E2 Investor Visa News & Trends 2021

E2 Investor Visa News & Trends 2021

E2 Investor Visa Trends 2021

Patrick: Hey, Patrick Findaro here, cofounder at Visa Franchise and Vetted Biz. I’m also joined by Sal Picataggio, as well as Carlos Colombo, two attorneys from Colombo & Hurd. Today, we’re gonna talk a little bit about E2 visa trends. I’ll talk about it more from, like, a business and franchise perspective. And then Sal and Carlos will start off, talking more from an immigration perspective. So, yeah, thanks again, Sal and Carlos, for joining. And maybe I can turn it to you two to give, like, a brief introduction. And then kick it off on E-2 visa trends from immigration perspective.

 

Carlos: Thanks, Patrick. It’s a pleasure joining you guys. We’ve known each other for a long time. And we’ve been able to help clients over the years, making sure that they proceed with the E-2 visa in the best way possible. As we know, there’s a lot of options out there, but not everybody knows exactly how to do this in a way that works for everyone. So let me talk a little bit about our firm, ourselves. And then we can jump into the actual topic at hand today. Carlos Colombo, I’m an attorney for over 20 years now actually. But when I say that, it’s hard to believe sometimes that it has been almost two decades. But I’ve been practicing for 22 years now. We have offices here in Orlando, Tampa, and Miami.

 

And our law firm has attorneys that specialize in different aspects of immigration law. I have always enjoyed doing the investor visas, E2s ,EB-5s, and the green card applications through employment or investment, like the EB-1, EB-2s, and the EB-5s. And Sal is also with our firm. And I’ll let him introduce himself.

 

Sal: Thanks, Carlos. And thanks Patrick for having us both on today. I’m Sal Picataggio. I’ve been with Colombo & Hurd for a little over a year now. I’ve been practicing for 10. And like Carlos, I too enjoy the E-2 and EB-5 investment visas, but also, the special ability visas like EB1-As and EB-2 national interest waivers. But E-2s seem to be coming back and forth. There’s always the bread and butter. Everyone loves E-2s. Whether immigration is challenging or more straightforward, people still love doing E-2s. And very happy to be discussing that with both of you today.

What is the E2 visa? And what are the general requirements?

Patrick: Perfect. Thanks. Well, maybe it could be good just to preface, what is the E2 visa? And what are the general requirements?

 

Carlos: Sal, you wanna take that?

 

Sal: Sure. Thank you. The E2 visa, the treaty investor visa, treaty, in that only certain countries with treaties with the United States are eligible to participate in this visa that requires an investment into a new, existing, or franchise business for the purposes of continued operations, supporting the investor, and his or her family, and of course, creating some jobs for U.S. citizens. It is a fairly business-friendly process compared to some of the other business immigration processes where it’s more in tune with how business is done in 2021. All different types of businesses can be eligible for an E-2. And our job here is to make sure that it’s structured properly, make sure that we are presenting what is required to the immigration service, either at the consulate or here through USCIS on this business structure and this investment.

Some of the general requirements to keep in mind for someone that might be applying for the E2 visa

Patrick: Thanks. What are, I guess, some of the general requirements or items to keep in mind for someone that might be applying for the E2 visa, whether it’s sort of startup, or franchise, or buying a business?

 

Carlos: Well, I mean, the main issue typically in what people usually will look for is number one, what is the investment amount, right? Because immigration law provides for the basic requirements. And then within those requirements, it is up to us as the attorneys to make sure we guide people through what it actually means. And like Sal said, it requires a substantial investment in the U.S.

It also has to be a business that is active, that is actually going to be providing services or the sale of products, for example. It can not be a passive investment, for example, just investing in stocks or undeveloped land, which is something that a lot of people will usually ask is, “Can I just make an investment in land or real estate as a passive investment and qualify for an E2?”

 

And obviously, the applicant has to be from a country that has a treaty that is active with the United States. And there’s a list of the treaty countries on the Department of State website. You always have to be careful. It doesn’t have a footnote that…because some countries had treaties that were active in the past and they’re no longer active right now. So, you know, those basic requirements are always important. And then from a business perspective, it depends. Obviously, you can invest in a business that is brand new. It doesn’t have to be operating right now. You can start from scratch. It can be an existing business. It can be a franchise.

