LEGAL GUIDE
Written by attorney Manvel Mikhaylovich Vasilyev | Apr 2, 2012

Substantiality of Investment for E-2 Visa Purposes – How Much is Enough?

Fitting a business plan into a regulatory framework is something every foreign investor hopes he never has to do. But fit it one must if the investment goal includes obtaining an E-2 visa.

One of the key requirements imposed on the E-2 visa applicant is to show that he or she has invested or is in the process of investing a “substantial" amount of capital into a commercial (profit-generating) enterprise.

The idea here is to show that investors are “unquestionably committed to the success of the business" and to ensure that “the business invested in is not speculative but is, or soon will be, a successful enterprise." In other words, that the investor has skin in the game and is committing enough money to get the business off the ground.

This would be a fairly straightforward requirement and not a bit unreasonable if the government told potential investors what amount it deemed “substantial," say for example $200,000. It does not. Instead, a consular officer stationed at a U.S. embassy or consulate thousands of miles away is charged with the responsibility to determine, on a case-by-case basis, whether the invested amount is substantial.

Needless to say, neither the extent to which a consular officer is familiar with the business environment in a particular location in the U.S., nor his or her business savvy can be presumed. This opens the door to misunderstandings, or to put it bluntly, unreasonable denials of visa applications.

In general, in order to prevail, an investor must pass two (2) tests: First, he must show that the amount to be invested is substantial in relation to the type of enterprise he is purchasing or establishing. It is understood that a manufacturing facility would require much more capital in order to become viable (machinery and equipment, assembly lines, production floor, storage facilities, etc.) than a consulting business or a graphic design studio (a rented office space and laptops). Thus, where a $50,000 investment may be sufficient in one instance, a $1,000,000 investment may fall short in another.

Second is the “proportionality test." This test is a comparison between two (2) figures: the amount of funds actually invested and the value of the enterprise (the amount required to purchase an existing enterprise or establish a new one). As usual, no particular figures are contained within the regulations. In practice, a $100,000 investment must be fully funded by the investor in order to support the E-2 visa application, whereas a $10,000,000 investment could be 10% funded and still support the E-2 application. Everything in between is open to interpretation.

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