If you work in the field of business brokerage you most likely have heard of the “E-2 Investment Visa”. However, this program is little understood and there are many misconceptions. In the following article I attempt to clarify what this program is and how we as business brokers are uniquely qualified to offer assistance.
Understanding the E-2 Visa Program
The E-2 visa is an investment based nonimmigrant visa, which allows citizens of certain Countries to live and work in the USA by investing in an existing U.S. business. By buying a US based business the E-2 applicant gains the right to live and work in the United States for a limited period of time. Usually, two years with the possibility of subsequent 2-year extensions. There is no limit to the potential number of extensions. The spouse and unmarried children (under 21) of the applicant may also join them in the US. Once here the spouse can apply for permission to work.
There is a second type of investment visa known as the EB-5. This differs in two important respects from the E-2. First of all, the amount of required investment for an EB-5 is significantly higher. Secondly the EB-5 is an immigrant program offering permanent residency to the investor. In this article I will focus on the E-2 program as this is the one you will most likely encounter.
The E-2 program requires a “substantial investment”, but no specific amount is set by law, so this is somewhat open to interpretation.
It is important to understand the type of business that will qualify for an E-2 investment. I look for small businesses with W2 employees. A business that can provide an income to support the investor and his/her family. The applicant will need to provide the immigration service with a business plan. They will want to establish a Company, typically LLC and obtain a Federal Tax number – EIN. Next a bank account should be opened in the United States. This can be a difficult step and the investor will likely need to be present to do this. Lastly the funds for the investment should be deposited in the Bank. These funds will need to be “sourced” to show their origin.
At this time the applicant will complete their due diligence on the business and accomplish the other normal steps of an acquisition. The attorney now submits the application to the Immigration Service. In the penultimate step the applicant will be called for an interview at the Embassy in their Country of origin. If everything goes well at the interview the Visa will be approved.
When working with an E-2 applicant my advice is that they retain a US based Immigration Attorney. This is a complex process, and the applicant will require assistance from an experienced Lawyer. I will not work with an E-2 applicant until they have engaged the attorney and put us in contact as we must work together.
The role of the business broker is critical in this process. We located a suitable business and made the necessary introductions. As with any deal we guide buyers and sellers through the process. The process from beginning to end will typically take six months or more. So, patience on the part of all parties is required. However, once an E-2 investor is committed I have never seen them back out of a deal due to cold feet.
The commitment of the buyer and the special circumstances involved make this a very rewarding deal for the Broker to bring to a successful close.
Yi Lee is an immigration lawyer with the law firm of David Vedder in Daytona Beach. In preparation for this article, I asked him several questions. I found his answers so informative that I have included the discussion below.
We typically suggest for minimum investment to be around $150,000 but I have had one approved for $90k. We like the range of $150k to $250k.
To qualify, the investor has to be a citizen of the treaty country that shares trade and commerce with the US. Not all countries can avail of the E-2 treaty visa. For example, India and China are not E-2 countries. For the UK, it is not enough to show that the investor is a citizen of the United Kingdom, but the investor must also show domicile in UK proper.
Any bona fide lawful business can be invested for the E-2 benefit. The investment must be substantial, which is determined on a case-by-case basis. Return on investment must be more than marginal. A marginal enterprise is one that does not have the present or future capacity to generate more than enough income to provide a minimal living for the treaty investor.
While creation of jobs, i.e., hiring of employees, is not necessary to obtain the E-2 benefit, it certainly helps to show that the investor is creating US jobs.
The biggest challenge when applying for the E-2 visas at Post is that every consulate has slightly different requirements. Overall, however, I have experienced that E-2 Officers are generally very reasonable and want to approve these visas to drive foreign investment into the US.
One piece of advice I would give to an applicant for an E-2 visa is to document everything! Have an accountant document the source of funds and show that it is a legitimate source. Create the LLC and capitalize the business account, if possible, before submitting the application. An organized application is a readily approvable application!
The typical timeline from application to approval is around 3 to 4 months. The fastest turnaround time I have seen was 2 months.
Anthony John Rigney is the owner and Broker with Quorum Business Advisors, LLC. He entered the business brokerage industry in 2008 and has been a member of the BBF since that time. For several years he served as President of the North Florida District.
Owner and Broker
Quorum Business Advisors, LLC