The L1 vs E2 Visa

Recently I spoke with an entrepreneur from the UK who wants to expand her business into the US. 

After hearing about her background and goals, two visas stood out as the best options—the L1 Visa and the E2 Visa.

This post covers the distinct advantages of each option and offers guidance for those who are trying to decide between the two.

The L1 Visa For Transferees

The L1 Visa is commonly used by large multinational companies who want to transfer employees to the US. Although this visa is better suited for larger companies, founders of small and mighty businesses can benefit from it as well—provided that they have the right corporate structure in place.

In order for the L1 visa to be a viable option for a start-up founder, a few hurdles must be cleared. 

First of all, the founder must show that they have been working abroad for the company for at least a year. Also, the work abroad must have involved executive or managerial duties. To read more about what constitutes qualifying managerial or executive duties, you can read this post.

For our purposes, it is sufficient to think of managerial or executive duties as those that involve supervision of managers and professionals or management of major company functions (ie. sales, marketing, etc.). Front line managers or those who are involved in day to day operations are unlikely to qualify.

Also, it is important to note that your business will have to continue to operate abroad while you are running a new related company in the US.

Some entrepreneurs—like myself—will likely stop reading about the L1 visa at this point. For many of us, our organization is simply not large enough to allow us to remove ourselves from the daily operations. 

However, if you do have an organization that supports qualifying executive or managerial work, then the L1 is an option worth considering, given its advantages.

L1 Visa Advantages

Advantage #1: A Better Green Card Path

The L1 visa(for managers and executives) has similar requirements to the EB1C green card. For this reason, many L1 visa applicants will be able to smoothly transition to green card status.

Advantage #2: All Nationalities Qualify

It is unfortunate that the US does not have an E2 treaty with all countries. As a result there are hugely talented entrepreneurs who cannot pursue the E2 visa since they do not possess the requisite nationality. 

Thankfully, those who do not qualify for the E2 will be able to consider other US immigration options including the L1 visa.

The E2 Visa For Entrepreneurs

The E2 visa is used by thousands of people each year. This visa allows entrepreneurs to run a US business in which they have made a substantial investment. There are a number of E2 visa requirements that you can read about here.  To summarize, here are some of the key requirements…

• You need the right nationality.
• Your investment in the US company must be committed and large enough to ensure that the company will be a success.
• You need the ability and the intention to direct the US company.
• Your company must employ US workers(now or in the future).
• You need to own at least 50% of the company.

If you can meet these and other requirements, then you will be able to enjoy the following advantages…

Advantage #1: Newly Minted Entrepreneurs Can Qualify

Unlike the L1 visa which requires you to first establish a company abroad with the appropriate structure, the E2 is available to founders of new companies. This makes it attainable for a wide swath of entrepreneurs with varying levels of experience.

Advantage #2:  Unlimited Extension/Renewals

The L1 provides a nice path to a green card. But…for those who cannot obtain a green card, the visa is limited in duration. The maximum duration for an executive or manager is seven years.

The E2 visa does not have a maximum duration. This means that you could run your US business indefinitely since there is no limit on the number of times you can renew/extend it.

Advantage #3: Two Years of Initial Duration

Upon each entry into the US on a valid E2 visa, you will receive a two year period of stay. This gives you a two year stretch to launch and scale your business before you are required to demonstrate that you still qualify.

For a “new office” L1 Visa(new office=US company that is less than a year old) the initial validity period is for one year. This creates a nearly impossible situation for entrepreneurs who will need to show that they create enough revenue to support an upper level manager or executive after a short period of time.

Which Option is Better For You(L1 vs E2 Visa)?

Immigration lawyers are routinely mocked for saying “it depends.” But, the best option for you does depend on your objectives and your experience.

For example, if you…

• scaled a successful business abroad
• worked for your foreign company in a qualifying role
• predict that you foreign business will continue while you are in the US 
• possess confidence in your ability to scale quickly in the US
• highly value a US green card

…then the L1 Visa is a great option!

If the green card is less important and you simply want to run a business in the US, then the E2 visa will be a more straight forward option—especially if you have not already started a related business abroad.

Conclusion

I hope this post helps you evaluate two popular visa options for starting a US business.

If neither of these options seem like a good fit, there are additional possibilities to check out including the National Interest Waiver(NIW) green card, the O1 visa, the Eb1A visa and the EB5 Visa.

An analysis of your options is best accomplished by working with one of the many knowledgeable US immigration lawyers.

If you have any questions for me, you can contact me at ben@frearlaw.com.