 

There’s different options that you can explore depending on what you want to accomplish. Most applicants probably will choose either an existing business or some kind of franchise model, because it’s a little bit easier to satisfy some of their requirements on what’s called marginality to show is the…will the business be able to produce enough for the applicant to live in the United States, and also for the business to survive, to create a few jobs, etc., etc. So all those basic requirements are sometimes a little bit easier with existing businesses or franchises that have a record in the U.S. that is positive.

“I wanna invest to get the E2 visa,” – “The minimum.”

Patrick: So Carlos and Sal, I think daily, we get an email or some inquiry, you know, “I wanna invest to get the E2 visa,” and I ask, or they say, you know, “The minimum.” And it’s like, what is the minimum? If someone’s looking to buy a business or start a franchise from scratch, I guess, what type of case would you not really wanna take on, that you have more doubt if it’s gonna get approved? Is there a set number or does this really vary?

 

Sal: Well, that is the million dollar question. And not to say that it costs a million dollars. That’s not what I’m saying. It depends. I know it’s a kind of a corny lawyer answer, but it really does depend on what they wanna commit to this venture. There is no set investment amount that is required in the law and regulations. A lot of times, you see kind of in and around $100,000.

But even then, it kind of depends on what is required to get this business operational, which is another reason why we like existing businesses and franchises because there’s a purchase price or a franchise fee and other associated costs with that. And when I’m sending that to the immigration service, either here or through the consulate, I’m giving them the invoice, “It costs this much. Here’s the purchase price. Here’s the franchise fee. I paid for it. It’s been paid. One hundred percent of it has been paid. So, there you go, I’ve committed the funds.”

 

When we’re starting from scratch, which is great for certain clients, they have to justify that the amount that they’re spending is necessary and enough to get this business off the ground. And then they have to commit those funds with no guarantee that their case is going to be approved. So the answer, yeah, is we will look into the business you’re looking into and see what makes sense.

 

Patrick: Yeah, makes sense.

 

Carlos: And along with that, Patrick, I think it’s the issue of, you may be able to win a case for a lower amount, $50,000, $60,000. That could happen. But is that business going to be a business that is going to survive in a year, in two years, or in five years when you’re renewing the visa? And will it provide the applicant with enough income, not only to maintain the business, but also to be able to live in the United States? Some people may have income from abroad and they may not be looking for the business in order to be able to survive, but they’re gonna have to prove that to the consular officer that they have other sources of income.

 

But on the other hand, when it comes time to renew the business, you wanna make sure that the numbers are going to be in the positive, not negative. And realistically, if everybody could find a business for $50,000 that was a great business, that was generating, you know, $500,000 of income a year, then everybody would be investing in that, right? It’s not that easy. So that’s why, you know, you usually will see cases in the $150,000, $200,000 range are usually fairly common. But a lot of people lately, you know, are saying, “No, I’m willing to invest a little bit more,” or go in with a partner sometimes and have a higher amount for businesses that are a little bit more interesting.

 

Patrick: And I think on the upper investment range, it just opens up a lot more options where you probably see a lot of people purchasing existing businesses in central Florida. If it’s like $100K, the owner is generally working 40 or 50 hours, you know, a week, and they generally trade at a multiple of 2 to 3 times owner’s compensation, so you know, is it really your American dream to take $40,000 out of a business that you’re working 50 hours a weekend? But if you’re investing $200,000, $300,000, okay, you know, from day 1, you could be taking out $100,000, maybe more, it’s a little bit more interesting, especially for those that are earning a lot of money already in their home country, which is the case with a lot of these E2 visa holders that I mention.

 

Sal: Exactly. Exactly.

 

The marginality requirement

Patrick: How do you see the marginality requirement? Because I would say, like, at least half of our clients are high-net-worth investors. So they have well over $1 million in net worth. And they have businesses abroad. They’re traveling back and forth. And they want a good, stable business with a day-to-day manager that they’ll be overseeing from, like, a strategic and financial perspective. But maybe, it’s not giving a ton of money to them, where if they were gonna be working 50 hours or even more on a weekly basis. So I’m curious to hear your opinion on the marginality requirement from both job creation and then, you know, basically the money that the investor would need to make.

 

Sal: For job creation, I mean, it’s not like an EB-5 where there’s a required 10. But we need to show that there is going to be a continued path towards additional job creation over that initial five-year period that the visa is usually for. And working with us, you know, a good business plan, you’re going to show what the growth of the business will be.

