What Every Investor Should Consider before Buying a Business for an E-2 Visa
An E-2 visa is a visa category that applies to people who want to invest in a business in the United States. If you do not want to start a business from scratch, you can always buy a business for an E-2 visa. However, there are some things you should note before buying a business for an E-2 Visa.
The Rate of Financing for Buying a Business for an E-2 VisaIn order to get an E-2 visa, the amount of financing (debt) used should be limited. If the purchase price for the business is between $100,000 and $500,000, then the financing should not be more than 25-30%.
For example, Mr. Shawn wants to purchase a gas station. The price of the station is $250,000, but he only has $100,000. The seller agrees to collect a down payment of $100,000 and financing for the remaining $150,000. The US embassy is going to reject Mr. Shawn's visa application because the amount of financing is about 60% of the whole purchase price.
Marginal InvestmentsThe E-2 visa requirements state that a business should not be marginal. This means that the returns from the business should be able to take care of more than the family needs of the applicant. In Florida, the average family income is well above $60,000. So, the returns from your investment needs to be significantly more than that.
For example, Mr. Lee wants to purchase a takeaway business. The business has just one employee. The business currently returns a profit of $20,000, but he believes it has more potential considering its location near new business offices.
The US embassy is going to reject the E-2 visa application because the current returns from the business are marginal. They are not even up to the median family income of $60,000 in Florida.
The Intended Business for an E-2 Visa is a Passive InvestmentE-2 visa requirements state that the intended business has to be one that you need to actively manage. This means that passive investments like stocks, some categories of real estate, bonds, and so on would not be eligible.
For example, Mr. and Mrs. Smith want to purchase a ten-apartment complex they would use for long-term rents. The apartment complex employs one-part time janitor who also does repairs.
The US embassy is going to reject their application for an E-2 visa because it is not a business that requires the active management of Mr. and Mrs. Smith. Mr. and Mrs. Smith can make money from their ten-apartment complex while they sleep. E-2 visa requirements expect that it has to be a business that they need to practically run from 9 to 5 every day in order to be successful.