The idea of a “substantial” investment is central to qualifying for an E-2 Treaty Investor visa — but it’s not defined by a single dollar figure. This article explains how U.S. adjudicators apply the proportionality test, what counts as a qualifying investment, and how an investor can present a strong case.

What "substantial" means under the E-2 rules

The E-2 visa requires that a foreign national make a substantial investment in a bona fide enterprise in the United States. The law does not set a numerical dollar threshold. Instead, adjudicators apply a comparative approach known as the proportionality test: the investment must be substantial in proportion to the total cost of either purchasing an established enterprise or creating a new one.

Put simply, the question is not just how much money the investor puts in, but whether that amount is reasonably necessary to start and operate the specific business. The goal is to ensure that the investor has made a real economic commitment and that the enterprise has a realistic chance of success.

Official guidance on E-2 eligibility and requirements is available from the U.S. Citizenship and Immigration Services (USCIS) and the U.S. Department of State. For more detail, see the USCIS E-2 page: https://www.uscis.gov/working-in-the-united-states/temporary-workers/e-2-treaty-investors.

The proportionality test — how adjudicators evaluate investment

The proportionality test compares the investor’s committed capital to the total cost of the business. Adjudicators ask whether the investment is large enough, when viewed against the project’s total budget, to ensure the enterprise’s successful operation. Several practical factors influence the outcome:

  • Total cost of the enterprise: The higher the overall budget, the lower the percentage of that sum an investor might need to contribute while still being considered substantial.
  • Nature of the business: A capital-intensive manufacturing business will have different expectations than a small consulting firm or retail startup.
  • Stage of development: Purchasing an established business often requires a different analysis than starting a business from scratch.
  • Evidence of commitment: Whether funds are actually at risk (spent or irrevocably committed) matters more than promises or conditional loans.

Because there’s no fixed threshold, adjudicators evaluate each case on the business’s own facts and supporting documentation.

Practical numerical examples (illustrative only)

These examples are illustrative — they do not predict individual outcomes — but they show how proportionality works in practice.

  • Small, low-cost business: A coffee cart with a total startup cost of $30,000. An investor who contributes $20,000 (66%) will likely fail the proportionality test because $20,000 is unlikely to be sufficient to operate the cart. An investor who commits $30,000 (100%) is more likely to meet the test.
  • Mid-range startup: A specialty food truck budgeted at $150,000. An investment of $113,000 (75%) or $125,000 (83%) stands a reasonable chance of being found substantial because the contributions represent a significant portion of the total needed to put the truck into operation.
  • Large enterprise: A manufacturing facility with a $5,000,000 cost. An investor contributing $1,500,000 (30%) might still be considered substantial if the amount is meaningful relative to the enterprise’s needs — for example, if those funds finance a crucial production line or if an investor’s capital is part of a larger legitimate financing plan. The key is whether the contribution materially enables the business to operate.

These scenarios show why context matters. A high percentage of a small total cost is often required for low-cost businesses, while a smaller percentage can be acceptable when the business is capital-intensive, provided the funds are meaningful to the operation.

How "capital at risk" works and what counts

An essential E-2 principle is that the investor’s funds must be at risk. The capital must be subject to partial or total loss if the enterprise fails. Funds that are not genuinely committed or that remain under the investor’s control without real exposure typically do not qualify.

Common forms of qualifying investment include cash deposited into the business bank account and spent on business assets, equipment purchases, leasehold improvements, inventory purchases, payment for professional services essential to the business, and documented expenditures that are integral to starting or operating the enterprise.

By contrast, the following are often problematic unless structured carefully and documented clearly:

  • Loans where the investor is the borrower and the loan is secured by the investor’s personal assets — these may not count unless the loan proceeds were actually committed to the enterprise and meaningfully at risk.
  • Promises of future funding or unexecuted agreements — adjudicators look for funds already invested or irrevocably committed.
  • Assets that remain personal and not transferred to the enterprise — funds must be committed to the business.

Marginality: the enterprise must be more than a means to support the investor

In addition to being substantial, the investment enterprise must not be marginal. A marginal enterprise is one that will only generate enough income to provide a minimal living for the investor and family. To meet the E-2 standard, an enterprise must either:

  • Have the capacity to generate more than minimal household income; or
  • Create job opportunities for U.S. workers — the presence of clear and credible plans to hire U.S. employees is strong evidence that the business is not marginal.

Evidence that strengthens the non-marginality argument includes detailed financial projections showing revenues, profits, and the capacity to support the investor’s family; concrete and realistic staffing plans; evidence of contracts or market traction; and documentation of actual hires or payroll commitments.

