The E-2 Investor visa is a nonimmigrant visa available to foreign investors and entrepreneurs who want to start and run a business in the US. One of the requirements for the E-2 visa is called the “Marginality” requirement. In order to satisfy this requirement, applicants must demonstrate that they are not starting an enterprise solely for the purpose of earning a living for themselves and their families.  This translates to creating U.S. jobs.  This post explores this requirement and provides insights on how to prove your business is not marginal.

For a full list of the requirements for the E-2 Visa, please click here.

What is the Marginality Requirement?

For E-2 purposes, a marginal enterprise is a business that does not have a present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and his or her family. While the law does not specifically mention the creation of jobs, this requirement gets at the core of why the E-2 investor visa exists.  That is, the purpose of the visa is to permit an investor to start a business that will have a positive economic impact and expand job opportunities in the local community and the U.S.. As such, the investor must be able to demonstrate that the proposed enterprise will have the ability to provide jobs for individuals other than the investor’s family members, or will be able to do so in the immediate future. However, the Marginality requirement does not require the E-2 enterprise to be a large business that hires dozens of employees. There are many successful E-2 businesses that have 3 employees and do not plan on growing past that.

How Do I Demonstrate That My Business Is Not Marginal?

For investors purchasing an existing business that already has employees and has profit, the Marginality requirement is easier to establish. An applicant would submit documentation such as payroll summaries, financial statements, the business’s tax returns, W-2s and W-3s, and other relevant documents that demonstrate the number of paid workers the business employs and the wages being paid. If the business is losing money or the financial viability is in question, then all of the above information would still be relevant but you would also need a business plan that clearly addressed how you were going to turn the business around.  You may also need some of the other aspects discussed in the start-up section below to support your case.

For start-ups, the Marginality requirement can be satisfied by submitting a comprehensive business plan that clearly states the projected future earning capacity within five years from the date the foreign national commences business activities. The business plan must be sufficiently detailed to permit drawing a reasonable inference about the job-creation potential of the E-2 enterprise. The plan must also be credible and based on objective and verifiable evidence. The plan should also contain a detailed description of the E-2 company’s hiring plan and should provide for the hiring of at least one employee by the second year of operations (and earlier if possible). The key theme for the business plan is it should be as detailed as possible, as accurate as possible and supported by strong data sources and corroborating evidence throughout the plan.

For more information on business plans, please click here.

In addition to a business plan, start-ups should also provide objective proof that the business will be viable and will attract clients.  This can be accomplished with documentation showing contracts that the business may have with clients and/or letters of intent showing that third parties want to use the services or buy products of the E-2 business.  The more detail the contracts or letters of intent contain, the better, and their purpose is to show the U.S. government that you have prospects that will support your business.

You can find out more about letters of intent by clicking here.

To find out more about the new rules or other investor visas, contact Scott Legal, P.C.

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Jose Rivera is an associate of Scott Legal, P.C. He can be reached at 212-223-2964 or by email at info@legalservicesincorporated.com.


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