US Investor Immigration Guide
Are you an immigrant looking for a way to establish yourself in the United States and gain some financial stability? An investor visa may be the right solution for you.
Investor visas are specifically designed to allow immigrants to create their own paths towards permanent residence in America, by making qualifying investments in US businesses and meeting certain requirements.
In this guide, we'll explain the essentials you need to know about investor visas, from eligibility criteria to application processes.
No matter where you're coming from or why you want a visa, let's make sure that investing your money wisely is part of your American dream!
Option 1: The Non-Immigrant E-2 Visa
If you are looking to start a business in the United States, the E-2 investor visa could be an excellent option. To determine your eligibility, it is important to first learn about the criteria for the E-2 visa and make sure that you meet them.
Applicants must be a citizen of a country with which the United States has a qualifying treaty, have invested or be actively in the process of investing a substantial amount of capital into the US business, and intend to remain in the United States to develop and direct their business. Additionally, applicants must demonstrate that they have control over the funds they are investing and that they are coming to work in a role other than employee.
Finally, applicants must show that their investment will support job growth within the US by demonstrating economic impact through hiring more employees or significantly increasing productivity. By taking all these criteria into consideration when applying for an E-2 visa, you can determine if you are eligible for this opportunity to create a thriving US business.
You can see a full list of E-2 qualifying countries on the travel.state.gov website.
E-2 Eligibility Requirements
- Substantial Investment – We recommend a minimum of US$100,000 for maximum chances for success. We must be able to prove that the money is 100% clean/legitimate money and document it back to its source. We do not recommend gifted funds. For maximum chances, the money used for the investment should be earned, either through the sale of an asset, business income distributions, or savings over time through employment. It could also be loaned funds, but only if the loan is secured with a personally owned asset of the investor.
- Controlling Interest in a US business operation – We recommend a minimum of 51% ownership in the US business. The business must be active and require daily attention from the E-2 investor. It cannot be a passive investment. The investor will need to form a US based entity or else purchase an existing US based entity, such as a Limited Liability Company or a Corporation.
- Not a marginal business – A marginal business is one in which the E-2 investor only receives a living wage. To qualify, an E-2 must think of the income of the business as a return on investment as opposed to a salary or wage. We would need to be able to show other income generating assets or financial resources, such as additional cash holdings, real estate with equity, or other investments – i.e. securities, bonds, retirement accounts, etc. – to be able to meet this requirement. Or we would need to show the expected returns from the E-2 business will far exceed the living requirements for the investor and their family.
- Location to operate the business identified and secured – The US government will not approve an E-2 unless we can show that the location to operate the business has been secured. This could be done by a lease or in some cases by a memorandum of understanding or letter of intent with a landlord. Also, a letter from the seller’s landlord confirming permission to assume the lease after the closing can be sufficient. Sometimes the real estate is part of the transaction, in which case this item is covered.
- Commitment to the E-2 enterprise – The US government will not approve an E-2 visa unless we can show that the funds are “committed” to the E-2 investment business. Currently the two ways they allow us to prove this requirement are:
- Make the investment. Purchase the business, equipment, real estate, etc. for the company operation and take the risk that they may not approve the application.
- Put the funds for the investment in escrow, with the only contingency being the approval of the E-2 visa.
Either way, the funds are in the US and tied up while we go through the process.
- Business Plan – The investor will also need a formal business plan with executive summary, investment summary, operational overview, feasibility data, 5 years of hiring projections, and 5 years of financial projections, at a minimum.
E-2 Visa Step-By-Step
To pursue the E-2 visa option, the following steps are required:
- Form a US limited liability entity – could be an LLC or Inc. as stated above – with a duly executed corporate book.
- Secure a Federal Employer Identification Number from the Internal Revenue Service for the company.
- Open a bank account for the US company.
- Transfer the funds needed to make the investment from the investor’s personal funds (with documentation proving the source of the funds) to the US company account.
- Execute any required contracts to make the investment in a US business operation in the name of the US company.
