What Investor Visa is Four Times as Popular as the EB-5 Visa?

What Investor Visa is Four Times as Popular as the EB-5 Visa?

By: Patrick Findaro, Commercial Director of Visa Franchise

In 2016, E-2 Investor Visa issuances increased from 41,162 to 44,243, representing a 7% increase year over year.  This represents four times as many EB-5 visas issued in 2016 (just under 10,000). At Visa Franchise, we have advised many clients who invest in U.S. franchises, qualifying for the E-2 Investor Visa.  The E-2 visa has grown in popularity in particular regions and countries like Turkey and Brazil.  Whether people are principally moving to the U.S. for economic reasons or for education and security for their children, the E-2 visa is an excellent option for many foreign nationals.

What is the E-2 visa?

The E-2 Treaty Investor Visa was designed for individuals from certain treaty countries who wish to make financial investments in U.S. businesses, and who want to come to the U.S. to direct and develop their businesses. These countries have a treaty of commerce and navigation with the U.S.  The E-2 visa is an excellent option for U.S. franchises as visa applications based on these types of businesses have a higher rate of success.   Below are the legal requirements for the E-2 visa.  Specifically, in order to qualify for the E-2 visa, Investors must demonstrate the following:

1. Commerce and Navigation Treaty with the U.S.

Investors must prove that a valid commerce and navigation 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.

2. Individual and/or business possesses the nationality of the treaty country;

Investors must demonstrate that the funds being used to invest in the U.S. business were in possession and control of a national or nationals of one of those treaty countries.  This can be a complex issue when a corporate entity is making the investment instead of an individual, and in that case, the nationality of the funds will be the same as the nationality of the majority of the owners of the corporation that made the investment.

3. Applicant has invested or is actively in the process of investing;

Investors 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 a lease for premises, purchased equipment, etc.  It is important to note that the U.S. government requires that the investment happens before the application for the visa, and this can be scary for many Investors.

4. Enterprise is a real and operating commercial enterprise 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.

One of the main benefits of investing in U.S. franchises, such as the ones we work with, is that they have a strong track record of success.  As such, consular officers are more likely to recognize them and approve the applications.  Additionally, consular officers prefer more “traditional” businesses that have a storefront, inventory, and equipment, instead of “speculative” ones such as consulting firms.

5. 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. In our experience, investments less than $100,000 also face a far higher chance of rejection.

6. 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.

 

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 is.  Another key benefit of investing in a U.S. franchise is that the franchise brand is very engaged 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.

 

E-2 success rate remains around 92%

The approval rates for the E-2 visa are much higher than other employment or investor visas like the H1-B , L-1 and EB-5. Over the past year, the approval rate fell slightly from 93% to 92%.

This includes people who did not receive the approval in the first interview and had to return back to the consulate with a revised petition.

*The adjusted approval rate equals: [[1] minus [Refusals minus Overcomes]] divided by [Issuances plus Refusals minus Overcomes]

 

The number of E-2 visa issuances keeps rising!

The U.S. Department of State provides key figures for E-2 issuances at all the U.S. embassies and consulates throughout the world.  The graph below shows the top 10 E-2 visa countries in the world. In 2016, Japan alone had more E-2 visas issued (13,609) than the entire EB-5 visa program! Many of the large established markets have been benefiting from the E-2 visa program for years.

For emerging markets like Turkey (10th in global E-2 visa issuances), E-2 visas have dramatically increased in popularity over the past few years. Turkey for instance grew from 371 E-2 visas in 2015 to 687 E-2 visas in 2016.  Many of our Turkish clients are investing in food franchises like coffee, gelato and pizza to qualify for their E-2 Investor visa.

Although Brazilians do not qualify for the E-2 Investor Visa, many Brazilians have dual-citizenships from countries that maintain an E-2 visa treaty like Italy, Spain, Paraguay and Argentina.  Brazilians with E-2 eligible second passports, have accounted for the 73% increase in E-2 visa issuances. From 2015 to 2016, E-2 visas issued in Brazil have increased from 154 to 266! This doesn’t account for the many Brazilian who apply directly in Rome, Italy, Buenos Aires, Argentina and other U.S. consulates outside of Brazil. At Visa Franchise, we anticipate this to nearly double given the prospective clients who are seeking second passports through ancestry.  For countries like Italy, Italian descendants might be eligible for citizenship even if it was their great-great-grandfather who was Italian.

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 info@visafranchise.com or call us at +1-305-454-7744