shop in Long Beach, California.  He had always
wanted to be near the Aquarium of the Pacific, and this embroidery shop was his chance to fulfill that life-long dream.
Spencer came to California to look for a shop, purchase some inventory and equipment, start a contract with a marketing
company, and hire a couple of employees – a sales person and a seamstress.

Spencer invested $24,000 in rent (he pre-paid for a year), he bought $4,000 in t-shirts, $2,000 in thread and $3,500 in
hats; he purchased two embroidery machines for $20,000 each; he paid a marketing company $15,000 to build a website and
create an internet marketing strategy; and he paid each of the employees $2,200 per month for the first month of their
employment. So, has he invested a substantial amount?  Let’s put Spencer to “the test.”

Cost of Brand-New Business (Cost to Get a Business Operational)             Spencer’s
Investment

Rent for three months: $24,000                                                                                  $6,000
(100%)

Inventory: $9,500
                                                                                                            $9,500
(100%)

Equipment:
$40,000                                                                                                        $20,000
(100%)

Marketing:
$15,000                                                                                                          $15,000
(100%)

Two employees: $4,400                                                                                                
$4,400 (100%)

Looks like it works, right? He paid 100% of the cost for a place, inventory and equipment, marketing, and for employees.
I’d say Spencer has a great shot at meeting the “substantial” investment E2 visa requirement.

What if things were a little different for Spencer?  He came to Long Beach and found an existing embroidery business to
buy.  The business was listed for sale at $190,000.  Spencer had $100,000 to invest.  Will this work?  He would be
investing about 53% of the purchase price.  This one is a maybe.  If I were Spencer’s attorney, I would recommend that
he try to find another $10,000-$20,000 in order to invest a higher proportion of the business price.  This simply
eliminates some of the risk of denial.

Let’s look at a slightly less wealthy Spencer.  He comes to the US and finds an embroidery business for sale for
$160,000.  He invests $70,000.  This one isn’t looking so great. He’s only investing about 44% of the purchase price. 
For a business as inexpensive as this embroidery shop, he needs to invest a much greater proportion of the costs. (Not
to say that $160,000 isn’t a lot of money.  It is!  But this is a small amount for an existing business in the US.)

On the other hand, what if Spencer could only afford 43% of the cost of the business, but the business was much larger? 
Spencer decided that he wasn’t satisfied to only run a small embroidery shop.  He wanted an
embroidery/crocheting/knitting/sewing factory in Long Beach.  He found one for sale that had everything he wanted.  He
was elated!  But my-oh-my, the price tag — $650,000!

Spencer had approximately $280,000 of his personal funds to invest.  Even though the proportion is lower than some (43%
or so), this case is much stronger based on the sheer amount of his investment.  I think Spencer would be OK in this
case.

Sufficient to Show Commitment for an E2 Visa

The requirement that the investment must be “sufficient” is an often-overlooked piece of the substantial investment
requirement.  So many people call the office and mention that they are going to start an online services company or a
professional services business.  They ask if a $30,000 is enough. After all, that is 100% of the start-up costs for a
new online business. The answer is no.  It is rare (and for your purposes, dear reader, consider it impossible) for
someone to invest $30,000 and get an E2 visa.  In fact, Rupert Law Group would never send a client to an interview with
a $30,000 investment.  The chance of denial (likely in the 90-95% range) is too high.

In real life, the “sufficient” piece of the substantial E2 visa requirement is rarely met without a minimum of $100,000
investment.  Is that a “hardline” number?  Absolutely not.  As mentioned, there are no hardline numbers when it comes to
the investment.  However, we know that this “sufficient” piece is based on common thought.  Put yourself in the
adjudicator’s shoes for a moment and you’ll see where this general number comes from.

Imagine you are a government employee working in the US Embassy in Sofia, Bulgaria.  You are reviewing a stack of E2
applications that have recently come in.  You get to an application from Jesse.  Jesse is a Bulgarian citizen who has
invested in an online marketing business in Fort Worth, Texas.  You know nothing about Jesse or his business except what
is in the application.  Jesse is requesting an E2 visa to come live and work in the United States with virtually no
immigration oversight whatsoever for the next five years.  He has invested $32,000 into a business. The investors in
last three E2 applications you have reviewed in the last 30 minutes or so invested $103,000, $98,000 and $210,000.

