4. Specific requirements of E-2

In addition to the shared "core" requirements, which can be found at http://www.e-2california.com/core_requirements, there are additional specific requirements for E-2 category.

E-2 (Treaty Investor) Specific Requirements

• E-2 investor must make an "investment", meaning the E-2 investor must have placed capital, including funds and other assets, at risk in the commercial sense with the purpose of generating a profit in either a new or existing enterprise in the U.S.;
• The E-2 investor must be in possession of and have control over the capital invested or actively in the process of being invested, meaning as long as the capital was not gained directly or indirectly through criminal activity, income from salary, business operation, gifts, loans, lottery winnings, or inheritances may qualify;
• The E-2 enterprise must be a bona fide enterprise, meaning the E-2 enterprise must be a real and active commercial undertaking, producing some service or commodity for profit and also meeting the particular jurisdiction's requirements for doing business;
• There must be an irrevocable commitment of funds, meaning the E-2 investor must have already invested or be actively in the process of investing the funds. Escrow arrangement is allowed, as long as the only pre-condition to the closing is the issuance of the E-2 visa;
• Capital invested is at risk, subject to partial or total loss, meaning the loans secured by the assets of the E-2 enterprise cannot count towards the capital;
• investment must be substantial, whatever that means. This means the U.S. consular officer and USCIS examiner has certain discretion;

and

• The investment must NOT be marginal.

Without question, the two most common grounds for denial are the requirements for "substantial" and "marginal". Therefore, careful analysis and preparation need to be made to overcome these two issues.

Substantial amount of capital or investment is "substantial" in the proportional sense, as follows:

• In relationship to the total cost of either purchasing an established enterprise or creating the type of enterprise under consideration;
• Sufficient to ensure the visa holder's financial commitment to the successful operation of the enterprise;

and

• Of a level to support the likelihood the treaty investor will successfully develop and direct the enterprise.

The funds used for investment must be the visa applicants own funds, but may be in the form of loans (as long as the loan is not collateralised by the E-2 enterprise). There is no formal requirement to prove the lawful source as with EB-5, but the possession and control of funds must be shown.

Marginality is not an easy and clear concept to show in practice; and as such, is a commonly cited ground of denial especially by consular officers who often resort to citing this ground when they are not sure they want to approve particular E-2 applications. To meet the marginality requirement, the E-2 enterprise (as opposed to the individual E-2 investor) business must have the present or future capacity to generate more than enough income to support the treaty investor and their family. The projected future income-generating capacity should generally be realisable within 5 years from the date the E-2 Visa holder commences the normal business activity of the enterprise -- therefore, requiring a persuasive business plan.