Who Shouldn’t Apply for the E-2 Visa?

The E-2 visa is one of the rare things in the world that is a true win win. Foreign national entrepreneurs get to live, work and grow a business in the US. And the US economy benefits from the jobs that these entrepreneurs create. But in reality, the E-2 is not for everyone. First of all, this visa is limited to foreign nationals whose country has an E-2 treaty with the US. And, even if your country has the relevant treaty, your may not be a great candidate to apply for the E-2 visa.

Don’t get me wrong…for most people who reach out to my practice, the E-2 visa is a natural fit. However, for others, I spend time trying to convince them that the E-2 is probably not a great option based on their situation.

In this post I cover three types of people who may want to re-think their plans to apply for the E-2 visa…

#1: The Committed Solopreneur

The E-2 visa is not the right option for people who are committed to having a one person business. Now, I get it, running a lean business is an enticing option. With all of the available outsourcing options and technology tools, you can run a successful business that doesn’t require employees. However, the E-2 visa is not available for marginal businesses. 

What does that mean? 

The US Foreign Affairs Manual(FAM) defines it for us. The FAM says…

A marginal enterprise is an enterprise that does not have the present or future capacity to generate enough income to provide more than a minimal living for the treaty investor and their family. 

If you aren’t projecting job creation, then you will likely be denied the E-2 visa on the basis that your business is marginal.

#2: The Risk Averse Entrepreneur

Most entrepreneurs are natural risk takers. But some people—myself included— like to take things slowly to limit their risk.

For example, those who follow the lean startup approach will have an initial assumption about how their business will work. Then they test those assumptions and iterate based on actual results. After testing the market for a product or service, they will increase their investment and scale up.

This is reasonable and smart. However, if you are applying for the E-2 visa, you won’t have that luxury because you have to make a substantial at risk investment—and formulate a plan—before you apply for the E-2 visa. This essentially means that you typically have to purchase everything that your business needs up front. Then, once the business is either operational or right on the cusp of becoming operational, you can proceed to apply for the E-2 visa.

For some people this will be way too risky. These people will ask…why would I make a large initial at risk investment when I do not know if I will receive the E-2 visa? If the idea of committing a large amount of money to a business that you may not be able to manage from within the US makes you break out in a cold sweat, then the E-2 is probably not a great fit. 

#3: The Reluctant Entrepreneur

When I talk to potential clients, I like to hear that the person has entrepreneurial experience or has wanted to start a business for a long time. For these people, running a business in the US is the primary motivation for applying for the E-2 visa.

But, sometimes I talk to people who appear to want to pursue the E-2 visa for other reasons. Sometimes, the non-investor spouse wants to pursue their career in the US by using the work authorization that they can receive through the process. Other times, the investor simply wants to be in the US so they can spend more time with their US based family or friends.

When the motivation for the E-2 visa is not related to the desire to run a business in the US, then the person who starts the US business may find themselves in an unsustainable situation. As anyone who has started and grown a business can tell you, it takes a lot of hard work and focus. If you aren’t fully committed to growing and running a business, it will likely fizzle. And when that happens, you will have a difficult time maintaining E-2 status—either because you no longer want to run the business, it is not profitable, or because your business is not creating the required jobs.

Conclusion

So there you have it. Those are the three types of people who should think twice before applying for the E-2 visa.

Ideally, E-2 investor applicants will have a strong desire to run a business in the US. The E-2 is not great for those who are risk averse since you have to make a substantial at-risk investment before you apply. And, you should be prepared to project job creation.

Thanks for your time!