What is the minimum investment required for an E-2 Treaty Investor "entrepreneur" visa?


Fortunately the investment threshold is often significantly less than the $800,000 or $1,050,000 required for EB-5 Immigrant Investor qualification, but U.S. immigration laws do not provide a clear answer as the definition of a “substantial investment” as required for E-2 Treaty Investor visa purposes is subject to the type of business.

For the startup of a new business, it’s important to document all expenditures by business owners towards premises, initial inventory, equipment, professional services, and other expenses which are required to establish the specific U.S. business to the point of operations, which is generally sufficient to show a “substantial investment” in the specific type of business.

For the acquisition of an existing business, a fair market value assessment by a CPA or other business professional would generally be recommended to prove that the cost of acquisition equates to a substantial investment.

9 FAM 402.9 is the citation to the U.S. Department of State’s Foreign Affairs Manual which provides a comprehensive overview of the requirements for E-2 Treaty Investor visa qualification, but here’s an excerpt focused on the investment requirement:

9 FAM 402.9-6(D)  Investment Must Be Substantial

(CT:VISA-1765;   05-01-2023)

a. General:  The purpose of the requirement is to ensure to a reasonable extent that the business invested in is not speculative but is, or soon will be, a successful enterprise.  The rules regarding the amount of funds committed to the commercial enterprise and the character of the funds, primarily personal funds or loans based on personal collateral, are intended to weed out risky undertakings and ensure that the investor is unquestionably committed to the success of the business.  Consequently, you must view the proportionate amount of funds invested, as evidenced by the proportionality test, considering the nature of the business and the projected success of the business.  Once you determine that an applicant has invested a substantial sum, the applicant generally does not need to be evaluated under this criterion again unless there has been a change in ownership usually through a business acquisition.  Business acquisitions normally occur when Company A buys most or all of the shares in Company B to assume control of its assets and operations and potentially leads to a consolidation or merger.

b. Interpretations of “Substantial”:  No set dollar figure constitutes a minimum amount of investment to be considered “substantial” for E-2 visa purposes.  Investment of a substantial amount of capital for E-2 visa purposes constitutes an amount that is:

(1)  Substantial in a proportional sense, as determined through the application of the proportionality test outlined below;

(2)  Sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise; and

(3)  Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise.

c.  Proportionality Test:  The proportionality test determines whether an investment is substantial by weighing the amount of qualifying funds invested against the cost of the business.  If the two figures are the same, then the investor has invested 100 percent of the needed funds in the business; such an investment is substantial.  Most cases involve lesser percentages.  The proportionality test can best be understood as a sort of inverted sliding scale.  The lower the cost of the business the higher a percentage of investment is required.  On the other hand, a highly expensive business would require a lower percentage of qualifying investment.  There are no bright line percentages that exist for an investment to be considered substantial.  Thus, investments constituting 100 percent of the total cost would normally qualify for a business requiring a startup cost of $100,000, for example.  At the other extreme, an investment of $10 million in a $100 million business may be considered substantial, based on the sheer magnitude of the investment itself.

(1)  See 9 FAM 402.9-6(B) above for guidance regarding qualifying funds.

(2)  The cost of an established business is generally its purchase price, which is normally the fair market value.

(3)  The cost of a newly created business is the actual cost needed to establish such a business to the point of being operational.  The actual cost can usually be determined by combining the cost of the assets the investor has already purchased with the cost estimates for the procurement of additional assets needed to run the business.  For example, cost may be established through invoices or contracts for substantial purchases of equipment and inventory; appraisals of the market value of land, buildings, equipment, and machinery; accounting audits; and records submissions to various governmental authorities.

(4)  The value (cost) of the business is clearly dependent on the nature of the enterprise.  Any manufacturing business, such as an automobile manufacturer, might easily cost many millions of dollars to either purchase or establish and operate the business.  At the extreme opposite pole, the cost to purchase an ongoing commercial enterprise or to establish a service business, such as a consulting firm, may be relatively low.  If all the other requirements for E-2 status are met as described in 9 FAM 402.9-6, the cost of the business per se is not independently relevant or determinative of qualification for E-2 status.

d. Investor’s Commitment:  You may request whatever documentation is needed to properly assess the nature and extent of commitment to a business venture.  Such evidence may include letters from chambers of commerce or statistics from trade associations.  Unverified and unaudited financial statements based exclusively on information supplied by an applicant normally are insufficient to establish the nature and status of an enterprise.

The above is informational and not intended to be legal advice. Please consult with an experienced business immigration attorney on your specific facts and circumstances before proceeding with any U.S. immigration strategy.