What happens if your H1-B visa was rejected? What about if you did not make the H1-B lottery? Learn about the E-2 visa business alternative!
Immigration has been in the forefront of the news recently and not always in a positive light. Specifically, the H1-B visa has been under attack, as being unjust to American workers and in need of reform. At Visa Franchise, we have many clients who tried and did not win the H1-B lottery that decide to invest in a franchise, which allows them to reside legally under the E-2 investor visa. In this article, we will review the H1-B visa, the most recent executive order, and the E-2 visa alternative.
What is the H1-B visa?
The H1-B visa is a non-immigrant visa that allows U.S. employers to temporarily employ foreign workers in specialty occupations. It is most commonly used for technology workers and recent college graduates employed by U.S. companies.
According to the United States Citizenship and Immigratoin Services (USCIS), there are five requirements for H1-B visa:
- You must have an employer-employee relationship with the petitioning U.S. employer
- Your job must qualify as a specialty occupation
- Your job must be in a specialty occupation related to your field of study
- You must be paid at least the actual or prevailing wage for your occupation, whichever is higher
- An H-1B visa number must be available at the time of filing the petition, unless the petition is exempt from numerical limits
H1-B Visa Cap
There is a cap of 85,000 visas a year, of which, 20,000 are reserved for graduates of U.S. master’s programs. USCIS received 199,000 H1B petitions for the lottery conducted on April 11, 2017. That means 58%+ of applicants need to figure out another U.S. immigration solution! It is a shame that so many foreign students are educated in the U.S. then sent packing with all the knowledge gained at U.S. universities.
Misuse of the H1-B visa program
Most nightly news segments such as 60 minutes have shed light on the abuse of the H1-B program, further limiting the number of slots for foreign students seeking U.S. employment. In the 60 minutes segment from March 19, 2017, companies throughout the U.S. are replacing American technology workers with foreigners. Even government institutions like the University of California, San Francisco, are outsourcing jobs to IT (information technology) workers from India. In multiple cases, the American IT professionals have to train the foreign IT professional over a multiweek period. If the American IT professional refuses to train the new employee, he risks losing severance payments. Walt Disney World alone laid off 200 workers and UCSF another 80 American workers. As President Trump stated at a campaign event, “They won’t give you the severance pay unless you train the people…”. Trump, as are many Americans, is disgusted by this practice and the manipulation of the H-1B Visa program.
Closing a 1998 loophole would largely prevent the rampant abuse
The H1-B program was not always unfavorable to American workers. However, congressmen wrote an amended law in 1998. It further regulated companies that relied heavily on H1-B workers (more than 15% of the workforce). These companies had to promise to not replace American workers with H1-B visa holders and not replace workers with firms they had outsourcing contracts with. However, if the foreign worker was paid at least $60,000 a year or had a master’s degree, the company was exempt from this new exemption! The prevailing wages for many technology workers are often above $100,000. Bruce Morrison, a former Democratic Congressman from Connecticut who was the principal author of the Immigration Act of 1990 that created the original H-1B program stated the 1998 bill “…licenses companies to displace American workers in a bill that purports to protect American workers.”
The E-2 visa alternative
For married couples, the E-2 visa is the ideal alternative to the H1-B lottery. One of the spouses can invest in a franchise and apply for the E-2 visa. Once the E-2 visa is approved, the spouse that did not invest is eligible for work authorization and can seek employment anywhere and for whichever company in the U.S.! Also processing times are quite short in many U.S. consulates and embassies, less than two weeks.
Specifically, in order to qualify for the E-2 visa, investors must demonstrate the following:
- Treaty – nvestors must prove that a valid treaty exists between the United States and their country of citizenship, as listed here. Individuals that have dual citizenship with one of these countries may apply for the E-2 visa.
- Applicant has invested or is actively in the process of investing – Investor’s must demonstrate that they have already invested the money into the business or are very close to doing so. This means that they have already incorporated the U.S. business, signed lease for premises, purchased equipment, and etc. It is important to note that the U.S. government requires that the investment happen BEFORE the application for the visa.
- Enterprise is a real and operating commercial enterprise and that it is not marginal – Marginal businesses are those that only make enough money to support the investor and his/her family, but the U.S. government wants to make sure that these businesses intend to grow much more than that. As such, Investors must present detailed 5-year business plans showing how the business will operate, how it will make money, and how it will grow and contribute to the American economy.
- Applicant’s investment is substantial – While there is no minimum investment amount for the E-2 visa, the regulations require that the investment be substantial in proportion to the total cost of the business. To illustrate this point, consider a new franchise business that has a total start-up cost of $300,000. In this case the individual would have to invest approximately $200,000-$225,000 for the investment to be considered substantial. On the other hand, the regulations also suggest that if the total start-up cost is less than $100,000, then the individual should invest 100% of the amount, or very close to it.
- Applicant is in a position to “develop and direct” the enterprise – The Investor must demonstrate that it is an active investment and that he/she is qualified to develop and direct the new U.S. business. While the Investor may certainly hire subordinate professionals, and they are encouraged to do so, they must show that they will have hands-on participation in the day-to-day operations.
The E-2 visa is a great option for investors from treaty countries that are considering investing in a U.S. franchise. The range of businesses is quite flexible given the above requirements, and be sure to always seek legal advice from a licensed immigration attorney. For further alternatives to the H1-B visa besides the E-2 visa, refer to our previous blog post by an experienced immigration attorney, Jacob Ratzan (Click here).
E-2 visa businesses
Unfamiliarity with the language, the new market, and the complex U.S. legal system can hinder an investor’s ability to develop their business in the U.S., no matter how good the product or service is. Another key benefit of investing in a U.S. franchise is that the franchisor is supportive in the business and will offer guidance and assistance in the operation of the business to ensure its success. As such, investors can invest with confidence knowing that they can count on experienced franchise professionals to help them in the management, operations and growth. This may not be the case with other types of new businesses. Visa Franchise has studied over 700 franchise and licensed businesses resulting in a curated portfolio of about ~50 businesses. Have a plan B and reach out today to learn more about franchise options eligible for the E-2, L-1 or EB-5 investor visas.
Who Is Visa Franchise?
Visa Franchise guides investors in identifying and analyzing the best investment opportunities tailored to their specific objectives. The focus of the firm is on franchises that qualify for the E-2 and EB-5 visas. Visa Franchise is the trusted advisor of clients from all over the world when it comes to helping them find the business opportunity that best meets their investment and immigration goals. Visa Franchise takes into consideration their capability, experience, and size of investment to ensure that they choose the best possible option for their unique, individual situation. Visa Franchise is based in Miami, Florida with offices in Orlando, Florida and São Paulo, Brazil.
If you are interested in owning a franchise please reach out to firstname.lastname@example.org or call us at +1-305-454-7744
Note: Visa Franchise does not make any financial performance representations other than provided by franchisors