Understanding the E2 Substantial Capital Requirement

E2 is a nonimmigrant classification that can allow the citizen or national of certain countries admission to the United States provided that a substantial capital investment into a U.S. business is made. The countries of origin that allow for a nonimmigrant investor to enter into the United States are known as treaty countries. Treaty countries are nations that have entered into a treaty of commerce or navigation with the U.S. government.

However, beyond these basic principles, there is a great deal of misunderstanding as to what constitutes qualifying “substantial capital” for an E2 visa. Further considerations include the necessary qualifications for an E2 investor, the magnitude of the investment, and the type of venture invested into. The experienced immigration attorneys of Colombo & Hurd can answer these questions while providing experienced and committed immigration guidance.

Necessary Qualifications for an E2 Investor

Before looking at the necessary capital requirements that would be sufficient to qualify as “substantial capital” it is important to first look at the characteristics and status that an individual must have to qualify. The basis for a foreign national’s eligibility for an E2 visa includes:

  • Status as a national of a country with which the United States holds a treaty of navigation and commerce.
  • Intention to enter the United States solely for the purposes of investment into a business venture or enterprise. The individual intends to direct & develop the company. The individual must generally show a minimum of a 50 percent ownership stake in the company. Alternatively the individual may demonstrate operational control of the entity.
  • The individual must make or be in the process of making a substantial capital investment in a bona fide business venture located within the United States.

The capital invested by the treaty-investor must be subject to some risk in the form of a potential total or partial loss. Furthermore, the treaty-investor must be able to demonstrate that the investment funds were not sourced, directly or indirectly, from criminal operations.

However the term “substantial capital” is still left undefined. In fact, the term is not explicitly defined in terms of dollar amounts. Rather, guidelines as to what would constitute a sufficient substantial investment are provided. These stanards set forth that the investment shall be:

  • Sufficient to guarantee that the E2 investor’s financial commitment is adequate
  • Of an amount sufficient to make the successful development of the business possible.
  • Substantial in relationship to the total purchase price of an existing business or substantial in relation to the costs of establishing a new business.

While the first two factors will vary from industry-to-industry and by the particularized goals of the business, the final point can be further expounded upon.

Required E2 Investments for a New Business

Developing a new business under an E2 visa can require careful financial stewardship because the investment must be made prior to filing one’s application for an E2 visa. Simply having the funds ready to go in a business account will not be enough because the funds must be irrevocably committed or in the process of being irrevocably committed to the investment. However in general the required “substantial investment” into a new business would amount to at least the amount of capital necessary to develop the business to where it can conduct operations. While investing into a new business venture can include some additional difficulties, it does provide the opportunity for an investor to control the direction and goals of a business from its inception.

>> Related Content: Pros & Cons of Investing in a Franchise For an E2

Required E2 Visa Investment for an Existing Company

Generally speaking, a treaty investor may consider applying for an E2 visa on the basis of the acquisition of an already existing company. If this method of investment is utilized, the required “substantial investment” is typically the purchase price of the already existing business entity. Financing of the purchase is allowed at the discretion of the consular official who is overseeing the application, but financing may not rise to such as level as to make the investment by the E2 investor less than substantial. For instance, for a business valued between $100,000 and $500,000 the financing should not typically exceed 25 to 30 percent of the purchase price. However, as the cost of purchase for the existing venture increases, the permissible amount of financing also increases.

Considering an E2 Investment?

If you are considering making a substantial investment through the E2 visa program, you likely have a host of additional questions and concerns. To schedule an initial consultation with an experienced immigration attorney call us at 1-800-659-7142 or contact us online.