Explaining the E2 visa requirements: How much is a “substantial” investment?
Hi Everyone!
I’m Angie Rupert, founder of Rupert Law Group. We focus almost exclusively on E2 visas so, no matter what treaty country you’re from and what state you want to live in, we can help!
Today we’re going to talk about one of the E2 visa requirements – the substantial investment. There’s a lot of confusion about this particular requirement for the E2 visa.
One of the things we’d like to go over is that there are actually three parts to what is considered “substantial.” Many times, I get questions from people saying, “Oh you know, I have a very inexpensive business it’s only going to cost $30,000 to start. I think I’ll just invest $30,000 and then apply for my E2 visa.” Unfortunately, that only includes one of the three prongs for substantial investment.
Let’s talk a little bit about all three prongs of substantial investment and hopefully it gives you a better sense of how much you actually need to invest in order to meet this requirement.
- It has to be enough to get the business operational.
So, in that example I just gave – if you need $30,000 to get this business operational – prong # 1 is met. That’s great!
Let’s look at another example: What if it costs $300,000 to get your business operational? You may have to invest $300,000, right? So, that’s a pretty simple guide. One thing I do want to mention though before we move on to the other two prongs, is that you don’t always have to invest 100% of the funds that it costs to get the business operational. So, in an instance where your business may cost $1,000,000 to be operational maybe you’ll only need to invest $500,000 or $600,000 in that case, right?
Kind of consider that this is a sliding scale, it’s called a proportionality test and I always say anything under about $250,000 or $300,000 you should invest the full amount. Beyond that we can start talking about percentages of the startup costs. So, really consider that when you were considering how much you need to invest.
In addition, if you have a business partner consider that, I get this question a lot, “well they’re going to invest $100,000 and I’ll invest $100,000 so that it’ll be a $200,000 investment, right?” In some instances, yes. In some instances, no. The concern is really about the E2 investor. If you have a business partner who’s a U.S. citizen or some other business partner that doesn’t need the E2, their investment is not really counted toward the total investment. The thing to consider is your percentage of ownership. Have you invested all of that percentage and is it enough to get it operational? So, consider those things as well.
Let’s take a quick example just to make it a little simpler. Let’s say that the business costs $150,000 to get operational and you own 75% of the business. Your investment should be a minimum of $100,000, right? Let’s take that same scenario and say that you’re 50-50 in the business, you should still probably invest $100,000 particularly if that other business partner is not really interested in getting the E2. We’re not really looking at their investment. The only thing to really be cautious about is to make sure that your investment is not less than that other person´s investment, right? So we’re still really just focused on your percentage of the startup costs that have been invested through your personal funds.
- Have you invested enough that the consular officer is assured of your commitment to the success of this business?
Now, that’s where we’re not really looking at the numbers that get it started, now we’re starting to look at what’s your buy-in. How is this consular officer going to know that you are bought in enough and that you have enough on the line (enough at risk) that you’re not going to let this business fail and you’re going to do everything in your power to make sure it’s a success.
That’s where we start getting into other kind of numbers, a lot of it is based on opinion; but, I normally recommend that it’s at least $100,000 even if the business only costs $30,000 or $40,000 to get started, Ok?
- Is the investment substantial enough to ensure that this business will be successful?
In other words, you’ve set it up properly in order to give the business a chance to really grow and develop here in the United States. That’s the same sort of test. It’s kind-of opinion based. You’re going to have to show how much you spent, what you spent on, ensure that this business really is set up enough that it can work, it can grow, and it’s going to be a success.
Those are the three prongs to measure if you’ve invested a substantial amount. Hopefully I answered all your questions but, guess what? If I didn’t, please give us a call or an email, I’d be happy to speak with you more about your specific case. Again, my name is Angie Rupert, founder of Rupert Law Group, and please reach out anytime. We can help!
Thanks so much, have a great day.