E2 Visa Investment Tactics: Equipment and Inventory Strategies

E2 Visa Investment Tactics: Equipment and Inventory Strategies

For all of you out there who are interested in using inventory or equipment you already have as part of the investment required for the E2 visa, this article is for you! We have had success with people all over the world who wish to use inventory and equipment as part of the investment. How did we do it? Read on!

There are several considerations when determining whether the equipment or inventory can be used as part of the mandatory investment.  This article will cover four of the main considerations. However, it’s important to note that ultimately the government official will determine whether or not the items count as part of the investment (but so far our clients have had great luck).

Consider the following:

  1. We must show that the equipment or inventory is owned by you, and we must be able to trace the funds used to purchase the items.
  2. All inventory and equipment must be physically located in the U.S. at the time of application until you have completed the E2 visa interview.
  3. We will need documentation proving the value of the equipment or inventory.
  4. You still must invest in other items (not just the inventory or equipment), so capital WILL be required.

Who owns the equipment of your inventory?

Our first job will be to evaluate the documentation you have in order to trace the source of funds used to acquire the equipment or inventory. We need to establish who purchased the item(s) and who currently owns it.  This really comes into play if another company owns the item.  Think about the following:

Example 1

Mexican company ABC Corporation buys two semi-trucks in 2019. The trucks were purchased with revenues generated by ABC Corporation.  ABC Corporation is owned 50/50 by the E2 investor and a business partner.

This situation could be tricky, since the entity is the owner, and the E2 investor is only 50% owner of the foreign entity. We would need to dig in a little more and possibly discuss how the E2 investor could buy the trucks from the Mexican entity.

Example 2

Another example that may be problematic is if a bank of lender owns the truck.  What if Steven Smith owns a owner/operator trucking company in Canada. He gets a loan in order to buy a semi-truck in 2022. Steven puts down $50,000 and he has a loan through a Canadian bank to finance the other $50,000. This could be a problem for sure.  Firstly, the bank still has ownership of the truck, and will likely never allow that truck to be moved into a U.S. entity’s name nor would the bank likely allow the truck to be permanently moved to another company – in this case the U.S.

All equipment or inventory needs to be in the U.S.

As part of the E2 visa application package, we typically include logistics documents showing that the items have been shipped and received in the U.S.  These documents may include bills of lading, importation documents or other official documents regarding the item(s).

Although on its face this consideration may not be that challenging, let’s dig a little deeper. Think about the owner/operator Canadian truck driver for a moment. He only has one truck, and if this truck is to be used as part of the E2 investment, it needs to be physically located in the U.S. for likely a minimum of 8-12 weeks, maybe longer. During that time, he will not have authorization to drive the truck in the U.S.  This could be quite a hardship!

What is the value of the inventory or equipment?

We need to include in the E2 visa application package documentation that shows the value of the items.  Sometimes this is simple – 100 black t-shirts are purchased for $2,000 USD from China on June 1 and shipped to the U.S. immediately.  The t-shirts arrive on July 1 into the Port of Long Beach. The value can be shown at $2,000 USD.

However, let’s take a real example of equipment that we have used for another client.  Our client owned an embroidery shop in Calgary Canada for about 15 years. During that time, she bought an embroidery machine for about $30,000 USD. Seven years or so AFTER she purchased and used the embroidery machine, she decided to start a U.S. entity and use the machine as part of the investment. Now how do we value this?

In her case, she was able to get a written valuation from the manufacturer of the machine. This is amazing! The machine was appraised at about $15,000 USD, so we included the machine as a $15,000 investment.

Sometimes things aren’t even this clear. What about those t-shirts in the first example?  Let’s say that you purchased 100 black t-shirts from a Chinese company about five years ago. The shirts were sitting in a warehouse in your home country.  Now you have decided that you would like to sell the t-shirts in your U.S. retail store. You can’t really get any type of appraisal, but maybe you could find the same t-shirts for sale online and value these t-shirts as comps.

You need a business, not assets

So, let’s say that we are able to meet the three requirements, above. We are almost there! The last thing to note is that the E2 visa is a visa to run a business.  So, we need to show a business, not just a pile of assets.

Let’s take that example of the trucking business again. Simply having a semi-truck located in the U.S. is not a business. It’s a very expensive asset.  You will still need to have a variety of other things:  insurance, an office, computers, an accountant to handle taxes, etc.  You need a business – not just assets. Therefore, you should also know that no matter how many items you may move to the U.S. to be included as part of the investment, some capital will also be needed.

If you’re interested in using equipment or inventory in order to show investment in the e2 business, feel free to reach out! We’re here to guide you through the E2 visa process, and we’d love to speak with you about your E2 visa.

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