What Kind of Business Qualifies for an E-2 Visa?

The E-2 is an investment visa, but the consular officer is really evaluating a business. Even a well-funded investment by a treaty national will be refused if the business itself does not qualify.

This article covers the three business tests: the business must be real and operating, it must not be marginal, and you must be in a position to develop and direct it.

Test 1: A real and operating commercial enterprise

State Department guidance requires the business to be a real, active commercial or entrepreneurial undertaking that produces a service or a commodity. Three consequences follow.

It must be for profit. Non-profit organizations cannot be E-2 enterprises.

It must be active, not passive. Investments that simply hold value do not qualify, including undeveloped land, stocks, or property held for appreciation. A single rental condominium you own is generally a passive investment. An actively managed business, such as a property management company, hotel, or construction firm, can qualify.

It must be real, not paper. A company that exists only in formation documents is not enough. For a new business, the officer must be convinced it will operate if the visa is issued. Signs that a business is real include:

• a signed commercial lease or purchase agreement;
• equipment and inventory purchased;
• licenses and permits obtained or applied for;
• a business bank account with operating activity;
• vendor contracts, supplier invoices, and marketing materials; and
• employees hired, or a concrete hiring plan.

Physical office space helps but is not strictly required. The guidance says a physical office is relevant evidence but not a requirement. For a home-based or online business, you need other strong proof that the enterprise is real and operating in the United States.

Test 2: Not a marginal enterprise

This is where many small-business E-2 cases are won or lost.

A marginal enterprise is one that lacks the present or future capacity to generate more than a minimal living for the investor and family.

A business is not marginal if it can:

• generate income beyond a minimal living for you and your family; or
• make a significant economic contribution, even if it does not yet produce such income, typically through job creation, purchases from local suppliers, or tax revenue.

That capacity should generally be realizable within five years of the business starting normal operations.

How marginality is shown

For a new business, the key evidence is a realistic, well-supported five-year business plan. It should include:

• market analysis for the specific location and customer base;
• staffing plan with job titles, hiring dates, and wages;
• revenue and expense projections built on stated assumptions; and
• the investor’s own role and compensation.

For an existing business, the officer looks at the track record:

• tax returns and financial statements;
• payroll records and W-2s; and
• growth trends.

Businesses that raise marginality concerns

• A one-person service business where the investor is the only one generating revenue, such as a solo consultant. The concern is that it amounts to self-employment rather than a growing enterprise. These cases can succeed, but the business plan must show a credible path to hiring and growth.
• Very low-cost ventures with thin projected margins.
• Businesses whose projections don’t hold together, such as revenue growth with no marketing budget or staffing that cannot support the projected sales.

There is no fixed number of U.S. jobs you must create. But hiring U.S. workers is one of the clearest ways to show that the business is not marginal, and a business plan without any hiring is harder to approve.

Test 3: You must “develop and direct” the business

The E-2 investor is coming to run the business, not merely to fund it. You must show that you control, or will control, the enterprise.

The usual way: at least 50% ownership. Owning 50% or more is the standard way to show control.

Equal (50/50) partnerships. An equal partnership or joint venture between two parties can give each partner control. The guidance calls this “negative control,” because each partner can block the other. It works only if both partners keep full management rights. With three or more equal partners, no single partner has control through ownership.

Operational control by other means. A minority owner may sometimes show control through a managerial position or another corporate arrangement. But merely holding a manager’s title is not enough if you do not actually control the business.

When ownership is spread widely, no single investor may qualify as the “investor.” Treaty-national owners may still send E-2 employees, as long as they collectively own at least 50% and together direct the business.

Startup, purchase, or franchise?

All three routes can qualify. Each presents the tests differently:

See also our pages on buying and selling a business and franchise law.

A practical checklist

Before applying, ask:

1. Could an outsider walk in, or log on, and see a functioning business?
2. Does the business plan show that the enterprise will support more than just my household, or create jobs, within five years?
3. Do I own at least 50%, or otherwise clearly control the company, and will I actually run it?
4. Is every claim in the plan backed by a document: a lease, a quote, an invoice, a contract?

If each answer is yes, the business side of the case is likely to be strong.

Attorney’s perspective

A business plan is not just a filing requirement; it is the core evidence a consular officer uses to decide whether the business is real and not marginal. I review every number in the plan with the client’s accountant to make sure each one is backed by a document.

For advice about your own situation, call +1 718-218-5805 or schedule a consultation. We meet clients in Flushing and Manhattan, in English or Chinese.

References

• 9 FAM 402.9-6(C), (E), and (F): https://fam.state.gov/fam/09FAM/09FAM040209.html
• 9 FAM 402.9-4(D), Physical Office Space: https://fam.state.gov/fam/09FAM/09FAM040209.html
• 8 C.F.R. § 214.2(e): https://www.ecfr.gov/current/title-8/section-214.2

Series overview

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. For advice about your situation, please contact us.

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