Some U.S. visas and green cards are based on the premise that the U.S. economy benefits from capital contributed by foreign investors.
The E-2 visa for treaty investors and the EB-5 immigrant investor green card fall into this category. Both the E-2 and EB-5 enable foreign investors to live and work in the U.S. Still, investors should consider the requirements and benefits of each and how best to proceed.
E-2 Visa for Treaty Investors
The E-2 visa allows foreign nationals to live and work in the U.S. if a treaty exists between their home country and the U.S. and if they invest a substantial amount of capital in a U.S. business. The U.S. Department of State maintains a current list of treaty countries, which include Germany, Great Britain, Iran, and Turkey. Notably, no treaty exists with China or India.
Foreign investors may obtain E-2 status by investing their personal assets to start a new business or fund an existing one in the U.S. If investing in an existing company, I advise clients to put their investment funds in an escrow account with the condition that the funds will be released to the company only if the E-2 visa is approved. If the visa is denied, the funds should be returned.
The E-2 visa does not require a minimum investment. However, I typically advise clients to put in $100,000 or more. Some exceptions exist depending on the specific business model.
The E-2 visa requires that:
- The foreign investor’s funds are fully “at risk,” meaning those funds would be lost if the company fails.
- The investor directs or manages the business.
- The investor or other investors from the E-2 visa candidate’s home country own at least 50% of the business.
- The business has growth potential, meaning it will generate profits above and beyond what the E-2 visa holder and her or his family need to make a living.
The E-2 visa processing time varies. It typically takes about four months if the E-2 is filed in the U.S. Investors willing to pay a $1,225 premium processing fee can get an E-2 visa processed in 15 days. Consular processing is cheaper and usually faster.
Maintaining E-2 Status
The E-2 visa can be extended indefinitely. However, United States Citizenship and Immigration Services (USCIS) will grant extensions only as long as the same conditions under which the visa was initially granted remain in place. That means investors will lose their E-2 status if they no longer manage the company, if they leave the company, or if additional investors are brought into the company and make it less than 50% owned by individuals of the investor’s treaty country.
If a foreign investor starts a company in Silicon Valley and later gets substantial angel or venture capital (VC) funding, the foreign investor’s ownership may diminish. Still, attracting angel or VC funding points to the startup’s prospects for success. That could open other avenues to remain in the U.S.
EB-5 Immigrant Investor Green Card
The EB-5 immigrant investor program consists of two investment options: one that requires investors to actively manage the company in which they put their money and one that allows investors to assume a passive role.
To receive a green card under the traditional EB-5 program, foreign nationals are required to:
- Invest $1 million in a business or $500,000 if the business is located in a high unemployment or rural area.
- Actively direct or manage the business.
- Directly create or preserve at least 10 full-time jobs for U.S. workers.
The EB-5 regional centers program—the most popular of the two EB-5 options—does not require investors to actively manage the business. The regional centers program allows a foreign national to get a green card by investing $1 million ($500,000 in high unemployment or rural areas) in a regional center that creates at least 10 direct or indirect jobs per investor. A regional center is a business approved by USCIS to promote economic development.
Both EB-5 options require investment funds to be fully “at risk.” That not only means all investment funds may be lost, but the investor may not get a green card if at least 10 full-time jobs fail to materialize as a result of the investment.
Transitioning from E-2 to EB-5
Applying for an EB-5 green card makes sense for E-2 visa holders who want to eventually become a U.S. citizen. All funds invested in an E-2 business visa can count toward the investment requirement for the traditional EB-5 program.
The E-2 visa holder’s business could become a USCIS designated EB-5 regional center depending on its structure. Foreign investors should devise a long-term strategy at the outset to make sure that the company is created and run to later comply with EB-5 requirements.
With EB-5 applications increasing, investors can expect to wait six years or more to receive a green card under the program. What’s more, expedited processing is unavailable for EB-5 petitions.
Unlike the EB-5 green card, the E-2 visa does not lead to permanent residence (a green card) or U.S. citizenship. U.S. citizenship and its benefits, such as voting and bringing family members to the U.S., require a green card. The EB-5 green card can lead to U.S. citizenship. Green card holders are eligible for U.S. citizenship after five years.
Permanent residents receive other benefits that non-immigrant visa holders do not. Permanent residents are eligible for in-state tuition rates at colleges and universities, as well as federal grants and scholarships. E-2 visa holders are not.
The E-2 visa can be extended indefinitely if the same conditions under which the visa was granted remain in effect. The EB-5 green card does not require that the jobs created continue to exist once a green card is finalized.