E2 Visa vs. EB5 Visa: The Advantages and Disadvantages of Each Program

For foreign nationals that want to invest in a business enterprise and live in the United States, there are two viable options; the E2 visa and the EB5 investor visa. Both programs have advantages and drawbacks, and they can also be used in combination to take advantage of the benefits of each with the right set of circumstances.

Here is a look at the advantages and disadvantages of the E2 and EB5 visa programs.

The E2 Visa Program

The E2 is a non-immigrant visa offered for investors who want to own a business in the United States and reside there with a spouse and children under age 21 while operating the business. To qualify, foreign nationals must make a substantial investment into a business that is not considered a marginal enterprise. In addition, you must obtain a minimum of 50% ownership in the business.

While there is no set amount the USCIS considers “substantial”, experience dictates that the investment should be in the neighborhood of $100,000 to $150,000 USD. Also, the investment must be in a “real” business, meaning a legitimate business model that will create a minimum of two jobs for American workers. This must be backed up by a solid business plan, and the source of your funding should be verified by a CPA to show it was all obtained legally.

Here are some of the benefits of the E2 visa program:

  • The investment amount is much smaller than with the EB5 program. One can realistically move and live in the USA with an investment in the low six figures;

  • Processing is relatively fast compared with other types of visas – average processing time for an E2 visa is 1-2 months;

  • E2 investors can bring their spouse and children under age 21 with them to the U.S.;

  • The visa holder’s spouse automatically receives a work permit and children may attend the school of their choice. In fact, many U.S. states offer in-state college tuition rates for children of E2 visa holders;

  • For nationals from most E treaty countries, visas are valid for two to five years with unlimited renewals as long as the business is still viable. In addition, visa holders can leave the U.S. for extended periods of time and re-enter the country while the visa is valid.

Here are some of the drawbacks of the E2 visa program:

  • The E2 visa does not provide a direct path to permanent residency or citizenship;

  • When the visa holder’s children reach age 21, they must find another way to legally remain in the U.S. or return to their country of origin;

  • If the business is struggling at the time you apply for a renewal, there is a chance your renewal application may be denied;

  • If the E2 investor closes or sells the business, they must find another way to legally remain in the country or return home.

The E2 visa program is great for foreign investors that want to buy into a smaller business and live and work in the United States. The important thing is to find a business that has a strong chance of visa approval and, just as importantly, a strong chance of long-term success. An increasing number of investors are looking at franchise business opportunities, because they give investors the opportunity to partner with a proven brand that has a vested interest in making sure they succeed.

The EB5 Visa Program

The EB5 visa is for investors who have a larger sum to invest and want an opportunity to gain legal permanent residence (LPR) status in America. To qualify, foreign nationals must invest either $500,000 or $1 million, depending on the location of the business, and create a minimum of 10 new jobs for U.S. workers.

Here are some of the benefits of the EB5 visa program:

  • Investors and their spouse and children become LPR green card holders, enjoying all the advantages of permanent residency;

  • As a green card holder, there is no need to apply for visa renewal every two to five years;

  • The investor does not need to own 50% of the business and/or manage the business to qualify.

Here are some of the drawbacks of the EB5 visa program:

  • The required investment amount of $500,000 to $1 million is up to 10 times higher than with the E2 visa;

  • Processing time for EB5 visa approval is typically 12 to 24 months;

  • S. LPRs are required to declare their worldwide income and assets when they file their taxes.

Like the E2, the EB5 visa is often used to invest in a franchise in the United States. However, because of the higher investment amount and requirement to create at least 10 American jobs, EB5 investors often make multi-unit purchases.

For foreign investors that want to come to the U.S. quicker but also eventually gain permanent residency, it is possible to utilize both programs. For example, an investor could purchase a single franchise for $200,000 through the E2 program and move to the U.S. Then once living in the country, they could apply for the EB5 program with the intention of purchasing additional franchise units to fulfill the $500,000 or $1 million and 10 job requirements.

It is important to keep in mind that requirements for the E2 and EB5 programs are not identical, and coordinating the two programs can be tricky. For investors planning to go this route, it is best to work with an experienced immigration attorney.

 

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