Can an E-2 Investment be from a Gift or Loan?

An E-2 Visa is an investor visa that requires an entrepreneur to invest a certain amount of capital in the in the United States to either start a business or purchase one.  The entrepreneur must be from certain countries and the amount of the investment depends on the type of business being set up.  For some service oriented businesses, the investment amount could be as low as $50,000.  One question that often comes up about the investment is whether or not the money invested had to “belong” to the investor.   That is, can an E-2 investor rely on a gift or a loan to start their enterprise.  This article summarizes the requirements in this area.

Can an E-2 Investor rely on a Gift?

The clear answer here is yes as E-2 visa regulations clearly state that a gift is permissible.  That being said, the reason for the gift has to make sense.  For example, gifts from immediate family members are quite plausible given the close connection.  In addition, a gift that will be used for an E-2 visa could come from a close friend and the close ties between the investor and the friend could be explained in the supporting documentation.  The further removed the gift giver is though, the more chance that the examiner will question the legitimacy of the gift. There is no hard and fast rule here but one should use common sense to assess what a 3rd party reviewer would think about the reasons for the gift.

Can an E-2 Investor rely on a Loan?

The short answer is yes but a loan is trickier than a gift for two reasons.  First, the loan cannot be secured by assets from the business as the investment amount must be at risk.  If the loan is secured by personal assets (such as your home), that is fine but you should be prepared to show the government a promissory note that lists the personal security.  Unsecured loans are permitted but can be risky.  While they are not prohibited, the government could claim that you do not have anything at risk as you could walk away from the loan.  Moreover, in the EB-5 context, the government used to accept unsecured loans as investments but in the last few years we have seen that USCIS requires that for EB-5 investments, the loan MUST be secured.  Many of the EB-5 concepts in time get ported over to E-2 and you should understand that you run a risk of questions if your loan is unsecured.

Second, a large loan could make an examiner feel that the investor is too highly leveraged and would not be in a position to repay the loan given the demands of a start up. As such, you may encounter marginality/viability issues with a loan.

How does an E-2 Gift or E-2 Loan impact Source of Funds?

Another key issue when looking at both gifts and loans is the E-2 source of funds requirement.   The source of funds requirement requires the investor to show that the funds he/she is investing came from a legitimate source.   If the amount came from savings, the investor should show tax returns for 3 years. If the amount came from the sale of a home or personal property, the documents and money transfers related to the sale should be provided.

If the Money does not come from the Investor, but from a gift or loan, the EXACT SAME REQUIREMENT that applied to the investor now applies to the person who gave the money.  As such, if a parent provided a gift, that parent would have to show documentation to show where they obtained the money (eg. tax returns).  This can be a particularly difficult requirement given the gift or loan giver’s potential sensitivity to their personal information.

Click here for PDF version.

For more practical or legal advice contact Scott Legal, P.C.. We offer services in a number of business areas including, Immigration, New Business set up, Contract review and development and entrepreneurial support. Call 212-223-2964 or email iscott@legalservicesincorporated.com for a consultation.

Ian E. Scott is a Harvard Law School Graduate, lawyer and author of Law School Lowdown: Secrets of Success from the Application Process to Landing Your First Job.  Mr. Scott worked as a corporate litigator in the law firm Cleary Gottlieb and currently runs his own law firm Scott Legal, P.C. specializing in Immigration Law & New Business set-up. 

 

 

24 Comments

  1. Azlan Shah August 17, 2015 10:37 am

    Hi there
    Im willing to buy a well known branded US franchise as a business investment therefore i wanted to confirm whether or not if it is possible to run a business with three different partners and apply for E2 visa as being a Pakistani National.. The total Investment will be $250000.

    Hope to hear back from you soon

    Thanks

    Reply
    • IanScott August 17, 2015 1:21 pm

      This may be possible but it requires a detailed explanation. If you were an investor, you would need to own 50%, if not, you may be able to apply as an employee but there are considerations there too. In order to assess your situation, please feel free to set up a paid consultation with us. We look forward to hearing from you.

      Reply
  2. Rob September 26, 2015 7:44 pm

    Is it possible to get a loan to buy a business in Florida I live in the uk? In your opinion is a gas station a good business or would another business be better? If you can get a loan do you know of any company’s who would offer you a loan to purchase a business?

    Reply
    • IanScott September 26, 2015 10:17 pm

      Thank you for contacting us. A loan is acceptable but could create a problem with leverage. Also, it is best when it is secured against personal assets. Please contact us if you would like to set up a consultation to further discuss E-2 visas.

