The E2 Visa Denial: Why it Happens and How to Avoid it

credit: gazelle index

credit: gazelle index

The E2 Visa is for treaty investors.  Its requirements were covered in a previous blog post.  To recap: in order to be granted an E2 visa, an applicant must: (1) be a national of an E2 treaty country, (2) must make a substantial investment, and (3) develop a bona fide enterprise.  For E2 visa investors in traditionally small businesses or for startup companies that are destined for growth, a common issue arises with this last requirement: demonstrating that the enterprise is bona fide.

A bona fide enterprise is one that has the present or future capacity to generate more than adequate living expenses for a treaty investor and his or her family. If the enterprise cannot generate more than adequate living expenses immediately, it must have the capacity to generate such income within five years from the date that the treaty investor’s E2 classification is granted.  If this is not the case, the investment is deemed to be a “marginal enterprise.” A marginal enterprise is defined as a business investment that does not have the present or future ability to produce more than enough income to provide anything but a minimal living for the treaty investor and his or her family.  Applicants found to have invested in marginal enterprises are often denied E2 visas, or are at least heavily questioned about the finances of the business.

The marginal enterprise question is essentially one of profit; it asks how much money a business can generate relative to the cost of living expenses for an E2 investor and his or her family.  Many things impact this inquiry, especially location.  For example, it is more expensive to support a family in San Francisco, CA, than it is to support a family in Dallas, TX.  The marginal enterprise question also looks at the potential for job creation.  Businesses with a high growth potential are generally not considered marginal enterprises because they will need to hire additional employees over time.  As immigration attorneys based in the Silicon Valley, we are keenly aware of the financial requirements for investments relative to places with high costs of living.

Given that the marginal enterprise question looks at both profitability and growth, it is extremely beneficial for E2 applicants to submit a well-researched business plan along with their visa application.  Other documents that are helpful to United States Citizenship and Immigration Services (USCIS) in proving that an enterprise is bona fide include:

-Notice of assignment of an Employer Identification Number from the Internal Revenue Service (IRS)

-Tax returns

-Financial statements

-Quarterly wage reports or payroll summaries, like W-2s and W-3s

-Business organizational chart

-Business licenses

-Bank statements, utility bills, and advertisements/telephone directory listings

-Contracts or customer/vendor agreements

-Escrow documents if any

-Lease agreements

-A well documented business plan

Our immigration attorneys can help you avoid this common pitfall in the E2 visa application process.  We can assist with presenting your investment to the government in the most favorable light possible.  Please contact our offices in San Jose [408-293-2026], San Francisco [415-300-0174], or Pasadena [626-398-1992] to arrange an appointment.

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