Do you feel that Jesse has invested a sufficient amount to show commitment?  Do you think he will work with everything
he has to avoid losing $32,000?  Maybe.  But what about in comparison with the other applicants?  Will they work just as
hard to avoid losing their 6-figure investments?  Or might they work a lot harder?  Although it’s painful to lose
$32,000, think about how much more painful it is to lose $103,000.  Or even more.  These are the thoughts that are going
through your brain for the 3-5 minutes you review the file.  What do you do? Do you accept this amount as sufficient? Or
do you simply send out an email asking for more investment before the interview?  I’m guessing it will be the latter.

There is something in our brains that notices a 6-figure investment.  This is an American’s psychological financial
“line.” Many people feel that a 6-figure income is the ideal. Less than six-figures is OK, but once you hit that
$100,000 mark, a psychological threshold is passed.  It’s not science.  It’s a feeling.  And that feeling is powerful.

So, going back to Spencer and his embroidery shop.  Notice that when he invested $280,000 the likelihood of approval
went up?  Even though the proportionality test resulted in a lower number, the actual investment dollars was high.  This
helps!

Likelihood of Success of an E2 Visa

Finally, the last element needed to review in order to meet the “substantial” requirement.  The adjudicator wants to
know how likely it is that the business will be a success.  Of course, there are no crystal balls, but we can make some
sweeping generalizations when it comes to success.

  • If an investor has a large amount of money on the line, he/she will be psychologically more invested in the
    business and will work harder.
  • If an investor invests a lot of money in a business, the business may have a better chance for success because
    there are more employees/inventory/marketing efforts (fill-in-the-blank depending on the type of business it
    is).
  • If an investor has more to invest, he/she is likely better with finances and money. Many investors could come up
    with $25,000 or $30,000.  But it takes someone with financial acumen to be able to invest $120,000 into a
    business in a foreign country.

So there you have it.  Everything you needed to know and were afraid was true about the E2 visa requirement of
“investment.”

E2 Visa Requirement: Commercial Enterprise Must Be Real and Active (Sometimes called “Real and Operating”)

In order to get an E2 visa, the business you are starting or buying must be real and active.  There is some confusion
over this E2 visa requirement, but we’ll go over the elements here in order to clear up any questions.  There are two
parts to the “real and active” requirement: timing and nature of the business.

Timing of an E2 Visa

Due to this poorly-named requirement, some investors are under the impression that the business must currently be
running in order for the investor to get an E2 visa.  That is not the case.  The business doesn’t have to be running at
the moment of application, but the business needs to be running within a week or so of the applicant arriving in the
US.  In other words, it’s imperative to show that the business is completely set up and ready to go as soon as the visa
is granted. This is where the unspoken E2 visa requirement of an office lease comes into play.

(E2 visa tip: You MUST have an office lease of some sort in order to be approved for an E2 visa. It doesn’t have
to be big or fancy, but it must be valid at the time of the proposed return to the US.  Having a valid lease at the time
of application is even better.) Even beyond the lease, the business needs to be ready to go as soon as the visa is
granted.

Let’s check in on Kathy and Bill, Argentina nationals, who have decided it’s time to fulfill their lifelong fantasy and
start a scuba shop in Mountain Point, Alaska. (I know what you’re thinking.  But this is super southern Alaska.) They
head to Alaska to check out the location they reviewed online.  They see the shop in person and fall in love.  This is
it!  They immediately sign a one-year lease before anyone else snatches it up.  They pay for a year of the lease
($18,000).  They set up a US bank account and are determined to invest more money after they return home to Argentina.

Once Kathy and Bill get home, they find a fabulous computer and printer for sale from an Alaska mom-and-pop office
supply shop for $3,000.  They purchase them immediately.  Next, they find the perfect domain name for their business:
KathandBill.com This domain is owned by someone else who currently runs an online gambling business.  This will never
do! Kathy and Bill enlist the help of a domain broker who negotiates a buy-out of the domain and website.  This is a big
expense ($80,000), since the website is so lucrative. Although it was painful to part with that much money, Kathy and
Bill know it was worth the expense, since they will put up a fabulous website all about their scuba business.

