One of the most common questions we get when foreign investors and entrepreneurs are considering an E-2 Visa is – What IS a substantial investment?
E-2 Visas require a “substantial investment” from the visa applicant to start their business in the United States (for a list of other requirements, click here). The definition of “substantial investment,” frustratingly enough is… It depends.
Factors for Determining Substantial Investment for E Visas
It might seem counterintuitive for the U.S. immigration laws to have such a loosely defined requirement for substantial investment, but the fluidity of the regulation reflects the wide range of the businesses and investments that can benefit from an E-2 visa. For example, an IT consultant who is working from home in rural Vermont would have a completely different start-up cost and capital requirement than an entrepreneur who wants to open a Japanese steakhouse in downtown Atlanta. Because so many start-ups can use the investment visa, “substantial investment” becomes a scale based on the type of business an investor wishes to own.
How Much Does It Cost to Start Your Business?
If your business requires infrastructure to run, your substantial investment should reflect your ability to create and maintain the infrastructure, as well as provide the necessary insurance and licensure for your business. You should be able to provide that you have accounted for the appropriate facilities – whether that is office space, technology resources, restaurant space and equipment, company vehicles, and other day-to-day necessities. When you apply for your visa, you should be ready get to work immediately, so you should already know the initial start-up costs associated with your business.
How Much Will It Cost to Run Your Business?
The initial period of an E-2 visa will depend on the type of business and the initial investment. When it is time to renew an E-2 visa, extensions are valid for up to five years and can be extended to perpetuity. For this reason, it is important to show that you have a long-term plan for your business – and the capital to keep it going until it can sustain itself. Showing you have rainy day and contingency funds for your business is helpful, but it is critically important to show that you have made the upfront investments into making your business viable.
Will the Business Rely on Employees?
If you are planning to hire employees, that should be reflected in your substantial investment. You can hire workers from your home country as long as you can show that you need them to run your business – either for their essential knowledge, or to work as a manager or executive in your company.
Is There an Established Business Model that Can Be Applied?
Franchises such as restaurants, shopping mall kiosks, and home care services have proved to be popular investment opportunities for foreign investors because they offer clear cut substantial investments. In many cases, these businesses can be purchased outright, offering the investor a turn-key opportunity that includes a complete look at investments and returns. Similarly, consulting practices can be an excellent option for entrepreneurs as substantial investments can be greatly minimized if the business does not need to account for office space or employees.