When it comes to the E-2 visa, one of the most common questions is about the minimum investment amount required. Unlike some visa categories that have a specified minimum financial requirement, the E-2 visa focuses on the concept of a “substantial” investment. This requirement is evaluated using a proportionality test rather than a fixed dollar amount, allowing for flexibility depending on the type and size of the business.
Substantial Investment: What Does It Mean?
The term “substantial” in the context of an E-2 visa is not defined by a specific dollar amount. Instead, it is assessed relative to the total cost of purchasing or establishing the business. The U.S. Department of State uses a proportionality test to determine whether the investment qualifies as substantial. This test states that the smaller the business, the higher the percentage of the investment that needs to be committed to the enterprise. For example, if you are starting a small consulting business, you might need to invest close to 100% of the startup costs to meet the substantial investment requirement. On the other hand, for larger enterprises, a smaller percentage of the total cost might suffice.
For example, a $200,000 business might require 100% investment, whereas a $10 million business might require only a 10% investment to meet the substantial investment requirement
Additionally, the investment must be at risk, meaning the funds must be irrevocably committed to the business and subject to loss if the business fails. This includes not only cash but also assets such as equipment, inventory, and intellectual property. The idea is to ensure that the investor is committed to the enterprise’s success, and not merely using it as a means to gain entry to the U.S.
It is also important that the investment is not merely sufficient to provide self-employment for the investor. The business should have the potential for growth and job creation. This means that the enterprise should ideally have the capacity to support other employees and not just the investor. Demonstrating that the business can operate for at least a year without relying on immediate cash flow can also be beneficial in showing its viability and long-term potential.
Investment Sources and Forms
Investors can use their own funds or those from other investors, as long as at least 50% of the business is owned by nationals of the treaty country. It is essential to demonstrate that the funds come from a lawful source, such as personal savings or the sale of property. Furthermore, while cash is the most straightforward form of investment, other forms such as equipment, inventory, and intellectual property can also be used as part of the investment. The funds must not come from the entity itself or another business entity.
One practical approach to mitigate the risk of investing a substantial amount of money without visa approval is using escrow arrangements. These funds are then irrevocably committed to the business but will only be released if the E-2 visa is approved.
For more information on how to navigate the complexities of the E-2 visa process, including determining the appropriate investment amount for your specific business venture, contact SRR Law Group LLC at 507-580-7374 or stacey@srrlawgroup.com to schedule a consultation. Our experienced immigration attorneys can help you navigate the E-2 visa process and address any issues that may arise.
Want to read more? Read our comprehensive overview of the E-2 visa process.