So far, they have invested $101,000.  They are ready to apply for an E2 visa.  Will they be approved?  Probably not. 
Even though they have invested quite a bit, they hardly have anything that is needed to run the business.  They still
need to buy more items (scuba gear) and do other things (get the necessary licenses) in order for the business to even
start operating. This isn’t a “real and active” business.

Nature of the Business for an E2 Visa

In order for an E2 visa to be approved, the business must be one that provides a good or a service. It must not be a
“paper organization” or an “idle speculative investment.” In other words – the company needs to do something.  “What
type of company doesn’t do anything,” you ask.  Many LLCs are simply corporate shells created for tax reasons.  Your E2
visa company must not be one of them.  Let’s turn to a couple who didn’t get this memo…

Suzie and Jethro, Armenia nationals, decide to create a real estate company, SAJ, LLC.  They are big developers in
Armenia, but they know in their hearts that true real estate opportunities are in Delphos, Kansas.  The 10-year plan for Suzie and
Jethro is to develop a high-rise apartment with 36 units and manage that building along with other buildings in the
area.  However, at the moment, Suzie and Jethro decide to buy a duplex in Delphos.  They will live in one unit and rent
out the rest.  Because they won’t be getting a loan to buy the duplex, they will be making money immediately with the
rent that the tenant will pay. Considering the low cost of living in Delphos, they will have more than enough income to
live comfortably and save money in order to build the high-rise in two years.

Are Suzie and Jethro approvable? No!  They don’t meet the “real and active” requirement.  Simply owning real estate and
renting it out is not providing a good or service.  This isn’t a real business.  It’s an idle investment that is getting
a return.  Suzie and Jethro, with the exception of an occasional “snaking” of the tenant’s toilet (don’t ask), are not
really working to provide a good or service. This isn’t a “real and active” business.

E2 Visa Requirement: Enterprise Must Be More than Marginal

What does the word “marginal” mean?  Much like when we are talking about the investment, the answer is pretty vague. 
Essentially, the government wants you to show that the E2 business has the capacity (either now or in the future) to
generate enough income for the investor to make a living.  In addition, the company needs to generate enough income for
employees.

Business Has the Capacity to Support Investor and Investor’s Family

The E2 business needs to generate income, but how much income?  Simply more than enough to support the investor and the
investor’s family.  As with most E2 visa requirements, this is pretty vague.  Generally speaking, think about your cost
of living now and try to figure out the US dollar equivalent.  You should be making about this much from the business
revenues.  Of course, now is always better than later, but you can also show that you will eventually get to that type
of income soon.  The government typically wants to get this type of income by the end of year five.  However, in your
case, it may be sooner than that.  One of the main factors here is the renewal.  But, we’re getting ahead of ourselves. 
Let’s take a look at a hypothetical that can illustrate this element.

Jasper, a Bangladesh national, is ready to start a yarn manufacturing plant in Burlington, Vermont.  He’s invested
$120,000 into the business so far, and everything is ready to roll.  He knows that this will be a tough road to
profitability, but he is willing to stick it out and make it work.  In order to show his commitment to the business, he
writes out a very conservative business plan with all of the financial projections for five years.  In the first two
years, he estimates that the business will lose money.  By year three, the business will break even.  By the end of year
five, the company will be in the black, but only by about $20,000 or so.  During these five years, he has decided to
forego a salary in order to give everything he has to the yarn business. Is Jasper approvable? Sorry, Jasper.  It’s a
no-go. Where did he go wrong? He didn’t take a salary.  He MUST take a salary and he must make sure it’s enough to
support him and his family.  Jasper is married with one four-year-old, so he may be able to live in Burlington for
$40,000-$50,000 a year.  This would have made all of the difference.

Employees Working for a Business with an E2 Visa

So now we come to “Most Frequent Question Number 4” (honestly, I lost count, but this is a popular question): How many
employees do I need?  Much like the investment requirement, there is no specific number.  That said, having employees,
or at least planning to hire employees, is crucial.  Does an investor have to have an employee at the time of
application? No. Does an investor have to have employees at the time of renewal? Yes. Is it easier to get an E2 visa
with an employee at the time of application? Probably.

Ellie, a Bahrain national, decided that it’s time to finally make the big move to Clayton, Georgia.  For at least a
decade (since she first saw Deliverance), she has been
dreaming of this paradise in which some of the movie (the good parts) were filmed. She decides to open a tour company
that gives Hollywood-style tours to folks who are interested in the movie, want to see where the it was filmed and learn
about the history of both the movie and the book.