      Reply
  3. Farhan March 10, 2016 12:10 am

    Can I sell a real estate property out side US and get the funds in my bank for buying a business and seeking e2 what is required

    Reply
    • IanScott March 10, 2016 1:21 pm

      Thank you for contacting us. You could certainly use funds from the sale of a property outside the U.S. for an E-2 visa. Please contact us if you would like to set up a consultation. Kind regards,

      Reply
  4. mirko colantonio April 22, 2016 11:21 am

    Good morning.

    I have my own funds to start up a business in Mississippi.
    The question is: I sold a property in 2005 and I have the certificate of sale but after all these years I don’t have the actual bank transaction… is it a problem?

    Thank you

    Mirko

    Reply
    • IanScott April 22, 2016 5:03 pm

      This may not be a problem as 11 years is a long time. Please contact us for a consultation and we can discuss this and the other e-2 requirements furhter.

      Kind regards,

      Reply
  5. Mariagrazia palmitesta April 22, 2016 11:23 am

    Good morning.

    I have my own funds to start up a business in Mississippi.
    The question is: I sold a property in 2005 and I have the certificate of sale but after all these years I don’t have the actual bank transaction… is it a problem?

    Thank you

    Mary

    Reply
  6. Bhavin April 22, 2016 12:13 pm

    Hello,

    Me and my wife have been running Beauty Salon business in London successfully from last 3.5 years. Can we buy beauty salon in USA or open our branch to qualify for E2 Visa?

    Reply
    • IanScott April 22, 2016 5:02 pm

      Thank you for contacting us. You could certainly buy a salon and that would be a good E2 business. Please let us know if you would like to set up a one hour consultation. We look forward to hearing from you.
      Kind regards,

      Reply
  7. ovib May 14, 2016 7:18 pm

    hi. me and my other 3 friends own a business in Romania. the company has more than 3 years and now the business is around 1 mil usd a year. can i apply for this kind of visa ?

    Reply
    • IanScott May 15, 2016 9:16 pm

      Thank you very much for contacting us. We know that the decision to start a business in the U.S. is one that brings many questions to the forefront and we are here to help. This firm was founded on an E-2 visa so we understand much of what you are concerned with. Our goal is to assist you so that you can realize the dream of growing a business in the U.S..

      We would like the opportunity to help you and welcome the chance to set up a one hour consultation with one of our lawyers who regularly processes E-2 visas. This lawyer will be able to answer all of your questions and can give you valuable information so that you can make informed decisions. Our consultations can be arranged based on your convenience and can be done over the telephone, via Skype, or in person.

      Our consultation fee of $250 will be refunded to you if you end up hiring us and we would be happy to send you a link so that we can set up an appointment.

      We hope you decide to give us the opportunity to assist you and please let us know if you would like to set up a consultation.

      Kind regards,

      Reply
  8. Ali June 13, 2016 6:59 pm

    Hi, My brother in law is a US citizen and wants to set up his “home improvement” business. He will start the process to obtain his licence this month. He has not enough funds and he wants me to be partner in his business by (me) investing (not a big amount though, around 25k) into his business. I am willing to do that, I have been to US couple of times before and I liked it there. I was wondering my situation qualifies me to invest (as E2 investor) in his business as a partner or employee(manager, executive) ? I am visiting US next month (July) on my B1/B2 visa. if you think my case sounds strong and I can qualify for it I would be happy to hire you and start the process.
    Few points :
    I am a married person with no kids.
    My wife is an advocate in Pakistan.
    I have done my Masters from London University.
    Have no experience in home improvement business before.

    Looking forward to hear from you!
    Thanks and best regards,

    Reply
    • IanScott June 14, 2016 12:46 am

      Thank you for contacting us. The investment amount would have to be 40-50K and even that is considered a low investment amount. This may work though if you apply through USCIS and process the application as a change of status. Please contact us if you would like to set up a consultation.

      Kind regards,

      Reply
  9. Misha June 15, 2016 9:15 pm

    Hi,
    I have been to US on visitor visa before for tourism and to see my sister’s family who are US citizens. She wants to file immigrant petition for me, that I understand a long road to go. I really like US and was thinking to invest in a business that my sister runs. (Child Care Facility). I am currently in US for summer. I am confused because If I apply for E2 investor from here to USCIS (i.e adjust status) through a lawyer from your firm :

    – Does that effect my visitor visa , or my visitor visa will stay intact?

    – if you get my e2 approved and I start my business with my sister (US citizen) here, can she also apply for immigrant visa for me while I keep my business going on e2 during wait times for F4 category.

    – I don’t want to bound myself to not to visit my home country since I have my property there. can any of the above scenario prohibit/abstain/or bound me to travel back and forth?

    Many thanks!

    Reply
    • IanScott June 16, 2016 3:44 am

      Thank you very much for contacting us and we welcome the opportunity to help you with your legal needs.

