PF:— (…) So, things are opening up, at least in Florida, where people are meeting again.
(…) And business is back, so it’s exciting.
It seems like 2022 is looking pretty bright in terms of just general business and U.S. immigration picking back up.
Sal Picataggio:— Yes, so it seems!
PF: So, Sal, what is the E2 Visa and who’s eligible for it, and what type of businesses might be eligible to?
SP: Sure. The E2 Visa is known as the Treaty Investor Visa which is a temporary Visa, not a Green Card. And the treaty element refers to a list of countries that are eligible to participate. Not every country, not every citizen, or every country is able to get this type of Visa. It’s a fairly long list and it’s based on citizenship, what passport you happen to have, not necessarily where you were born. So, folks holding multiple passports can be able to use any of the eligible ones that they may have.
And the investment part. So, treaty is where they’re from. The investment part is that this is an investment-based process where the applicant can look into a new business or an existing business or most relevant here, a franchise to invest into where they would develop the business, they would direct its management and operate it and grow it over time so that it’s viable, earning money, increasing revenue over time and also importantly, starting to hire workers in the United States.
PF: And here in Florida, what type of businesses have you seen? there’s the franchise route. You can buy a new franchise, buy an existing franchise. Also, you could buy a business, startup. Are there any kind of industries that you’ve seen more of your clients trending to for their E2 Investor Visa?
SP: What I love about the E2 is that it is really flexible in terms of the type of business you can operate. Obviously, I’m going to advise people to look into something where there’s that potential for employment. And it’s hard sometimes where some types of businesses, don’t need a ton of people to operate them properly but if there is the opportunity to bring in people, both directly employed but also bringing in service providers and third parties as well to oversee.
PF: And for better or worse, there’s no employment requirement, right? How do you go about that?
SP: No, nothing specific other than to show it will create employment. Immigration calls it marginality, something that’s going to earn money for the investor and his or her family but also that it’s going to support employees in the future. There’s no specific number. It’s not like the EB-5 program where you need to have 10. It’s just if it’s reasonable, if there’s a plan for growth, if it’s going to grow over time, that’s what immigration is looking for job creation.
PF: Or it could be a combination of, like, actual employees which would be W-2 tax form, and then contractors which would be a 1099 tax form.
SP: I’ve done mixes like that before. I’m often wary to do entirely contractors and third parties that will have some people on staff. So, some people are actually on the payroll. But what’s nice about it is that to show immigration that there’s going to be kind of that broader effect, “Oh, we’re going to be giving work to these other companies that are going to be involved.” And it’s more to show that the investor has kind of an enterprise to oversee over time.
PF: There is a reason the U.S. government’s giving them a Visa. It can’t just be some online business that they could be anywhere.
SP: That’s another element where, like, how the business is actually structured. I mean, it basically took a global pandemic that forced people to work from home for immigration to finally realize that decentralized home-based businesses could even be a thing for E2s and they worked it into the policy and the regulations. Because before that, trying to do something that was decentralized without, like, an office was really, really hard to do because, well, how could you possibly run a business when you’re not with people. Well, what year do you think this is?
PF: Email, phone.
SP: I mean, when do you think these businesses are being operated? I’ve been doing this 10 years and for much longer than that, remote-based businesses. Email’s been around for quite a while. People have been able to do this. So, it finally took that and that’s now being better. But for example, one of the random requirements you see on all the lists and all the consulates’ posts is, “Send us photos of your office.” Like, okay but what if we don’t really have offices? But that’s…they’re being at that.
PF: It seems like a lot of things are antiquated but there’s been, I guess, some minor changes where you can technically not have an office but it’s probably better, right, visually to have something.
SP: You got to play the game with that. I mean, there are other requirements there. You want to make sure you’re hitting all the points of eligibility even if it doesn’t make the most sense for the way you want to operate your business. It’s just part of dealing in any system with regulations related to the business itself but now it’s also trying to support an immigration process. If you’re operating a business that required certain licenses for certain materials you’re using or equipment you’re using. You got to go get those licenses and just kind of think about that as a license for the business operator to exist in the United States. You got to follow those rules.
“The E2 Visa is known as the Treaty Investor Visa which is a temporary Visa, not a Green Card. And the treaty element refers to a list of countries that are eligible to participate.”
PF: That’s well said. So, I imagine if it’s a franchise, they can work with us or they can work directly with their franchisor but imagine someone’s working with a Visa franchise, we’ve explored all these different options. They found a franchise they want to invest in. They’ve invested the capital. You’re starting to put together the petition. Now what? When can they get their E2 Visa and actually move their family to the U.S. which is a big reason why they want to live in the U.S.? They don’t want to be by themselves. They want to bring their family along.