Ellie makes a sizeable investment, she gets an office lease and a tour bus, and she gets all the licenses and permits
needed.  She is ready to go! Ellie figures that she will run the business herself.  Maybe at some point she will hire
her boyfriend (also a Bahrain national), but that is years down the road and a separate E2 employee filing.  So, for the
foreseeable future, Ellie is going to do this on her own.  She is a woman on a mission – never let Deliverance die! 
Will Ellie be approved?  No way!  Not only does she not have any current employees, but she doesn’t even have plans for
employees.  This will never fly.

How about Jenny, the Singapore national, who is starting an upholstery business in Key West Florida?  She can’t get
enough of the lovely climate and all of those six-toed cats.  She
finds the best location for her shop, makes a great investment, and she gets all her ducks in a row.  She makes the
business plan showing fabulous revenues and income for herself, and she adds an employee: one assistant in year five.
Will she be approved?  Maybe, but I wouldn’t put the odds in her favor.

Although there is no minimum number of employees, you should plan on having more than one; and you should plan on hiring
an employee early in the business.  The adjudicators want to see that you plan on growing the business. Also, Jenny
should know that she will be going for a renewal likely before she has been in business for five years.  As mentioned,
even though the standard is that your business must be enough to support you and your employees before year 5, you
really can’t go to a renewal interview without at least one employee (and, as I always say when talking about investment
and employees: the more the merrier).  Overall, I’d say Jenny is a wobbler.  If I were her attorney, I’d encourage her
to get more aggressive in hiring and have at least one employee by year 2, and at least 2 employees at the time of
renewal.

E2 Visa Requirement: Applicant is in a Position to Develop and Direct the Enterprise

Every E2 investor application must prove two things:

  • That national(s) of the treaty country own(s) a minimum of 50% of the business.
  • That the treaty country national(s) “direct and develop” the business.

E2 Visa Application Requirement: Minimum 50% Ownership

The first element of this E2 visa requirement is, on its face, easy to show.  Let’s take a look at a very simple
example.

Casey, a Croatia national, is ready to start his Zamboni repair business in Scottsdale, Arizona. 
Through his research, Casey knows that Arizona is the new “hot bed” of Zamboni sales, so he feels very confident in his
business prospects.  He decides to take on a US citizen business partner, Annie, who will handle the day-to-day
operation of the business.  They are great friends, so they happily agree that Casey will own 75% of the business, and
Annie will own 25% of the business. This works perfectly!  Casey is a majority owner, and this meets the minimum
ownership element of this requirement.

What if things were a little bit different between Annie and Casey?  Annie insists that because she will be working from
8am-6pm every day, that she deserves more stake in the company.  Casey agrees, and they decide that they will own the
business 50/50.  This also meets the simple ownership element of this E2 visa requirement.  All that is required is a
50% ownership by a national of a treaty country.  That is met here.

There are some cases that get more complicated than this, particularly when speaking about treaty country companies that
start E2 companies in the US and hire E2 employees.  However, that is a topic for another blog post.

E2 Visa Application Requirement: Direct and Develop

The second element, the E2 applicant’s ability to “direct and develop” (also sometimes referred to as “control”), has a
few more shades of gray than the minimum ownership interest.  As with the first example of Casey and Annie, where Casey
owned 75% and his job description (not just title) was that of CEO; and Annie owned 25% and had a more day-to-day
operations job description, the element of control is met.  Casey owns a majority, which means that he has the authority
to make binding decisions about the business.  He has the ownership control AND his job description shows that he both
controls the business, and “directs and develops” the business as well.  This is a winner.

But how about in the second example, where Annie and Casey each have an equal share of ownership in the business?  Or in
the case of Steve and Betsy, who both have 50% ownership of a barber shop in Nebraska? Since neither party owns a
majority of shares, the ability to control and “direct and develop” the business isn’t so clear.  That said, this is a
common situation within the world of E2 visas.

So, how do we show that the treaty country national “directs and develops” the business if the other owner has the same
piece of the business?  The answer is “negative control.”

