E-2 Visa – What is a “Substantial Investment?”

In law there are many amorphous terms of art, such as the word “reasonable”… who should decide what is reasonable? In a courtroom judges and juries decide legal terms of art. In immigration, legal terms of art are decided by immigration judges, USCIS, and the U.S. Department of State (“DOS”).

When one applies for an E-2 investment visa, the applicant must prove that his or her investment is “substantial.” DOS is the branch that typically decides whether an E-2 visa investment is “substantial” or not.

So we are confronted with the question of what DOS thinks is a sufficiently “substantial” amount of money when an investor either is purchasing an existing company or starting a new company from the ground up. What do I think substantial means? Well, as a good attorney, my answer to you is “it depends.”

“It depends”, because my feeling is that “substantial” means the investment has to make sense from a business perspective. If your company idea is to start a new golf course, the investment will need to be in the millions of dollars. So don’t come to me with a business plan that shows that you can start a golf course with $500k. It doesn’t make sense. And I can tell you that DOS will consider a million dollar investment as “substantial.”

The harder cases when proving substantiality are for small investments. The rule of thumb that I use is not much less than $100,000. Can you get an E-2 approval on an investment of less than $100k? Yes you can, but its risky, and I don’t like risk. So if the investment is less than $100k, then I typically would have the investor put extra cash in the U.S. company’s bank account for reserve funds.

So imagine that a client is purchasing an existing company for $60k that has three employees. This would probably not be considered “substantial”. At any rate it is borderline, and so the recommendation would be for the client to put an extra $40k in the company bank account to be used for marketing, renovations, and other enhancements to the company.

Income is Key

An E visa for an investment of less than $100k is possible, but it is very risky. The reason that it is risky is because the investment has to be one that will produce enough income for the investor to live on while in the U.S. And if you can show me a company that can be purchased for $50k that will produce enough income to live on, please tell me about this magic investment!

All jokes aside, it really does depend on a case-by-case basis as to whether an investment will pass the E-2 standards. But in general, remember that the investment must: (1) make business sense, and (2) produce enough income for the investor to live on while in the U.S. If these two points are covered, you likely have a “substantial” investment.

-John

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