But unlike in EB-5, it’s not a required number of 10, unlike in L-1, it’s not, like, you need a specific number of managers, and supervisors, and staff below that. You have that flexibility to structure the business that makes sense for the business owner. But it needs to make sense. I mean, you’re gonna hear stories, of course, you know, someone hired three people over the course of five years, that was fine, and you hear someone who hired 10 people, 15 people and it just…it has to make sense for the business, and there has to be that plan for continued growth over time.

 

Carlos: And I think that under the…yeah, under the Trump administration, there seemed to be more of an emphasis on creation of jobs, right? And, you know, we saw consular officers ask, “Well, you know, you’re only gonna be creating one job or two jobs. How is that going to benefit the U.S. economy? How is that gonna be beneficial to the U.S.?” So you have to be more prepared for that.

We’ll have to see now with the Biden administration, you know, this hire American policy is no longer the official policy of the U.S. government so we’ll have to see how that trend…I think it’s gonna change, and we’re gonna go back to, yes, jobs are important as one factor to prove marginality and the benefits to the U.S. economy, but it’s not the only factor, right? So we usually will recommend that at least showing, you know, two or three jobs, you know, being created. They don’t all have to be full-time. It has to make sense for the numbers and for the business, but that always helps.

 

Patrick: Could these jobs be independent contractors or they have to be actual employees like W-2 employees?

 

Carlos: Yeah. I mean, usually W-2s is gonna be viewed more favorably because they’re more permanent, you know, 1099s, you can get rid of the person at any moment. Although the reality is, in most states like here in Florida, employment is at will, which means you can fire the person at any time, any [crosstalk 00:13:56], which is sometimes the argument that we will make when the people…immigration questions at 1099. But I think if we have 1 or 2 W-2 salaries, then maybe add 1 or two 1099s, it can make it look more interesting.

 

Sal: I wouldn’t feel great doing an entirely 1099 organizational structure. But if you’re gonna mix some people…some 1099, some W-2s, I think that probably would be okay. It may depend on an officer who wants to mess around with the case. But, yeah, having a mix like that typically definitely could be fine.

 

Patrick: Well, I wanna bring out some questions. So we have JR, “Hey. As a Mexican, I am able to have any financial aid when applying to a franchise, not risk invested, perhaps $90,000 in advance. But can I be able to get $50,000 in financial aid from that?” I imagine bank financing, which we’ve had a couple of clients explore, but they’ve never been able to get it until they actually have a green card. And it’s been very difficult to get financing. I think maybe there’s some exceptions for Canadians that can get financing through TD Bank, but from Mexico, I think it would be very difficult. Then, yeah, there were a couple of other questions, I guess, in terms of, you know, advance…well, I guess, he had a couple more follow-ups. So say the investment is $150,000 and the franchise fee is $40,000, working capital of $30,000, real estate deposit, what counts to that substantial investment amount? Like, if you have $30,000 in the bank account, is that gonna account towards the substantial investment amount for the E2 visa?

 

Sal: Well, there’s a little bit of a proportionality requirement where whatever the required investment is, the more of an investment that’s required, a smaller percentage of that you can spend. So if the total all-in is only $80,000, $100,000, $150,000, they’re going to probably expect you to spend all of that entire thing. If the total all-in is $500,000, you know, maybe $200,000, $300,000, $400,000, the higher you go, the slightly less of a percentage you may be able to invest. At the end of the day, the requirement is it has to be substantial and needs to be committed. So saying that I have money coming in and it’s not in the investor’s account, it’s not in the business account, it’s not in escrow or anything, then where’s the commitment? So there’s a couple of different factors at play.

 

Carlos: And money in a bank account typically is not counted really as an investment because it’s not committed, right? So now, we have been able to obtain approval without much questioning. Let’s say you have $100,000 actually invested that you spent, that has been legally committed, and you have $20,000 or $30,000 in the operating account for operating expenses, you know, we would argue that that has been committed because we will show in the business plan that this will be money that will be spent in the first few months of operation until the business has the sales that it needs to get going. But you shouldn’t rely solely on that to get to a comfortable amount for the investment.

 

Sal: Moderation is a good thing to practice with the E2 investment, not too many 1099s, not too much money in the operating account. Don’t spend everything on just assets. I had someone years ago who said, “Well, I wanna buy dumpsters.” “What do you mean you wanna buy dumpsters? You’re gonna run, like, a hauling company? You’re gonna drop them off, pick them up?” They’re like, “No, I’m just buying the dumpsters.” No, that’s not a business. That’s just dumpsters.

