The article discusses the E-2 visa minimum investment you need to qualify for an E-2 visa. As a foreign investor you must consider the E-2 investment amount you have available to invest along other requirements before you submit your E-2 visa application to establish a new business or purchase a pre-existing business in the US.
The E-2 visa is a nonimmigrant visa that allows a foreign investor from an E-2 treaty country to live and work in the United States together with his or her family in exchange for making a substantial investment in a US business. With the E-2 visa, the foreign investor or foreign entrepreneur can come to the United States to be self-employed and direct and develop the US business. The investor can choose to invest in a startup business, a pre-existing business or purchase an already existing business or franchise.
To learn more about the E-2 visa and requirements visit our E-2 visa page.
But one of the most important questions to consider when pursuing this visa is how much you do you need to invest to qualify for an E-2 visa? This article discusses important considerations about the E-2 visa minimum investment.
How much is the minimum investment required for E-2 visa?
Your E-2 visa minimum investment amount must be substantial and irrevocably committed to the US business. While there is no legal minimum investment required for E-2 visa, the rules and regulations provide that the foreign investor must invest a substantial amount of capital to qualify for an E-2 visa.
Because there is no official minimum or maximum investment amount required for the E-2 visa, the key is to determine the minimum investment you can make for an E-2 visa that is substantial enough to qualify you for the E-2 visa.
Generally, the E-2 visa minimum investment recommended is $100,000 or more. However, our experience shows that you can obtain an E-2 visa with a lower investment amount, but your investment should not be less than $50,000.
It is important to understand that there is a risk associated with investments lower than $100,000. However, lower investment amounts can qualify you for an E-2 visa especially when considering the nature of the business and industry, access to additional capital, percentage invested of the total cost and others.
Many factors go into determining the E-2 minimum investment for a specific business including:
- Business activities and industry
- The percentage of investment of the total cost of the business
- Your access to additional investment capital
- Whether you are applying for a change of status in the US or for an E-2 visa at a US Consulate abroad.
The E-2 visa investment must be substantial
While US regulations do not set a specific dollar amount as a minimum E-2 investment, the regulations state that the investment must be substantial.
From a practical standpoint, a substantial amount is an amount that once invested can ensure the success of the business and is large enough to guarantee that the investor is unquestionably committed to the success of the business.
From a legal standpoint, substantial in the E-2 visa context must be ”a substantial amount…as distinct from a relatively small amount of capital…solely for the purpose of earning a living.”
The regulations clearly state that no set dollar figure constitutes a minimum amount of investment to be considered substantial. Instead, if an investment is substantial is determined using a proportionality test among other factors.
A substantial E-2 visa investment amount is an amount that is:
- Substantial in relationship to the total cost of either purchasing an appropriate proportion of an established business or by applying funds to create a new business as determined by the proportionality test
- Sufficient to ensure the successful operation of the business through investor’s financial commitment to the business; and
- Of a magnitude to support the likelihood that the investor will successfully develop and direct the business.
These factors are used to determine when an E-2 visa investment is substantial in light of the nature of the business and its projected success.
For example, if you are from Bulgaria and you want to open a cleaning service business or a yoga studio in Miami, an investment of around $100,000 is likely substantial for E-2 visa purposes. However, $100,000 is not substantial if you plan to open a club in Miami Beach because the amount required to start a club is substantially more than $100,000.
The proportionality test for E-2 minimum investment
The proportionality test determines if an E-2 investment is substantial by weighing the amount of funds invested against the cost of the specific business. The proportionality test focuses on comparing:
- the amount of qualifying funds you actually invest in the business; with
- the total value of the business, which is the cost of an established business, or if a newly created business, then the cost of establishing that business.
If you are purchasing an existing business for E-2 visa, then the value of the business is the purchase price (fair market value).
If you are setting up a new business for E-2 visa, then the value of the business is the actual cost needed to establish the business to the point of being operational which can be the total start up costs.
It is important to understand that not all businesses are equal and the value of the business is dependent on the nature of the business. This means that certain businesses such as manufacturing businesses or hotels can cost millions of dollars to purchase or create, while others such as business consulting, marketing firms, IT companies and software development have lower startup and purchase costs.
To adjudicate the E-2 visa and determine if your investment is substantial, consular officers will calculate the value of the business and compare it with the amount of the funds or assets you actually invested in the business to determine the percentage of your commitment.
If the funds invested in the E-2 business equals or exceeds the value of the business, then the investor has invested 100% of the funds needed and the investment is substantial even for small businesses of less than $100,000. However, in most cases investors spend lesser percentages before applying for the E-2 visa.
The proportionality test is a sort of inverted sliding scale. The lower the cost of the business the higher a percentage of investment is required.
For businesses with a lower value to be considered substantial, your investment should be a high percentage of the total value of the business.
For businesses with a very high value to be considered substantial, your investment can be a lower percentage of the total value of the business.
But there is no percentage used to determine if your E-2 visa investment is substantial. Our experience shows that if the value of the business is $100,000 or less, you should expect to invest anywhere from 50 to 100% of the value of the business. On the other hand, if the value of the business is $1,000,000 or less, then lesser percentages may qualify.
For example, if you start a business which has a startup cost of $50,000, then you should expect to invest close to the entire $50,000 (100% of funds needed) for the investment to be substantial. On the other hand, if you plan to open a 20-room hotel in Miami, Florida which requires a total investment of $1 million, then an investment of $300,000 or more may be considered substantial.
Malescu Law can assist
Our investor visa lawyers in Miami, Florida assist investors and entrepreneurs with E-2 visa application, E-2 business plan, E-2 business selection and franchise and any other services related to the E-2 visa process.
Malescu Law P.A. – Business & Immigration Lawyers