Forming business partnerships creates opportunities for E-2 investors with limited capital. It also offers excellent option for potential partners looking for business opportunities in the United States.

However, using a partner’s investment incorrectly can lead to an E-2 visa denial.

Thus, it’s important to understand WHEN and HOW funds from a partner can help meet the E-2 visa requirements.

Here, we'll explore 3 common partnership options for E-2 visa.

We understand the challenges involved and are here to simplify the process for you. If you need help understanding any of our articles, please contact us. We provide assistance to investors, attorneys, franchise consultants, and business brokers.

Understanding the E-2 Visa with Business Partners

The E-2 visa is designed to promote genuine foreign investment into the United States, requiring applicants to make a substantial investment. When partners are involved, it's important to know whose funds qualify (count) toward the E-2 investment.

Three key points to understand about the E-2 visa in partnership scenarios include:

1. Qualifying Funds: Investment money must meet specific requirements to be considered qualifying for E-2 purposes.

For instance, if the total cost to purchase a business is $250,000, but only $50,000 meets the qualifying criteria for the E-2 visa, the investment considered for the visa would be just $50,000. The remaining $200,000, which doesn't meet the required criteria, would not count toward the E-2 investment eligibility.

2. Substantial Investment: The total investment must be "substantial".

While we won't delve into the specifics of how much is a substantial investment in this article, just know that only qualifying funds count toward fulfilling the substantial investment requirement. Conversely, non-qualifying funds do not count towards the substantial investment that an E-2 investor needs to satisfy.

3. Partner Contributions: Only certain types of partner contributions qualify, and not all will count toward the E-2 visa.

Generally, only a joint E-2 investor or a foreign investor from a treaty country can qualify their funds for E-2 investment. This will be explained in more detail in the three partnership structures.

What Are Qualifying Funds for the E-2 Visa?

To understand what qualifies as an E-2 investment, it’s crucial to differentiate between qualifying and non-qualifying funds. Below are the criteria that must be met for funds to qualify (count) toward the E-2 visa investment:

Criteria for Qualifying Funds

  1. Legal Source of Funds: The funds must come from lawfully acquired source(s). Examples include:
    • Personal income from employment
    • Gains from stock investments
    • Proceeds from selling personal assets, such as real estate
  1. Personal Possession of Funds: The E-2 investor must have personal possession and control over the funds before they are invested in the U.S. business, such as holding funds in the E-2 investor’s personal bank account.
  2. Funds from Other Foreign Investors: Foreign investors not seeking an E-2 visa may contribute qualifying funds if they:
  • Are citizens of a Treaty Country.
  • Do not intend to reside in the U.S. with any other visa.
  • Are not U.S. citizens.
  • Are not U.S. legal permanent residents (green card holders).
  • Are not living in the U.S. with another visa.

Non-Qualifying Funds

Funds that do not count toward the E-2 investment include:

  • Money from illegal activities or funds that cannot be traced to lawful source.
  • Money that was not held in the personal possession and control of the E-2 investor.
  • Money that cannot be verified and traced to its lawful origin(s).
  • Contributions from U.S. citizens or permanent residents.
  • Partner contributions that fail to meet the criteria for qualifying funds (see above funds from other foreign investors).

Types of Partnerships and Their Impact on the E-2 Visa

Now that we've defined qualifying and non-qualifying funds, let's apply these definitions while exploring the 3 common partnership structures for E-2 visa applicants.

1. Joint E-2 Investor Visa Partnership with Another E-2 Investor

This arrangement involves two E-2 investors who co-own a U.S. business, with each bringing qualifying funds to the partnership.

Key Points:
  • Both partners must be citizens of treaty countries.
  • Each investor’s funds must come from legal, traceable sources.
  • Each investor must own 50% of the business and contribute equal shares of qualifying funds.
Advantages:
  • Both investors’ funds can count toward the E-2 visa investment.
  • Each investor can bring their immediate family members to the U.S. under the E-2 visa.
Example:

Two investors from Canada each invest qualifying funds of $75,000 into a U.S. business, forming a total investment of $150,000. Both partners' funds qualify, and both can apply for the E-2 visa.

2. E-2 Investor Partnering with a U.S. Citizen, Green Card Holder, or U.S. Visa Holder

In this partnership, an E-2 investor teams up with a U.S. citizen or permanent resident. Although the U.S. partner can provide funds to help start or purchase the business, none of their contributions count toward the E-2 visa investment.