Are there any kind of businesses that the consulates are just very strict on getting approved?

franchise-services

 

Patrick: What are some kinda, like, red flag businesses that you see at some of these consulates where maybe there’s been fraud or there’s just been people that don’t actually open the business? Are there any kind of businesses that the consulates are just very strict on getting approved?

 

Sal: Well, now I’m looking at dumpsters then.

 

Carlos: What I’ve seen a lot of questions lately is flipping houses. Everybody wants to be in that business, which clearly to me means that it’s been saturated or is saturated already. And the problem with that a lot of the time is number one, you know, what kind of company is that? Is it a construction company? Do you have the licenses to do that, which may be difficult to obtain? Or do you have a partner that is licensed to do construction? Or are you just hiring people here and there, and fixing the house, and flipping, and then that’s it?

I think that…consulates are getting a little bit tired of those models. And unless you have a very good organization for that kind of business with the proper licenses, that’s not going to be easy. Because again, it goes to, well, you bought a house, that’s just a real estate investment that is passive, and that’s it.

The strategy is for 2021 if you wanna move here on the E2 visa

Patrick: That makes sense. And then, you know, we’ve had approvals throughout this crisis, not from all over the world, but you know, we had one recently in Chile, some parts of Asia we’ve had E2 visa approvals. Could you just comment, you know, a little bit in light of what’s going on, what the strategy is for 2021 if you wanna move here on the E2 visa?

 

Sal: Prayer and meditation. No. The consulates are inconsistent. It’s an inconsistent situation with consulate availability, with appointments. And maybe there’s multiple consulates in one country. One might be open, one might not. I [inaudible 00:19:58] in Germany not long ago, where one was open and one wasn’t. And so the planning is gonna be essential to make sure you can plan for the possibility of getting your case pushed through in the consulate. But being prepared to wait for appointment availability, being prepared to have your appointment rescheduled maybe only a couple of weeks away. And I think, Carlos, you could probably elaborate on this more, we’ve been successful in actually making requests to get appointments moving, even in light of somebody’s challenges.

 

Carlos: I think it depends. It’s a country by country situation. You know, some countries are, you know, with COVID, are having a harder time than others. So in part, it depends on your particular nationality, where you’re located, if we can get the appointment or not. And some people are looking to change status in the U.S. rather than filing in the embassy. Our preference as attorneys is usually to file the case at the embassy or consulate because that way, you get the visa stamp on your passport. A visa, which is the document that allows you to enter the United States under the E2 visa, can only be issued by an embassy or a consulate. You cannot do that inside the United States.

 

If you’re here under a visa category that allows you to change status, which means, for example, if you’re here on a B1/B2, and you wanna switch to the E-2 inside the U.S., you can do that. But that will not give you the actual visa on the passport. So if, let’s say, you change status in the U.S., you’re here for a year running your business, if you leave the United States and wanna come back under the E-2, you will have to stop by the consulate or the embassy, present your case, your E-2 case, and have them interview you, and give you the visa. But some people, because they can get the appointments, are actually changing their status in the U.S.

 

Sal: Yeah, just the nature of travel is much more difficult now. People who are already here don’t necessarily wanna go back and forth. There’s no guarantee they’re gonna get an appointment in a reasonable time, so they change their status and they’ll deal with the consulate when they can. That requires you to extend your status here in the U.S. by submitting more paperwork every two years. Whereas, if you had the visa and it is a multiple entry visa, and it does last for a significant amount of time, up to five years, that status can be renewed just by the nature of traveling in and out of the United States, which is why we want them to get the visa. That renewal by travel is fantastic.

 

But you know, the nature of travel difficulties in 2020 and now in 2021 means changes of status is just gonna be the way to do it. And look, you know, if you wanna be here running your business, there’s no better inspiration than you can’t go anywhere else. So we work with the clients to work with what’s best for them and what’s available.