Documentation that persuades adjudicators

Because E-2 adjudications are fact-based, the quality and breadth of documentary evidence matters greatly. Typical documentation to assemble includes:

  • Investment evidence: bank statements showing transfers into the business, wire receipts, cancelled checks, invoices for equipment or inventory, bills of sale, and purchase agreements.
  • Proof funds are at risk: receipts for expenditures, cancelled checks, proof of asset purchases, and contracts that demonstrate irrevocable obligation.
  • Business formation records: corporate or LLC formation documents, operating agreements, shareholder agreements, and state registrations.
  • Leases and real property documents: signed commercial lease agreements, property purchase contracts, proof of leasehold improvements being paid for.
  • Detailed business plan: narrative description, market analysis, realistic financial projections (cash flow, profit & loss, balance sheet), staffing and hiring timelines, and marketing strategy.
  • Contracts and customer evidence: signed client contracts, letters of intent, supplier agreements, and purchase orders.
  • Employment evidence: job descriptions, staffing projections, copies of payroll or offers to U.S. employees.
  • Tax and accounting records (if purchasing an existing business): prior tax returns, balance sheets, and profit/loss statements to demonstrate historical performance.

Adjudicators weigh the totality of this documentation to decide whether the investment is substantial relative to the business’s needs.

Common pitfalls and how to avoid them

Investors often make avoidable mistakes that weaken their E-2 petitions. Recognizing and preventing these pitfalls improves the odds of success:

  • Undercapitalization: Starting with too little money or hoping to raise funds after obtaining the visa without a credible initial investment plan weakens the proportionality argument.
  • Poorly documented funds: Lack of clear paper trails for the source and use of funds can lead to denial. Every major transaction should be verifiable.
  • Counting non-risked funds: Treating temporary or conditional loans, escrowed funds that can be returned freely, or personal assets not committed to the business as investment will be questioned.
  • Weak business plan: Vague projections, unrealistic assumptions, or absence of a hiring plan make it difficult to prove both substantiality and non-marginality.
  • Inconsistent documentation: Differences between financial statements, bank records, and the business plan raise red flags.

Structuring the investment: practical tips

To present the strongest possible E-2 case, investors should consider practical structuring steps:

  • Match funding to business needs: Ensure initial capital reasonably covers startup costs and critical operations until the business is revenue-generating.
  • Document every step: Maintain a clear audit trail for transfers, purchases, and contracts. Adjudicators prefer evidence showing funds were actually spent on business operations.
  • Use a credible business plan: Include conservative, well-supported financial projections and a realistic timeline for hiring and sales growth.
  • Show funds at risk early: Even if investment proceeds in phases, make an unequivocal initial capital commitment that is meaningful to immediate operations.
  • Avoid relying solely on future investors: While future financing can be part of a long-term plan, the initial investor must show that the business is viable with the capital already committed.
  • Consider hiring plans: If the enterprise will be small, focus on proving it will generate more than minimal income; if possible, show credible plans to employ U.S. workers.

Special situation: buying an existing business

When buying an existing enterprise, the proportionality test looks at the purchase price as the enterprise’s total cost. Documentation from the sale is critical: purchase agreement, escrow statements, proof of funds transferred, and historical financial records of the business.

Adjudicators will examine whether the investment paid to acquire the business was real and at risk and whether the purchase price reflected market value (not an inflated or artificially low price arranged solely to meet E-2 requirements).

When an investor should consult an attorney

Because E-2 adjudications hinge on nuanced factual assessments and careful documentation, experienced counsel can help design the investment structure, prepare a persuasive business plan, and assemble the evidentiary record. An attorney with E-2 experience can also anticipate likely questions from consular officers or USCIS adjudicators and advise on strategies to demonstrate both substantiality and non-marginality.

Which part of the proportionality test is most challenging for an investor: deciding how much to invest, documenting funds at risk, or proving non-marginality? Thinking through that question early helps shape a stronger application strategy.

With careful planning, transparent documentation, and a business plan that shows how the investment supports real operations and job creation or meaningful income, an investor can make a persuasive case that the investment is substantial and meets the E-2 standard. For practical guidance on preparing an E-2 petition and sample business plan expectations, see the USCIS E-2 information: https://www.uscis.gov/working-in-the-united-states/temporary-workers/e-2-treaty-investors.

Please Note: This blog is intended solely for informational purposes and should not be regarded as legal advice. As always, it is advisable to consult with an experienced immigration attorney for personalized guidance based on your specific circumstances.