Key Points:
  • The E-2 investor must contribute the majority of the investment.
  • The U.S. partner’s funds do not count as qualifying funds for the E-2 visa.
  • The E-2 investor must own at least 50% controlling ownership and hold the highest managerial position in the business.
Advantages:
  • The U.S. partner may assist with essential business logistics, such as obtaining licenses and opening bank accounts, which can be challenging for E-2 investors who lack a Social Security Number or are not physically present in the U.S.
Example:

Tom, an E-2 investor, found a restaurant that costs $400,000 to purchase. He can invest $300,000 of his personal funds, but needs an additional $100,000. His U.S. partner, Jerry, provides the remaining funds. However, only Tom’s $300,000 will counts as a qualifying E-2 investment.

It's important to note that if the U.S. business partner's investment is too significant, the visa officer may determine the E-2 investor's qualifying funds have become too diluted, no longer meeting the "substantial" investment requirement for the E-2 visa.

With over 600 successful E-2 visa cases so far, our firm has deep insight into the investment balances that visa officers typically accept. We have a strong track record of navigating complex partnership structures to ensure our clients meet the substantial investment requirement. If you're unsure whether your U.S. partner's contribution is too large, contact our firm for expert guidance. We’ll help you structure the investment to maximize your chances of visa approval.

3. E-2 Investor Partnering with Other Foreign Investors

This partnership involves other foreign investors, who must be citizens of treaty countries. Each investor can contribute qualifying funds, and the collective amount can count towards the E-2 investment.

Key Points:
  • All other foreign investors must meet the following criteria for qualifying funds and they:
    • Are citizens of a Treaty Country.
    • Do not intend to reside in the U.S. with any other visa.
    • Are not U.S. citizens.
    • Are not U.S. legal permanent residents (green card holders).
    • Are not living in the U.S. with another visa.
  • The primary E-2 applicant must hold at least 50% ownership of the business.
Advantages:
  • All other foreign investors’ contributions may count as qualifying funds.
  • The group can pool resources to meet the substantial investment requirement.
Example:

Imagine a group of 10 investors, with five from Canada and five from the U.K., collectively investing in a U.S. business. One of the investors will apply as the primary E-2 visa applicant and relocate to the U.S. The other foreign investors’ and the E-2 applicants’, combined investments count toward the E-2 visa requirements, regardless of the specific amount each person contributes. However, it is advisable for the primary E-2 applicant to invest a substantial portion of their own funds to show a strong personal commitment to the business. The primary applicant must also hold at least 50% ownership of the business, while the remaining shares can be distributed among the other partners.

Unlike partnerships with U.S. citizens or permanent residents, where their contributions don't count toward the E-2 visa, investments from other foreign investors that meet the above conditions are considered qualifying funds.

Conclusion

When forming partnerships for an E-2 visa, it’s essential to ensure that all qualifying funds meet the visa’s requirements. The structure of your partnership—whether with another E-2 investor, a U.S. citizen, or multiple other foreign investors—will significantly impact how much of the investment qualifies toward the E-2 visa. It’s crucial to work with an experienced E-2 attorney to avoid potential pitfalls and maximize your chances of visa approval.

If you need guidance on your E-2 visa application or help structuring a partnership for E-2 visa purposes, our team is here to assist. Contact us. We have real world experience and insights.

Summary FAQ: How Much to Invest When Business Partners Are Involved

  1. What is the minimum investment for an E-2 visa? There is no fixed minimum, but the investment must be substantial relative to the business. Typically, $100,000 to $150,000 could be considered sufficient for most small businesses.
  2. Can my partner's funds count toward the E-2 visa investment? If your partner meets the criteria for “other foreign investor” who is from a treaty country or is a joint E-2 investor, then their funds may count as qualifying. However, contributions from U.S. citizens or permanent residents do not qualify.
  3. What are qualifying funds for the E-2 visa? Qualifying funds must come from a legal source, be under the investor's control and possession, and be traceable through bank records to the lawful origin. Funds from illegal activities or untraceable sources do not qualify.
  4. Can I partner with a U.S. citizen for my E-2 visa? Yes, but their contributions won’t count as part of the qualifying investment. The E-2 investor should provide the substantial majority of the qualifying funds.
  5. What happens if my U.S. partner contributes a large amount? If the U.S. partner's contribution is too significant, it may dilute the E-2 investor's stake, jeopardizing the visa application.
  6. Can I partner with multiple foreign investors for an E-2 visa? Yes, and their contributions may count as qualifying funds, provided they meet all E-2 visa requirements, and meet the criteria of “other foreign investors” who are citizens of treaty countries.