The E-2 classification is a type of investor visa which allows E-2 treaty investors an individual and his/her family to come to the United States on a temporary basis to run a business.

E-2 classification is not open to everyone. For, example citizens of India do not qualify for E-2 status. Therefore, if you are a citizen of India and are looking to invest in the U.S. you would have to consider filing an EB-5 petition.

To qualify for E-2 classification you must meet the following criteria:

Be a national of a country with which the United States maintains a treaty of commerce and navigation (Go to this current list of eligible countries).
Have invested, or be actively in the process of investing, a substantial amount of capital in a bona- fide enterprise in the United States.
Be seeking to enter the United States solely to develop and direct the investment enterprise. This is established by showing at least 50% ownership of the enterprise or possession of operational control through a managerial position or other corporate devices.

Invested or in the process of investing

At the time of filing the application for E-2 classification, you must have either invested or be in the process of investing because it is a requirement of the E-2 classification that the capital be at risk.

To qualify based on “in the process of investing” you can use an escrow account. The use of an escrow account means that once the petition is approved the money is transferred from the escrow account directly to the business. However, the benefit of using this account is that if the E-2 application is denied for any reason then your money would be returned to you and would not be invested in the business. This avoids the situation of investing in a business and then facing a denial of your E-2 application. Otherwise, you will have invested in a business that you are not authorized to run.

Substantial investment

Unfortunately, there is no clear definition of what amounts to “substantial.” At Patel Law Group (PLG) we routinely advise clients that they need to invest a minimum of $100,000.00. Although some Attorneys claim to have obtained approval for investment amounts lower than this at PLG, we make every effort to reduce the risk of a denial based on USCIS concluding that the investment is not substantial. By investing at this level, you give yourself a better chance of approval.

However, the investment needs to be substantial in relation to the total cost of the business. For example, if the business costs $100,000.00 the investor would need to invest the full amount. For a business where the total cost is $500,000.00 the investor would need to invest at least $375,000.00 which represents 75% of the total cost of the business. For a business in excess of $500,000.00 a 50% investment would suffice.

Please note that the above figures are intended as a guideline only.

Source of funds

As an investor you will need to demonstrate that you own the funds and the source of those funds, meaning where the money has originated from. You must demonstrate that the funds have not been obtained either directly or indirectly from criminal activity.

Do I have to buy an existing business or a new one?

You have the option of establishing a new business or buying a new one. The problem most potential investors have with setting up a new business is how to invest a substantial amount of money. For example, if you wanted to set up an IT consulting business it would be difficult to invest $100,000.00 as there is little to invest in other than office space and furniture/computer equipment, etc.

However, when you buy an existing business the purchase price is essentially the investment.

Do I have to run the business myself?

Yes, you are required to have at least 50% ownership and must be coming to the U.S. to direct and develop the business. This means you should be the one with operational control over the business and generally supervising employees.

Businesses cannot be marginal.

Your business cannot be marginal. In other words, it should not just generate enough income for you and your family.

Although there is no job creation requirement if you can demonstrate that you will employ U.S. citizens or green card holders then it will be much easier for you to demonstrate that your business is not marginal.

How to apply

A person can file Form I-129 to change the status to E-2 classification if currently in the U.S in a lawful nonimmigrant status. The E-2 classification can also be obtained by applying abroad.

Period of Authorized Stay

You are allowed a maximum initial stay of two years. As long as you continue to run your business you can apply for an extension of your E-2 classification and this may be granted in increments of up to two years each. There is no limit on the number of times that you can apply to extend your E-2 status.

However, if you travel outside of the U.S. you will generally be granted an automatic two-year period of readmission when returning. In these circumstances, you would not need to file a new Form I-129 with USCIS.

Can I obtain a green card?

Unfortunately, there is no direct path to obtaining a green card based on E-2 classification. However, if you run a successful business for many years and generate a sufficient income you could use that income to file an EB-5 application. For further information about an EB-5 application please contact our Managing Partner, Rakesh Patel at rpatel@patellegal.com.

Employees

Certain employees may also seek E-2 classification. To qualify for E-2 classification the employee must be the same nationality as the principal E-2 investor and must be engaged in duties of an executive or supervisory nature or possess special qualifications.

Dependents

You may be accompanied or followed by spouses and unmarried children who are under 21 years of age. Their nationalities need not be the same as yours. Family members generally will be granted the same period of stay as you and spouses of E-2 workers are authorized to work.

If you are interested in filing an E-2 application or would like further information, please contact PLG Partner, Chris Prescott at cprescott@patellegal.com to schedule a consultation.