- Fund the contract, either by purchasing the business or by putting the funds to acquire the business in escrow.
- Secure a location to operate the business.
- Complete the formal business plan.
- File the E-2 Treaty Investor Visa Application.
Adjustment of Status or Consular Processing?
There are two options for filing the E-2 visa application – filing as a change of status within the US, also known as adjustment of status, and filing for a visa at the US consulate, or consular processing.
Adjustment of Status
If the person has a visa to the US and enters the US legally, they can file a change of status application with USCIS. There are pros and cons to this approach.
Speed – Filing with USCIS is much faster than filing with the US consulate. Best estimate for processing an E-2 visa at a consulate now is around 9-12 months. Change of status will likely only be around 4-6 months start to finish.
No interview – there is no interview with USCIS to process an E-2 change of status application.
Government fees are substantially higher – at the consulate, the investor pays a $205 government fee. With USCIS, the fee is close to $3000 for the investor.
No travel – The USCIS change of status process does not result in the investor obtaining a new visa. A visa is an entry document. When a visa is used to enter the US, the person is then given status, a time period to be in the US and limitations on what activities are permitted.
You’re able to change your status, limitations and activities permitted, not the visa in the passport. To be able to travel internationally, the investor will have to process through the US consulate. The change of status process is irrelevant to the visa application process.
Duration – A change of status application is only approved for 2 years. The visa through consular processing would be good for 5 years for the same effort.
Those who choose the change of status option do so because they don’t have immediate international travel needs and prefer the speed of the adjustment of status process.
The alternative approach is to file with the US consulate for the E-2 visa. There are also pros and cons to this approach, which mirror those of change of status above.
Longer duration – The visa validity period is 5 years. Each time the person uses the E-2 visa to enter the US, he or she is given a 2-year status period. To renew, simply take a trip and go back through inspection prior to the expiration of status and return with a new 2-year status period.
Cost – While the legal fee is the same for both approaches (because the work is the same), the government fees are substantially cheaper at the US consulate.
Travel at will – An E-2 visa holder can travel in and out of the US at will during the validity period of the E-2 visa.
Longer wait time to process the application, as explained above.
Interview required – The investor must appear at an in-person interview to explain the source of the funds for the investment and the business plan to the satisfaction of the consular officer.
Those who choose the visa option do so generally because of the need to have international travel flexibility. Also, they prefer the longer validity period on one fee.
Is a E-2 Visa The Best Option For You?
E-2 is a great visa option. It’s very flexible, the dependent spouse has built in work authorization as an E-2 spouse, and the kids can go to school and stay in the US as E-2 dependents until they turn 21.
The only negative to E-2 is that it does not have a built-in pathway to permanent residence. There are options for getting to permanent residence in the US, such as employment sponsorship, investment through EB-5 (explained below) or family sponsorship. We can discuss strategies for the green card in more depth should you decide to work with us on the E-2 visa option.
Option 2: EB-5 Employment Creation Visa
The EB-5 visa is the closest thing we have in the US to buying a green card. With an investment of at least US$800,000, an investor can apply for a green card in the US. There are two approaches to pursue the EB-5 visa – direct investment, something the investor owns and controls actively, or passive investment, made with an investment bank called a Regional Center.
With an investment of $1,050,000, an investor can open or buy a business in the US and apply for an EB-5 green card. When the EB-5 green card is granted, the investor will have 2 years of conditional resident status. During that time, the investor will need to create at least 10 new full-time jobs for US workers.
In other words, if the investor purchases a business with 10 full time employees for $1,050,000 or more, the business will need to grow to 20 full time employees by the end of the 2-year conditional resident status period. If the investor fails to add 10 additional full-time employees by that time, and keep them during the process, the removal of conditions application will be denied, and the person will be processed for deportation.
We generally do not recommend this approach. There are not very many businesses with a $1,050,000 start up capitalization that can support 10 new employees within 2 years’ time. Most of our investors who use the EB-5 visa are planning to invest a lot more than the minimum requirement, such as for purchasing a hotel or a commercial office building.
