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What is a Marginal Enterprise in the Context of E-2 Visas?

What is a Marginal Enterprise in the Context of E-2 Visas?

If you're considering applying for an E-2 visa, it's crucial to understand the concept of a "marginal enterprise." The U.S. immigration law requires that the business you invest in must not be marginal. But what exactly does that mean? Let's break it down with a simple explanation and an illustrative example.

Defining a Marginal Enterprise

A marginal enterprise is a business that does not have the present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and their family. In other words, the business must produce sufficient revenue to support the investor and their dependents, not just cover its own expenses.

However, an enterprise that does not have the capacity to generate such income but does have a present or future capacity to make a significant economic contribution is not considered a marginal enterprise.

Key Points to Consider:

  1. Present Capacity: The business should ideally be generating enough income at present to support the investor and their family.
  2. Future Capacity: If the business is new and currently not generating sufficient income, it must have the potential to do so within five years from the date the investor’s E-2 classification begins.

An Illustrative Example

Let's consider two hypothetical scenarios to illustrate what might be considered a marginal enterprise and what wouldn't.

Scenario 1: Marginal Enterprise

Business Type: A small local coffee shop.

Investment: $50,000.

Current Revenue: $30,000 per year.

Expenses: $25,000 per year.

Profit: $5,000 per year.

Investor's Family Needs: $40,000 per year to live minimally.

In this scenario, the coffee shop generates a profit of only $5,000 per year, which is far below the $40,000 needed for the investor and their family's minimal living expenses. Even if the business has the potential to grow, it would most likely be considered marginal if it cannot realistically generate the necessary income within five years.

Scenario 2: Non-Marginal Enterprise

Business Type: A boutique marketing agency.

Investment: $150,000.

Current Revenue: $100,000 per year.

Expenses: $60,000 per year.

Profit: $40,000 per year.

Investor's Family Needs: $50,000 per year to live minimally.

Business Plan: The agency has secured contracts with several mid-sized companies and projects a revenue increase to $200,000 per year within two years, with expenses stabilizing at $100,000 per year.

In this scenario, the marketing agency is currently generating $40,000 in profit annually. While this is slightly below the $50,000 needed for the investor and their family's minimal living expenses, the business has secured contracts that will likely boost revenue to $200,000 per year within two years. This projection shows that the business will soon generate sufficient income to support the investor and their family, making it a non-marginal enterprise.

Why This Matters

Understanding whether your business is considered marginal is crucial because it impacts your eligibility for the E-2 visa. A non-marginal enterprise demonstrates to U.S. immigration authorities that your business has the capacity to sustain itself and provide for your family, making you a viable candidate for the visa.

In a Nutshell

A marginal enterprise, in the context of the E-2 visa, is one that cannot support the investor and their family either currently or in the foreseeable future. When planning your investment and applying for the E-2 visa, ensure your business has a clear path to generating sufficient income within five years. By doing so, you'll increase your chances of a successful application and a stable future in the United States.

For more detailed guidance and to assess your specific situation, consider consulting with an immigration attorney who can help you navigate the complexities of the E-2 visa requirements. At Visa Business Plans, we work with hundreds of immigration attorneys nationwide who can help you get started on the path to achieving your E-2 visa. If you have already selected your immigration attorney and need assistance drafting a powerful immigration business plan for your E-2 visa application, our team is ready to help. Contact us today to learn more.

The information provided in this blog is intended solely for informational purposes. While we strive to offer accurate and up-to-date content, it should not be considered legal advice. Immigration laws and regulations are subject to change, and individual circumstances can vary widely. For personalized guidance and legal advice regarding your specific immigration situation, we strongly recommend consulting with a qualified immigration attorney who can provide you with tailored assistance and ensure compliance with current laws and regulations.

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 four 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.

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