SP: Right. It’s for everybody. That, I think, is kind of the biggest thing that we saw in 2021 and it’s going to be very important in 2022 is the difference between Visa and status. The Visa being what goes into their passport. They get it at a U.S. embassy or consulate in their country. That allows them to travel into United States. They show it to the border officer. You get that stamp that shows the dates and you enter. Status is how long they’re here and what they’re able to do while they’re here.
Many countries get a Visa that’s valid for five years. So, throughout that five-year period, they’re able to travel inside and out of the United States. But every time they make that entry, they get that…how long they’re allowed to stay is only two years. The thing is getting Visas is really, really, really hard. 2020 saw consulates closed throughout the world for most of the year. They were still accepting applications.
PF: We had a few approvals but probably, like, 5% of what we had.
SP: Very low because they weren’t even really open to process these cases and the backlogs grew and grew and grew and grew. So, as consulates have reopened, maybe their e-Visa unit isn’t quite up to full speed or if they might be, they’re still working through backlog starting in early 2020 and now we’re almost in 2022. So, getting an interview if one’s even available, it might be months down the road. I mean, we hear reports from Toronto, London, and such. I mean, almost a year sometimes out. Now certain countries, for example, Mexico is churning through these. They’re trying to crank through it.
PF: Mexico’s fast. Yes, I think it’s been 30 days.
SP: Yes, and so a lot of countries are starting to really up their processing but some are just not quite yet. And some aren’t doing it at all. So, there was a Forbes article we were reviewing in the office earlier this week or last week talking about the E2 Visa processing where certain countries are essentially telling applicants, “We have your application but we have no plans to schedule an interview at this time. We’re just not doing it.”
I don’t know how they have the authority to do that but they’re just not processing them which is keeping how many tens or hundreds of millions of dollars in investments are trapped somewhere. Someone who could be here running a business and creating jobs, they can’t get a Visa to enter the United States. But what if they’re already here? These investors who may already be in the United States, maybe they were here studying, maybe they were here as visitors, realized an opportunity and decided, “You know what? I have this opportunity to start this business.” They can apply to change their status.
PF: And how long is that taking right now?
SP: Ah, so that is eligible for premium processing where you can give the government an extra $2,500 and get an answer in 15 days and that’s calendar days, not even business days. So, in two weeks and a day you have an answer. And a lot of times it takes much faster than that. The ones approved recently maybe about a week.
PF: So, this could be an option for someone that maybe they had a job, they’re laid off, they could get laid off, they could just switch to an E2 Visa?
SP: Yes. If they were here in the United States and working because of those. If you had a work status and you need to keep working or else you got to leave. But for someone maybe coming out of an H-1B and they were laid off you have a little bit of a grace period to either find new employment or file to change your status. And if you’re able to put together your source of investment funds, find a Visa and get moving…find a franchise, rather, and get moving really quickly, filing for that change of status within those 60 days could be possible. It’s aggressive. It’s an aggressive timeline to be sure.
Some countries are telling their applicants “We have your application but we have no plans to schedule an interview at this time. We’re just not doing it.”
PF: Yes. That’s to do with a franchise. It’s tough to, like, do a startup business in two months but if you are just focused on the franchise search and analysis for two months, we can get that done. Buying a business? I do like that option but it can take a while. I mean, after doing the due diligence, a lot of people aren’t paying taxes. They’re paying their employees in cash.
SP: Due diligence is really hard with the existing businesses, especially when I look at those sheets where they do kind of a summary of the numbers and they all end in triple zero. It’s like, “That’s not possible.”
PF: Or, like, it would be a business that has 10K in profit but there are owner add-backs of 60K and it’s just like, “What is that? You’re running your due diligence?”
SP: Sometimes with existing businesses, it’s funky. And what’s interesting about going the franchise route, if you’re starting a new franchise, in the eyes of the business, it’s just the next location on established business. In the eyes of immigration, it’s still considered a new investment. I see investor’s new venture even though it might be the 58th Crumbl Cookies in Central Florida which is a rough approximation with how many of those have opened in Central Florida. Oh, my gosh. A lot of them.
PF: That’s a great franchise. Unfortunately, they’re not taking on E2 Visa investors. We’ve asked them a few times.
SP: Well, if it’s a matter of getting me more cookies, then…but something like that where it’s…yes, it’s a new business. Yes, it’s immigration so you’re showing you’re making an investment, you’re looking at the financial projections which…you’re going to get historical data from other franchise locations. In the eyes of immigration, that still a new business. You’re not dealing with what was the owner doing beforehand. I mean, I do love existing businesses for kind of one of the same reasons is that the price is set.
PF: They have a track record.
SP: Yes, there’s a track record provided they were doing things they were supposed to be doing and nothing weird. And the price is set. Because an E2 investment…we didn’t mention this earlier, I don’t think. But there’s no set investment. Substantial investment which means however much it’s supposed to cost, you should invest most, if not all of that. And how much it’s supposed to cost?