We generally suggest considering investing $800,000 passively with a Regional Center and then use the balance of their investment capital to do whatever they want to do rather than trying to accomplish both. That being said, we can support either approach. We will explain the Regional Center investment process later on.
Pros to the direct investment approach:
- Control over the business
- Better return on investment potential
- Total costs are lower – while legal fees are higher with this approach, the investor saves the cost of the investment bank access fees to their funds, which are substantial.
Cons to the direct investment approach:
- Much higher immigration risk
- The law forces the investor to hire and pay for full time employees even if the business cannot support and does not need those employees
Passive EB-5 Investment
The alternative approach to this is for the investor to invest with a well-established and reputable investment bank, called a regional center. The investment requirement is $800,000, discounted off the direct investment approach. The regional center is responsible for the job creation requirement, further adding to the passivity of the investment from an immigration compliance perspective.
We do not support a regional center investment that is not real estate backed in some way. There are regional centers who offer sizeable returns for investment as venture capital into businesses. We find those to be too risky an investment for us to be willing to get involved in the immigration process. From our perspective, the lower the return, the better because it means lower risk. We want the investor to get their money back with minimal risk of default by the regional center.
Pros of working with a regional center:
- Much lower immigration risk – job creation is handled by the fund, not the investor.
- Smoother process saves legal fees (around $10,000 cheaper to work with the regional center)
Cons of working with a regional center:
- Lower return potential
- Money tied up for 5-7 years
- No control – fully passive investor
- Higher total cost – regional center charge an access fee to their funds, which can be substantial – we’ve seen as high as $60,000
Is an EB-5 Visa the Right Choice For You?
Something to consider for the EB-5 visa is that the timeframes are horrendous right now. USCIS reports taking about 5 years to process the petition. If the investor and the dependent family are in the US, they can all file for green cards concurrently with the petition. That will allow for work and travel authorization while waiting for a final decision. If the person is not in the US though, it is a very long wait for any benefit.
This is why, for those who qualify, coupling E-2 and EB-5 is generally the best approach. Use E-2 to get here to own and run a business, making money in the meantime. Then do EB-5 as the pathway to the green card, if there is sufficient investment capital to be able to do both.
How to Fund an E-2 and EB-5 visa
We are frequently asked what sources of funding are appropriate for E-2 and EB-5 visas. The best option is personal funds of the investor, accumulated in a documented, legitimate way. Some examples would be:
- Savings from salaried employment over time
- Distribution of business or other investment income accumulated over time
- Sale of a business, appreciated securities or real estate
- Retirement savings
- Inheritance received from the passing of a close family member
- Loan proceeds secured with equity in personal assets, such a home, commercial property or a business
These are ideal sources of funds for E-2 and EB-5 visas.
Alternative sources of funds can be used but come with some risk. The US is importing knowledge with the E-2 and EB-5 programs. Getting money from someone else to make an E-2 or EB-5 investment doesn’t prove the investor knows anything about running a business. Also, the government often will consider the funds given to the investor to really be loans that are not secured by a personal asset.
- Funds given as a gift from a friend or family member
- Advance of inheritance
- Unsecured loan
- Loan from a business owned and controlled by the investor
It’s not that an investor couldn’t try these approaches, they may work. But each comes with risk.
Do You Need an Immigration Lawyer For Your E-2 or EB-5 Visa Application?
We are immigration lawyers, not business lawyers, business brokers or real estate brokers. We help by consulting throughout the E-2 and EB-5 visa process to ensure things are set up correctly, the way the government prefers them to be set up.
We do the heavy lifting on the change of status or visa application, the forms and the evidence submission. We also help with any request for evidence letters that come from the government as they decide on the case.
We do not do business formation, business plans, or corporate book development. We have third party resources that we work with to help with those requirements. But we do ensure these third-party resources complete the necessary requirements the way they need to be done to ensure maximum chances for success in the process.
We hope this information has been helpful as you assess the options and decide which could be beneficial to you. If you’d like to dive deeper into either of these approaches you can schedule a consultation with one of our attorneys.