      At your earliest convenience, we would be happy to offer you a consultation with one of our lawyers. If after the consultation you decide to hire us to work on your matter and your billing is greater than $2,500, our $250 one hour consultation fee will be waived and the amount will be applied towards your future bill. (As such, the consultation would be free).

      While some legal questions appear straight forward, most do not have a yes or no answer and a proper answer requires a review of the facts and circumstances as well as an application of legal knowledge. Moreover, almost all questions require follow up and additional analysis that is best done during a consultation.

      We look forward to working with you and please contact us if you would like to set up a consultation. For your ease of reference, I have included information below to set up a consultation.

      Please find attached our credit card link to make your $250 consultation payment for a one hour consultation. If you end up hiring the firm and your bill is greater than $2,500, we will apply this consultation fee to your final bill. Once we receive the payment, we can schedule and confirm your appointment. Please reach out if you have any questions.

      https://secure.lawpay.com/pages/scottlegalservices/operating

      Reply
  10. IanScott July 21, 2016 2:49 pm

    Thank you for contacting us. We would be happy to help you with your E-2 visa. At your convenience, we welcome the opportunity to set up a one hour consultation to discuss. Please let me know if you would like to set something up. Kind regards,

    Reply
  11. Jay Stewart July 27, 2016 3:00 am

    My wife and I have been looking into E-2 visas for some time, we are Canadian and want to move to USA. I have two quick questions:

    Would a sole proprietorship work for an E-2?

    And would a Canadian financial institution allow us to invest in USA as long as we secured it to our assets in Canada?

    I know that we are able to be employed in the business, but were wondering if we need employees also.

    Thanks so much!

    Reply
  12. Ali September 5, 2016 3:52 am

    I am canadian citizen.my brother lives in usa.I want to start small kind retail business
    If I transfer my $60000 funds in usa bank.is this possible to get E2 visa.

    Reply
    • IanScott September 5, 2016 11:29 am

      Hello and thank you very much for contacting us. We know that the decision to start a business in the U.S. is one that brings many questions to the forefront and we are here to help. This firm was founded on an E-2 visa so we understand much of what you are concerned with. Our goal is to assist you so that you can realize the dream of growing a business in the U.S.. I have attached our E-2 visa brochure here that describes our services and fees. We can help you with the E-2 visa, your business plan and your business entity set-up.

      We would like the opportunity to help you and welcome the chance to set up a one hour consultation with one of our lawyers who regularly processes E-2 visas. This lawyer will be able to answer all of your questions and can give you valuable information so that you can make informed decisions. Our consultations can be arranged based on your convenience and can be done over the telephone, via Skype, or in person.

      Our consultation fee of $250 will be refunded to you if you end up hiring us and I have attached the link to set up a consultation below.

      https://secure.lawpay.com/pages/scottlegalservices/operating

      We hope you decide to give us the opportunity to assist you and please let us know if you would like to set up a consultation.

      Kind regards,

      Reply
  13. irfan merchant November 15, 2016 8:00 am

    hi , i have 2 questions .first i have a wife and 3 kids aged 9,12,15
    my 15 yr old daughter is a us citizen and all of us are canadians if i come on a E2 visa with my family can i also get my mother an father who are indian citizens ? i would want my parents to stay with me , is that possible on the E2visa ,
    second my friend owns various business he is willing to put my name in one of his business as a 50% partner would that be sufficient or do i have to show the investment physically ,thx
    regards

    Reply
    • IanScott November 15, 2016 5:17 pm

      Hello and thank you very much for contacting us. We know that the decision to start a business in the U.S. is one that brings many questions to the forefront and we are here to help. This firm was founded on an E-2 visa so we understand much of what you are concerned with. Our goal is to assist you so that you can realize the dream of growing a business in the U.S.. I have attached a link to our E-2 visa brochure below that describes our services and fees and you can see from the brochure that we can also help you with your business plan and your business entity set-up.

      E-2 Visa Brochure

      http://legalservicesincorporated.com/wp-content/uploads/2015/06/E-2BrochureScottLegalServices20151.pdf

      We would like the opportunity to help you and welcome the chance to set up a one hour consultation with one of our lawyers who regularly processes E-2 visas. This lawyer will be able to answer all of your questions and can give you valuable information so that you can make informed decisions. Our consultations can be arranged based on your convenience and can be done over the telephone, via Skype, or in person.

      Our consultation fee of $250 will be refunded to you if you end up hiring us and I have attached the link to set up a consultation below.

      https://secure.lawpay.com/pages/scottlegalservices/operating

      We hope you decide to give us the opportunity to assist you and please let us know if you would like to set up a consultation.

      Kind regards,

      Reply

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