E2 Visa Application Requirement: Negative Control

The idea behind “negative control” is that both owners have equal ownership shares, but that “they each have the
capacity of making decisions that are binding on the other party.” So, how do we show that?  One way is equal voting
shares, which should be spelled out in corporate documents (minutes or by-laws).  Another way is to show the job
description of each owner.

In the case of Casey and Annie, the government is less interested in Annie’s job description than about Casey’s job
description.  After all, Annie is a US citizen and can do as she pleases.  But, they definitely want to know what Casey
will be doing in the business and if he can show control over the business.  If I were Casey’s lawyer, I would get
details about the business and his involvement—clear list of duties on the E2 visa application.  In addition, I would
point out areas of the corporate documents that show that he has equal voting shares to prove that Annie doesn’t have
the ability to make decisions on her own. She needs Casey’s agreement in order to make decisions about the business. 
(Of course, the reverse is true, as well; but we are proving Casey’s ability to develop and direct the business, not
Annie’s.)

So, how about a slightly different take on this story? Casey decides to open the Zamboni repair business but with his
Croatia national friend, Ralley.  They decide that they will each own 50% of the business.  This means there are two
applicants for an E2 investor visa. In this case, we need to show that each investor meets all of the requirements
including the direct and development requirement. In this instance, we need to show that both Casey and Ralley have the
ability to develop and direct the business.  Like in the example with Casey and Annie, I would point out the voting
rights; and I would clearly write out the job descriptions.  Both Casey and Ralley need to show that they have separate
but equal job duties and that they can each make binding decisions about the business.

E2 Visa Application Requirement: Control by Management

There is a possibility to show that you are a minority shareholder (or member) and can still control the business.  If
this is the case, you can qualify for the E2 investor visa.  How is this possible? Let’s take a look at Vic and Sue, two
Estonia nationals.

Vic and Sue have always wanted to start a car wash in the States.  They love the feel of leather seats, and don’t even
get them started on that “new car” smell.  (They have the Estonian patent for the New Car Air Freshener.  They have made
millions!) They decide that Boseman, Montana is the perfect place to open their car wash.  After all, everyone knows
that Interstate
90 is the autobahn of southwest Montana
.  Cars are a big deal there.

Vic and Sue book a flight to Montana and arrive in Bozeman.  Vic is in heaven.  The sky, the ground, there are huge open
spaces everywhere you look!  Sue is less-than-thrilled.  She really likes the hustle and bustle of Tallinn.  Bozeman seems like small
potatoes in comparison.  Nevertheless, they are sure this is where their next million will come from.  When they return
home, they discuss the idea a bit more.  Alas, Vic doesn’t have as much to invest, but he is desperate to live in
Montana.  Sue invested her patent money well and has plenty of cash, but she wants to stay in Tallinn.  They decide that
Sue will invest $240,000 and own 60% of the business, while Vic will invest $160,000 and own 40% of the business.  Sue
will stay in Tallinn and essentially be a silent partner.  Vic will move to Montana and oversee everything.

Will this work? Yes!  Why? It meets both ownership requirements for the E2 visa:

  • The business is owed by treaty country nationals (100%).
  • The applicant can show both control and management.

In this case, Sue won’t even be in the US.  If I were Vic’s lawyer, I would also include language in the corporate
documents to show that Sue is simply investing money.  She would have no (or at least less than 50%) voting rights.  I
would also describe Vic’s job duties, which would include essentially all the work.

Notes about Control with Less Ownership for an E2 Visa

As you may have guessed, this is one to avoid if at all possible.  Why?  Because it’s not as common.  We need to look
back upon the US Consulate officer who is reviewing this application among a huge stack of other applications. What is
clearer and faster? Someone who owns a majority of a business or someone who owns a minority?  If you own a majority and
are applying for the investor visa, it’s an easy “check the box” sort of thing. The officer can quickly move on to the
next requirement.  If you own a minority and have to show control through investment, it’s less clear and it raises
questions.  If you can own 51% of the business, do it!

Conclusion: Your E2 Visa Requirements for Investors

So, that’s it!  Just as easy as that, right? If I have any words of wisdom for you, it’s to relax and enjoy the
process.  Certainly, that’s easier said than done, but rest assured that this law firm has handled many E2 visas, so we
definitely know what E2 Visa requirements investors should be looking for.  If you have any questions, know that we have
the answers. Seriously, we do!  Don’t believe me? Just contact me and ask.