Addressing Critical E-2 Visa Requirements for Start-Ups
The E-2 visa law was not written and approved by entrepreneurs or businesspeople. It was created and instituted b the U.S. Congress with the goal of attracting foreign investment that creates jobs in the United States.
This concept is critical. Why?
Because realities and immigration expectations do not mix. A solid business plan that raises millions of dollars from investors might be denied an E-2 visa!
So what are entrepreneurs to do?
There are several requirements for the E-2 visa. Here at Visa Business Plans, we work hand-in-hand with immigration attorneys to craft business plans that clearly address two critical components of the application process: substantial investment and marginal enterprise.
Substantial Investment
The substantial investment requirement is a somewhat subjective benchmark that seeks to assure that the treaty investor is putting forth enough capital to be proportional to the total value of the particular enterprise in question and one that will help ensure its success.
It is particularly noteworthy that there is no fixed dollar figure that constitutes a minimum amount of investment to meet the substantial investment requirement. In fact, Visa Business Plans wrote a business plan that included an E-2 investment of just over $12,000 that was approved.
Instead of a dollar amount, a substantial amount of capital for E-2 visa purposes constitutes an amount that is:
Substantial in a proportional sense, as determined through the application of the proportionality test outlined below;
Sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise; and
Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise. [1]
In addition to meeting the substantiality test above, the investment must also pass the proportionality standard, which compares the investor’s investment to the total investment in the business. The higher the percentage of the investor’s capital input to that total, the better the chances of passing the proportionality component of the test.
The proportionality test is also best thought of as a sliding scale, as it determines whether an investment is substantial by weighing the total amount of qualifying funds invested against the cost of the business [2]. This sliding scale approach does not draw a line at a specific dollar amount or percentage of investment.
For example, a 10 percent investment in a $1 billion company ($10 million) would be more likely to pass the proportionality test than 10 percent invested in a $100,000 enterprise ($10,000).
Marginal Enterprise
The second key component that investors must meet in the E-2 visa process is the marginal enterprise standard.
According to the U.S. Department of State, “A marginal enterprise is an enterprise that does not have the present or future capacity to generate enough income to provide a more than minimal living for the treaty investor and his or her family. An enterprise that does not have the capacity to generate such income that has a present or future capacity to make a significant economic contribution is not a marginal enterprise.” [2]
So, in most cases, the U.S. government will look at direct and indirect job creation first - but they want to also make sure that the investor (and his or her family) will have the financial resources to cover their living expenses in the U.S. They don’t want investors to potentially become a burden on the country’s taxpayers.
Much like with the substantial investment prong, the marginal enterprise component does not require an exact number of employees that the business must have to achieve the standard. However, having a significant number of employees can help meet the requirement, especially if they are U.S. employees. [3]
In short, the U.S. wants to ensure that it enjoys tangible economic benefits from the enterprise while mitigating against any potential drawbacks should the business fail.
Summary
Here at Visa Business Plans, we have helped thousands of entrepreneurs successfully obtain their E-2 visas. We know there are no magic numbers with the critical components of substantial investment and marginal enterprise, so we customize each and every one of our business plans to clearly demonstrate the positive impact your investment will have on the U.S. economy.
Our tried and trusted methods have assisted thousands of entrepreneurs in successfully obtaining their E-2 visas. Give us a call today to see how we help you achieve yours.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in 4 different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.
[1] https://www.uscis.gov/working-in-the-united-states/temporary-workers/e-2-treaty-investors
[2] https://fam.state.gov/fam/09FAM/09FAM040209.html#M402_9_6_E
[3]https://www.klaskolaw.com/hot-questions/klaskos-criteria-for-analyzing-an-e-2-start-up-business/
