IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Barbara Marcouiller:

How Non-U.S. Citizens Can Open or Acquire a U.S. Business

In the U.S. there are temporary visas, called non-immigrant visas (NIV), and immigrant visas (IV) for permanent residence, the so-called “green card” that allows a person to live and work in the U.S. indefinitely.  Most types of visas that are based on employment require a U.S. employer to petition U.S. Citizenship and Immigration Services (USCIS) to authorize them to employ the foreign national.  One type of visa that does not require an employer to petition, but rather can be applied for directly by the foreign national, is the E-1 or E-2 visa.  The E-1 visa, called a Treaty Trader, is similar to the E-2 but is for enterprises engaged in trade.  Here we will focus on the E-2, which is for applicants who are opening or acquiring a business in the U.S.

The E-2 investor visa is much faster and less expensive than its big brother the EB-5.  It is a wonderful option for many foreign entrepreneurs.  Called the Treaty Investor visa (along with its cousin the Treaty Trader E-1 visa), it is a temporary nonimmigrant visa.  It does not lead to a green card itself.  Typically, it is valid for two years, and notably can be renewed indefinitely.  We have clients who have been on an E-2 visa for 20 years.

The E-2 requires the investor be a national of a country with which the U.S. has a Treaty of Friendship Navigation and Commerce, nowadays more commonly called a Bilateral Investment Treaty or Free Trade Agreement.  The U.S. has qualifying treaties with 82 countries, meaning nationals of 82 countries may qualify to participate.  Note that with some countries the U.S. has only a treaty allowing for an E-1 trader or only an E-2 investor, but most treaties allow for both.

Until very recently, a person who does not have the nationality of a treaty country could acquire the citizenship of a treaty country quickly.  For example, it was relatively accessible to most people to gain citizenship in either Grenada in the Caribbean and Malta in the Mediterranean based on investment in that country, and then do an E-2 to the U.S.  However, as of December 23, 2022, the U.S. law was amended to allow USCIS to request additional proof of how the applicant obtained the treaty country nationality.  For those individuals who obtained treaty country nationality through a financial investment, USCIS may now require proof that the applicant has been domiciled in the treaty country for a continuous period of at least 3 years at any point before applying for E-1 or E-2 classification.

The E-2 is granted to an investor who seeks to enter the U.S. solely to direct or develop the operations of an enterprise in which s/he has invested or is actively in the process of investing a substantial amount of capital in a bona fide enterprise.

To qualify you must establish a number of requirements including:

1. The applicant must be a national of a country with which the U.S. has the required type of treaty for an E-2;
2. Must have the intent ultimately to leave the U.S. and return to your country upon conclusion of your E-2 investor activities;
3. If approved, an E-2 is valid for two years, and may be requested to be extended beyond two years in increments of two years at a time;
4. The applicant, must have invested or be actively in the process of investing;
5. The investment must be “substantial;”
6. The investment funds must be “at risk;” a passive investment will not qualify;
7. The investment may not be marginal, meaning the return on the investment will be more than merely enough to sustain the investor and his or her family;
8. The investment enterprise is a real and operating commercial enterprise;
9. The applicant will “develop and direct” the business;

How much money needs to be invested to meet the standard of “substantial” is not a set number for an E-2 as it is with an EB-5, but rather depends on what the investment is.  A lawyer who needs only a desk, computer and telecom/office infrastructure may be able to direct a real and operating enterprise for a lower initial investment than a manufacturer of solvents to remove graffiti that requires the appropriate space and permits for manufacturing and storing solvents.  We have an internal standard in our firm that we don’t accept a case in which the investment is less than $125,000.  We do not want our clients to go through the process if we aren’t confident that it will be approved.  We do E-2s across industries and for any size company.

There are many details to address.  For example, the applicant needs to show the source of the funds to prove the money was obtained legally, that the money is his/hers to invest (not a loan under most circumstances), the funds are irrevocably committed to the enterprise, and much more.  An applicant will want to work with an experienced E-2 immigration attorney to make sure you can establish all the details.

The E-2 visa is eligible for Premium Processing from USCIS, meaning you could get the petition approved much more quickly than types of visas that do not have that option.  In fact, it could be as little as 15 days if the applicant is already in the U.S. on a different type of visa and is applying to change status to the E-2.  For any type of change of status, if the applicant should leave the U.S. they will need to obtain the visa from the U.S. consulate abroad (except for visa-exempt countries like Canada), and will want to plan ahead for that.

The E-2 is a great option for nationals of 82 countries to open or acquire a business in the U.S. With the E-2 they are able to live and work in the U.S. in 2-year increments, though E-2s can be renewed indefinitely.

If you have questions relating to the content of this article, Barbara Marcouiller would welcome inquiries. Ms. Marcouiller can be reached at (425) 822-2228, or barbara@kirklandlaw.com.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, accounting, legal, and financial planning communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.