The options to think about if you wanna get a green card eventually through yourself, the investor, or through a spouse

 

Patrick: I had a question for you two. We’ve been involved with E2 visa businesses for far less time than Colombo & Hurd, just in the last six years. We started in 2015. And we thought that there will be a lot more E2 visa renewals with our clients. We’ve had a few, but most of the time, they get a green card from the spouse or the investor gets a green card. And I think that’s the worry, and that’s something that’s on every E2 visa investor’s head, you know, whether they’re…wherever they’re in the process of investing, or they already have the E-2 visa, or they’re thinking about it, I would love to just hear from you two some different cases. And what are the options to think about if you wanna get a green card eventually through yourself, the investor, or through a spouse?

 

Carlos: So there’s different options. I mean, I think E-2 is probably one of my favorite non-immigrant visas, right? Because you have immigrant visas, which are the green cards, is what gives you permanent residency. And you have non-immigrant, which are temporary. And the E-2 is temporary in nature. It doesn’t lead to a green card or U.S. permanent residency, but it is fairly flexible, and fairly straightforward and fast compared to applying for a green card. Applying for a green card takes time, usually around a year, sometimes longer. So the E-2 is a good first step to the U.S.

 

Once they’re here, there’s different options usually that they will explore. Typically, you know, if you have a couple that is married, the spouse that is more employable, that may have better job opportunities, will not be the principal applicant. They will be the dependent spouse because they will get a work permit to work anywhere they want in the U.S. So they can go into the market, and find a job, and sometimes, they could be sponsored for a green card that way, either through an EB-3 or EB-2 category for the green card.

There are also combinations where you can do E-2 and EB-5s, where you can move that towards a permanent residency based on a higher investment amount as you’re here in the United States. Or the national interest waiver, EB-2, has become fairly popular in the last few years. And sometimes, it’s a little bit easier because you’re here in the U.S., again, and you can develop some connections. You sort of know, “Okay, now that I’m here, I know what I can do in my field, research,” maybe you’re able to get the license that you wanted, etc. So those are some of the more common options. Sal, I don’t know if you have comments on that.

 

Sal: Yeah. I mean, it used to be E-2 to EB-5 was a good thing because you could use the E-2 investment towards the EB-5 investment. And when you spent $100,000 or $150,000 or maybe $200,000 out of a total of what used to be $500,000 for an investment, and you’re counting the jobs that you created before towards your 10 required for an EB-5, that was a really popular proposition to make. “Oh, well, I only need to invest a little bit more. And then the business has been doing good, so I’ll reinvest and I’ll do an EB-5.” But now, that EB-5 is $900,000 up to $1.8 million, that’s a lot for a lot of people.

So like Carlos said, the national interest waiver, I’m thinking we’re going to see more, and more, and more of. They’ve been in the U.S. They’ve established something. And they could potentially, with the right planning, have set up a business that will help them further, whichever nationally important endeavor they want to pursue for the EB-2 NIW. They can use that business and those contacts to support that future contribution that they want to make. They already have business partners, and they are part of the community. And like I said, they may be able to get certain licenses and other certifications in the U.S. that they may require. So I’m thinking E-2 to NIW is going to be more and more popular as time goes on.

Any further legal considerations

Patrick: Are there any further legal considerations that you two like to discuss in terms of just general, if someone is interested in applying for the E2 visa this year?

 

Carlos: Yeah. I would say, you know, we talked about the change of status, but be careful. You know, this is a general conversation we’re having. We’re not providing specific legal advice to anyone listening here because we don’t know your individual situation. So for example, don’t think that you can enter the U.S. under the visa waiver program and then change your status to an E-2. You can’t do that. If you enter under the visa waiver, you’re precluded from changing your status in the United States or extending it. So also for example, we have a lot of clients from Brazil that may have dual nationality. They may have a spouse that is Colombian or they may have Italian citizenship through their ancestry. So if you enter with your Brazilian passport under a B1/B2, just because you have the Italian doesn’t mean that you can change status in the U.S. either because you did not enter with the B1/B2 in your Italian passport. So there’s little detail…those details are where people will make mistakes, not hire an attorney and not get the proper advice on the individual case.

 

And I think the other thing is not committing the funds, right? I think that’s another big mistake that people make. They think that they can get away with as little as an investment as possible. And I think that’s what Sal said is important, and why go with somebody like you guys who understands the business side…because the attorney should not be providing advice on what is a good business or not, right? That’s not our role. You need the experts that understand business. And if you have a fair market value for a franchise, if you have a fair market value for an existing business, then it becomes much easier to have the funds committed and to be able to prove why that is a substantial investment. So those are, I think, the two things that I would caution people to be aware of.

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