If you are applying for an E-2 visa and considering a partnership where each partner owns 50% of the business, you might be wondering if it is possible for one partner to loan or gift money to the other for the visa application. This situation arises often, particularly when one partner has the capital and the other has the operational expertise. However, it is essential to understand why this approach is generally not advisable and can endanger the success of your petition.
Understanding the E-2 Visa Investment Requirement
The E-2 visa requires applicants to make a substantial investment in a U.S. business. Crucially, this investment must come from the applicant’s own funds or from legally obtained sources. In the context of a 50/50 partnership, each partner seeking an E-2 visa must independently demonstrate that they invested their own share in the business. The funds must be “at risk,” meaning they are subject to partial or total loss if the business fails.
Why Loans or Gifts from a Business Partner Are Problematic
If one partner lacks the funds for their investment, they may consider borrowing from or receiving a gift from the other 50% partner. However, this approach can lead to significant complications during the visa review process.
Issues with Investment Credibility and Sweat Equity
The immigration officer reviewing your application may question the credibility of the investment if it is clear that one partner’s funds originated from the other. They might view this as an attempt to artificially create the appearance of a dual investment when, in reality, only one person is taking the financial risk. Furthermore, when one partner receives a loan or gift from the other, it often raises suspicions that the arrangement is actually a “sweat equity” deal. In such a scenario, the partner receiving the loan is effectively exchanging work or services for equity rather than making a true financial contribution. This is problematic because the E-2 visa requires a substantial financial contribution, not just labor.
Questions Regarding Ownership and Control
The E-2 visa regulations emphasize that the investor must be at risk financially and have control over the business. If one partner provides all the funding, it can lead to questions about whether the other partner truly has a financial stake or actual control in the enterprise. If the “borrowing” partner has no skin in the game, an officer may determine that they do not meet the core criteria of the treaty investor classification.
Charting a Safer Path for Partnerships
Attempting to use a loan or gift from a 50% business partner to satisfy the E-2 visa investment requirement is risky and not recommended. Immigration officers may view this arrangement as undermining the authenticity of the investment and could deny the visa based on concerns that the funds do not genuinely belong to the applicant. If you are considering a partnership for an E-2 visa, it is essential that each partner can independently demonstrate their financial contribution to the business.
At Scott Legal, P.C., we specialize in complex E-2 visa applications and can help ensure your investment structure is compliant with U.S. immigration standards. We invite you to download our free guides, sign up for one of our free webinars where you can ask questions, or schedule a consultation with us today to explore your options.
