This article was first published in March 2008

US Visa Options For The Self-Employed Or Entrepreneur
SMALL AND medium business owners from overseas desirous of investing money in the United States often have to cross one big hurdle before they can set up shop here: obtaining the appropriate visa. The “E-2 visa” or the “treaty investor visa” is often the most viable option for many small businesses. Its purpose is to facilitate international business relations, and foster investment in the United States by foreign nationals and corporations.

E-2 visas are defined by the US immigration and Nationality Act, as visas issued to a foreign national who is “entitled to enter the United States under and in pursuance of the provisions of a treaty of commerce and navigation between the United States and the foreign state of which he or she is a national, solely to develop and direct the operation of an enterprise in which he or she has invested or of an enterprise in which he or she is actively in the process of investing a substantial amount of capital.”

As per the above definition, three conditions need to be met in order to obtain the E-2 visa:

Nationality: This visa category is only available to nationals of countries that have entered into reciprocal treaties of commerce and navigation with the United States. The visa could be available to the investor himself, a managerial employee having duties of a supervisory or executive character and to an employee who has some specific qualifications that would make his or her services essential to the operation of the employer’s enterprise. If the investor is a company or organization, more than 50% of the ownership of the company must belong to nationals of the treaty country. The nationality of a business is determined by the nationality of the individual owners of that business.

Marginality: The applicant should not be coming to the United States solely in connection with the investment of a small amount of capital in a marginal enterprise. In other words, the investment must not be for the sole purpose of providing a living for the investor and his family. For new and smaller businesses, surpassing the marginality test is often a big challenge. The marginality test can be overcome by demonstrating a strong, professionally prepared application with a business plan including a five-year income projection. Although not a legal requirement, it is often useful to show that the business creates employment for individuals other than the investor himself. If the business intends to create employment in the future, this should be well documented in the business plan. Additionally, the marginality test can also be met by demonstrating sufficient assets belonging to the investor outside the United States.

Substantiality: The investor is required to invest a substantial amount of capital in the enterprise. There is no fixed amount that needs to be invested in order to meet the substantiality test. However, the investor must demonstrate that the business is not speculative but is or will soon be a successful venture. In order for an investment to be substantial, it must be proportional to the total value of the business. The investment should be sufficient to support the likelihood that the business will be successful.

In addition to the above three conditions, the investment must be “at risk” in order to qualify for E-2 purposes. The concept of investment connotes the placing of funds or other capital assets at risk, in the commercial sense, in the hope of generating a financial return. If the funds are not subject to partial or total loss if business fortunes reverse, then it is not an “investment” for E-2 purposes.

Advantages of the E-2 visa:

* The E-2 visa does not require the alien to establish that he or she is proceeding to the United States for a temporary period of time or to have a permanent foreign residence, so long as the investor demonstrates his intent to return to his home country upon a termination of his stay in the United States. The E-2 visa could be extended for an infinite length of time, usually in two-year increments.

* The investment is not industry specific and as long as all other conditions are met, the funds could be invested in a bona fide business in any industry.

* An application does not have to be made to the United States Citizenship and Immigration Services (USCIS). A foreign national can apply directly at a United States Consulate in his or her home country.

* Dependants of the E-2 visa holder are eligible to work in the United States upon an application for work authorization.

Disadvantages of the E-2 visa:

* The E-2 visa is not a very useful tool to obtain permanent residence or the “Green Card”. In other words, it is a non-immigrant visa and is not designed to be a stepping stone into a Green Card. Therefore, if the end goal is to obtain a Green Card, proper advance planning is critical and the E-2 investor may have to convert to a more Green Card friendly nonimmigrant status like the H or the L category.

* The foreign national has to invest a substantial amount of money in order to qualify for this category. Again, the amount of investment depends on the kind of industry invested into. For example, a car wash facility would require a higher investment than a beauty salon.

Difference between the L-1 and E-2 visas: The L-1 category is another useful visa category designed specifically for multinational businesses that wish to transfer certain employees from its foreign operations to the United States. The employee must have worked for a subsidiary, parent, affiliate or branch office of the US Company outside of the United States for at least one year out of the last three years. The E-2 category, on the other hand does not require a foreign national to have an ongoing business in a foreign country. It is easier to obtain a Green Card through the L-1 category. Therefore multinational businesses that wish to transfer employees to the United States should consider the L-1 option first, if obtaining a Green Card for the foreign employee is the end goal. Therefore, it follows that an investor who wants to obtain permanent residence in the United States and who meets all the L-1 requirements should consider transferring himself or herself to the United States on an L-1 visa instead of pursuing an E-2 visa.

The other Investment Visa: The EB-5 visa is popularly known as the million-dollar visa and is available to qualified investors seeking permanent residence though investment in a new commercial enterprise. The basic requirements for this category are as follows:

* The amount of investment is $1m USD. The investment may be $500,000 in a targeted employment area (area that has experienced unemployment of at least 150 percent of the national average rate or a rural area);

* Investment must be in an active business and should not be a passive Investment such as buying a residence for investment or purchasing stock;

* The business must have been created after November 29, 1990 or the investment must substantially alter an older business (ie created before 11/29/90);

* The funds should be obtained from lawful sources and should be the individual’s own funds. Examples of this would be a gift, inheritance, and funds from foreign business. The USCIS scrutinizes the source of funds to prevent investment from funds that have not been gained lawfully.

The investment must create 10 full time jobs. If the investment is made in a USCIS designated Regional Centre, the job creation could be direct or indirect. 10,000 immigrant visas per year are available under the EB-5 category. Of the 10,000 investor visas available annually, 5,000 are set-aside for those who apply under a Pilot Program involving an USCIS-designated Regional Centre. A Regional Centre is an entity, organization or agency that has been approved as such by the Service, which focuses on a specific geographic area within the United States and seeks to promote economic growth. However, it should be noted that the Regional Centre programme is a pilot programme and is set to “sunset” or end in November 2008. Despite some active lobbying by immigration attorneys and interested business owners, there has been no clarification from the USCIS regarding an extension of the pilot program.

This visa category is particularly beneficial for individuals seeking to move to the United States permanently as it is an immigrant visa category and results in a Green Card for the individual investor and his spouse and children. However, considering the high amount of investment required and the precarious nature of the Regional Centre Pilot Programme, the E-2 category remains popular among small to medium business-owners who wish to invest in the United States. If used properly, a foreign business owner could successfully operate his or her business in the United States for an infinite period of time on an E-2 visa.

Mitch Wexler is a Partner of Fragomen, Del Rey, Bernsen & Loewy, LLP, the world’s largest immigration law firm. He can be reached at (949) 660-3531 or mwexler@fragomen.com.