What you need to know about the E2 Visa “at risk” requirement - Frear Law
e2 visa at risk requirement immigration lawyer

One difficult aspect of the E2 visa(based on an investment) is that you must show that your investment is “at risk.” This basically means that you can’t get your money back if you have a change of heart and decide that you no longer want to be in business.

As an investor, this puts you in a difficult position. Do you spend a lot of money on a business without knowing for sure that you can even get the E2 visa? Or, do you spend less and risk less financially, which in turn weakens your application?

There are no easy solutions to this dilemma, but this post will discuss some strategies that you could use. The strategies include selecting a business with lower startup costs, utilizing escrow accounts and transferring previously purchased equipment.

What is the “at risk” requirement?

Before we discuss the strategies, it may be helpful to provide an overview of the E2 Visa process. There are a number of requirements for the e2 visa. You must be a national of a country that has a treaty of trade and friendship with the United States. Additionally, you must make a substantial investment in a commercial enterprise in the United States using lawfully obtained funds. This investment must be “at risk” meaning that it is subject to partial or total loss.

Money sitting idly in a US bank account is insufficient. The funds have to be committed. To many investors, this is the most intimidating aspect of the E2 visa process. Who in their right mind would spend a substantial sum of money before knowing if they will be allowed to manage their business in the US? The good news for those in this precarious position is that people take this risk consistently and more oftentimes are able to come to the US on the E2 visa to manage their investment.

STRATEGIES FOR DEALING WITH THE “AT RISK” REQUIREMENT

Strategy #1 Select an E2 Project that Doesn’t Require a Huge Investment

So…how does an E2 visa applicant walk the tightrope between making an at risk investment without risking a huge financial loss in the event of a denial. The first thing that you can do is to select a business that does not require a huge amount of capital. The thought of losing $100,000 is terrible, but you may be able to bounce back from such a loss. A $4 million loss on the other hand may be extremely difficult to deal with.

If you decide to select a business that has lower start up costs to reduce your financial risk, you will need to ensure that your E2 Visa Investment qualifies as “substantial.” Substantial in this context means that the investment is sufficient to ensure your  financial commitment to a successful operation of the enterprise.

The smaller the amount that is required to start a business, the larger the percentage of the overall investment is required. For example, if your business requires an investment of 100,000 you will likely need to have invested that entire amount(100%) in order to obtain an E2 visa. If the amount that is needed is much higher, you may be able to get by with investing a smaller percentage that is required to operate the business. For example, if the overall amount of investment that is needed to make the business succeed is $2,000,000 an investment of $1,500,000 will probably suffice. Of course, because of the amount of money at risk, you will want to discuss your investment strategy at length with a knowledgeable immigration lawyer and before you begin to invest.

Strategy # 2 Put Funds in Escrow

So, let’s say that you identified an investment that you want to make for the E2 Visa. Maybe you are going to open up a franchise. Or, perhaps you are going to buy an existing business. For these types of investments, you will be able to put part of the investment funds in escrow so that you can reduce your financial risk. With an escrow agreement you make the release of the funds contingent upon the issuance of the E2 visa. For example, if you are buying a franchise, you could put the franchise fee in an escrow account. Upon issuance of the E2 visa, the funds will be transferred to the franchisor. If the E2 visa is not issued, the funds could be returned to you. It is important to note that escrow agreements are not acceptable for E2 Visa purposes if there are other conditions of the escrow agreement. Such conditions will lead the adjudicator to conclude that your funds are not committed to the business.

Strategy # 3 Transfer Items that were previously purchased

Another way to reduce the risk of losing money in the event that the E2 visa is denied is by transferring items to be used in the new business. For example, if you previously purchased equipment, you could possibly count that previous purchase as part of the investment in the new venture. This is possible as long as 1) you can show that item will be used for business purposes 2) the item has been transferred to the United States 3) you can prove that you made the purchase and 4) you can demonstrate the current market value of the item.

Success after an E2 Denial

What happens if the E2 Visa application is denied because there are not sufficient funds at Risk? If you are unsuccessful in showing USCIS that you have invested a sufficient amount of at risk funds, your E2 visa application will be denied. That sounds bad, but please keep in mind that if you are denied, you will be able to apply again and show the consulate that you have corrected the problem. Obviously, an E2 visa denial is stressful and you want to avoid that scenario from arising. However, if you are denied, there is no reason to panic because through sound guidance from an immigration lawyer you may be able to successfully re apply.

Conclusion

The E2 Visa requirement that the investment be placed “at risk” creates anxiety for E2 Visa applicants. However, through guidance from an immigration lawyer you will be able to develop a strategy that minimizes your risk of financial loss. The strategy can include selecting a business with lower startup costs, utilization of escrow accounts and transferring previously purchased items to be used in the business.

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