Investors & Entrepreneurs - L-1 E-2
Entrepreneurs & Small Business Owners' U.S. Immigration Strategy
The United States is a desirable destination for investors and entrepreneurs. Its economic and political stability has been a mainstay, and over the years the U.S. continues to experience economic growth and individual wealth creation. The main source of this growth and prosperity is the small businessperson. All across America small businesses have been the catalyst of this growth, creating jobs for Americans and wealth and security for entrepreneurs.
The U.S. government encourages foreign investment in the U.S. because foreigners investing in the U.S. create job opportunities for Americans. Americans working earn money, part of which is invested in banks, stocks, bonds, real estate and businesses, and part of which is spent on consumer goods and services. The more money earned by Americans, the more invested and the more spent, creating more demand for additional goods and services. Consequently, the United States Government has immigration laws that allow foreigners to come to the U.S. to head and manage businesses that they either buy or start-up.
Two Strategies for Foreign Businesspeople
Do you own or manage a business that you have been involved with on a full time basis for at least one year? If their answer is "yes", the Intracompany Transfer Visa (L-1) strategy may be the best avenue. If their answer is "no", then the Investor Visa strategy (E-2) may be the best avenue.
The Investor Visa, or E-2, does not require the businessperson to have an existing, on-going business in a foreign country. However, the E-2 does require the applicant to make a substantial investment in a U.S. business and there is no clear cut strategy to obtain a Green Card, even though the visa is technically available for "infinite duration." The E-2 visa is available to anyone who is in a position to make a substantial investment in a U.S. business, develop and direct that business, and create new job opportunities or commerce in the United States.
The Intracompany Transfer Visa, or L-1, does not require a minimum amount for investment. But it does require the businessperson to have been an executive or manager of an on-going foreign business for at least one out of the past three years. The big difference? While the E-2 visa strategy provides for the client to stay in the U.S. for as long as they control and operate the business, it does not usually provide for the client to acquire a Green Card. The L-1 visa strategy offers a clear path to the Green Card.
The E-2 Investor Visa
If you do not currently own or operate an existing foreign business, the E-2 visa is the best available option. The E-2 visa is available to foreign businesspeople of "treaty countries" coming to the U.S. solely to develop and direct the operations of an enterprise in which the foreigners has invested, or is in the process of investing a substantial amount of capital. The U.S. government has indicated that a substantial amount of capital is generally considered to be a minimum of US$100,000. In reality, the client needs assets closer to $250,000 to have the ability to qualify for the E-2 visa and be successful in the U.S., but is can be less. For example: A consulting company or a software company requires considerable less start up capital and E-2 visa applications with those business strategies have been approved.
The biggest hurdle to overcome in obtaining the E-2 visa is whether the client is making a "substantial" investment. Substantial can be met by demonstrating that (i) the amount invested is substantial in proportion to the total value of the enterprise for similarly established enterprises; or (ii) the amount invested is the normal amount necessary to establish a viable enterprise for new businesses.
What does this mean? Well, if the actual "at risk" investment is more than half the value of the enterprise, is should meet the "substantial" test. For example, an investment of $80,000 in a motel valued at $440,000 where the remainder was secured by property mortgage is not substantial. Also, an investment of $100,000 in a $700,000 motel, where the remainder is secured by property mortgage, is also not substantial. However, if the investment is $150,000 in a $250,000 business, it may meet the substantiality test. Or if the investment is in excess of $1 million, where the business is costing $10 million including debt, the investment may be substantial irrespective of the fact that the amount invested is only 10% of the business.
There is a recognized distinction between manufacturing and service industry businesses. Therefore, a substantial investment in a service business may be met if it is established that the amount invested is necessary to establish a viable enterprise company which can grow independently. For example, a consulting company set up to fulfill a contractual obligation with a U.S. business may require just enough capital to open a office, buy necessary office equipment (desks, phone, fax computers) and enough working capital to support the E-2 personnel for a given period of time. Again, in some instances, this could mean an investment of less than $100,000.
In addition, the client must have control over the U.S. enterprise. Having 50% control is sufficient, even where the 50% ownership is in a joint venture. This of course, provides an opportunity for two people (presumably friends) to apply for E-2 visas based upon a "joint venture" arrangement.
The money invested also must be "at risk" and subject to loss. Collateral for a loan must be from personal assets or a personal signature on a loan. Mortgage debt or a commercially secured loan (e.g., loan secured by the business's assets) is not sufficient. The client must also demonstrate that it is his or her money at risk, and the U.S. business cannot be a passive investment like stocks or undeveloped land. Land development as opposed to land investment, is permissible.
Once approved the E-2 visa can be extended for as long as the client owns and operates the business. This could be for the rest of the person's life as long as they continue to maintain control over and operate the business. If the business is sold or closed the person must leave the U.S. unless another immigration option is available.
The L-1 Intracompany Transfer Visa
The L-1 visa is granted to foreign business owners or managers coming to the United States to perform services in an executive or managerial capacity. The foreign business person must have worked abroad in an executive or managerial capacity for a foreign employer which is a branch, subsidiary or affiliate of the U.S. employer for one continuous year within the three-year period immediately before filing the L-1 petition.
The U.S. Government often categorizes the L-1 as "multinational transfers." This gives the perception that the L-1 visa may only be granted to executives and managers from large, multi-million dollar, multinational corporations. This is not true and we emphasize this to all of our potential business clients. In fact, the L-1 category is especially useful and highly recommended for small and medium sized businesses whose owners, executives and managers may want to come to the United States to "test the water" on conducting business in the United States without investing a substantial amount of money.
With the L-1 there are no minimum investment or capital requirements and no set number of U.S. employees that must be hired. In fact, the U.S. Government will grant a one year period to allow the business person to "open an office and commence operations" of the U.S. business. However, prior to the end of that initial one-year period, the L-1 client must be able to demonstrate that the U.S. business is operating, generating business, and moving forward on its business strategy. Employment of Americans is a plus but not an absolute requirement. Consequently, the L-1 visa strategy is the most straightforward strategy for foreign business owners to obtain a U.S. Green Card.
Qualifying for a Green Card as an Intracompany Transferee. If the foreigner owns a business and has the ability to maintain its operations for at least two years they should be able to obtain a Green Card. The key to the Green Card strategy is having the client "transfer" to a U.S. business that has been operating for at least one year. This is possible whether they open a new office, obtain the L-1 visa, and operate the business for at least one year, or if they purchase a controlling interest in an existing U.S. business that has been operating for at least one year.
New Office Strategy. Under the new-office strategy, the foreigner received the initial L-1 visa for one year. Just prior to the expiration of the L-1 visa, they submit a petition for an extension of the L-1 status by demonstrating that both the foreign company and the new, U.S. business are real operating enterprises. Tax returns, financial statements, bank statements, photographs of the businesses, and other evidence of continuing operations are required to be submitted.
If the petition is approved, the L-1 is extended for two years.
By then the U.S. business will have been open for at least one year and the foreigner can qualify for a Green Card by demonstrating that the U.S. business has been in existence and operating for at least one year. Documentation similar to that used to extend the initial L-1 visa can be used for the Green Card petition.
Purchasing an Existing Business. In the alternative, the foreigner who owns and controls a foreign company that has been operating for at least one year can purchase a controlling interest in an already existing U.S. business that has been operating for at least one year. Upon taking control of the U.S. business, the foreigner is eligible to apply for the Green Card. In either case, the foreign company and the U.S. company must have been operating for at least one year.