If you’re starting a brand-new startup, you kind of have to justify that now. With a franchise or an existing business or an existing franchise, that amount is set. There’s the market value that it’s being sold for or the franchise fee and various other fees that may be involved. That’s the amount. And if the franchisor says it’s X dollars, there you go. You’re showing you spent that amount of money and you’ve done it.
PF: Yes, with startups, it’s almost better, if you’re married, one spouse has a startup, the other one has an anchor franchise that actually justifies the investment. Because from personal experience, my brother and I started a Visa franchise six, seven years back. I think we each invested 20K. And it was able to break even, start paying dividends out. So, I don’t know if a 40K investment would meet…like, I don’t think your consulate officer’s going like that. I know people with approvals for several hundred K.
SP: And we all know somebody who got that E2 Visa for $35,000. I mean, that’s definitely an exception. Most folks are hovering around about a $100,000 mark if not more. It’s just that’s kind of what these officers are kind of looking for both here in the U.S. and at the consulates around the world. That’s what they’re comfortable with. The lower you go, the more justification you’re going to have to provide.
But if you’re doing a very service-based business…I mean, not a lot of office space required. What? A couple of laptops and some online services you got to pay for. I mean, low overhead-type businesses are a thing but now you’re justifying to immigration why this is a worthwhile investment and what is the return going to be, what is the growth going to be, what is the impact going to be of that. You have to start justifying it a little more.
PF: So, imagine someone’s found their business, they’re super excited about the business, they’ve invested, it comes down to the time to apply. Some of our clients have dual nationality. Probably over half of our clients, they have some passport, they’re living somewhere else. So, I imagine that gives a little bit of optionality to see what consulate’s going to process, process faster. How do you deal with those type of clients?
SP: Other than that, the regulations are kind of weird about what they call consulate shopping or form shopping where, “Hey, you know, you have to have some tie to the business or, sorry, to the country.” What I’m seeing with people with multiple passports, it’s usually because one of them doesn’t count towards the Visa like the Brazilians and Italians where a Brazilian passport is not going to help you. Your Italian passport will because Italy’s on the list, Brazil isn’t. and the Brazilians are applying in Brazil. So, a Brazilian investor with an Italian passport is applying as an Italian but in Rio.
PF: And there’s hundreds of E2 Visa approvals with Brazilians and Venezuelans that…
SP: Tons. Tons, tons, tons, tons.
PF: And maybe not in 2020. Definitely not in 2020 but going back years it was, like, 200 plus approvals.
SP: And I actually spoke with someone recently who has residency in Mexico but they’re a British citizen. So, they used the fact that they had their Mexican passport and were able to do it in Mexico avoiding what is usually a very lengthy process in London. London has a huge E2 Visa consulate. But they take their time and they’re backlogged. But Mexico is flying through them so he was able to do it there.
PF: And it’s interesting, like, to see the difference in the consulates. Like, Buenos Aires for some reason or other seems a lot more difficult than Mexico City where they’re processing more E2s.
“If you’re starting a new franchise, in the eyes of the business, it’s just the next location on established business. In the eyes of immigration, they still consider it a new investment.”
SP: Even within the same country, different locations will have slightly different procedures. Like, between Rio and Sao Paulo…I know we keep using Brazil as an example. Between Rio and Sao Paulo, one location is cool with submitting all the documentation electronically by email. The other one wants you to bring it to the biometrics appointment and drop it off. Don’t ask me which one was which. I forget.
But the point is one does one and one does the other and they’re all under the same embassy system and that’s what all these consulates…they all report to the Department of State yet each embassy and consulate location has some flexibility with how they do it. Some may require 70 pages. Others may require 90. Some 100 in terms of your application. How long it can be, how many pages they’re allowed to count. And anywhere between, I’ve seen anywhere between 70 and 100 pages application.
PF: I mean, I know your firm, Colombo & Hurd, you have a lot of immigration attorneys there and you’re processing hundreds of different Visa categories including the E2 Visa. How are you getting the information flow? Do you have a network of attorneys and you’re sharing notes on…because it seems like a moving target. Like, what consulate’s open? Which one’s not?
SP: It kind of is. And between the 10 or so of us here where we’re all sharing that information. Thank goodness for Microsoft Teams and the communication that we have. And other than that, we, at Colombo & Hurd, are very involved with other organizations like AILA.
PF: For sure, yes.
SP: AILA has regional chapters so their Central Florida Chapter is really helpful. But also, various and different groups on social media for immigration attorneys are really good resources that we’re all tapped into to see kind of what the latest is. And one of the more common questions I see on those forums and those groups are, “Are any countries accepting third-country nationals?” By that, I mean someone who’s not a resident of a country.
PF: No tie.
SP: No tie but are they accepting. And in the before times, there were certain consulates that would take pretty much anyone…