If you’ve decided to buy a majority share of a business that qualifies for an E-2 Visa, the seller might propose reinvesting the purchase price back into the business. They may suggest that you transfer the funds directly to the business bank account instead of their personal account. Here’s what you need to know about this scenario in the context of an E-2 visa application.
Key Requirements for E-2 Visa Investment
One of the primary requirements for an E-2 visa is that the applicant must invest their funds into the business in a manner that meets specific criteria:
- Funds at Risk: The investment funds must be at risk of loss, meaning there should be a possibility that you might not recover the funds if the business fails.
- Irrevocably Committed: The funds must be irrevocably committed to the business, which means you cannot withdraw or reclaim them after the transfer.
The amount of the investment depends on the type of business but an investment amount can be as low as $50,000 in some instances.
Acceptable Methods of Fund Transfer
To satisfy these requirements, simply transferring funds to the business bank account may not be sufficient. Here are the preferred methods to ensure compliance:
- Spending Funds on the Business:
- After transferring the funds to the business bank account, you should spend them on business expenses, equipment, inventory, or other necessary investments. This demonstrates that the funds are actively being used in the business operations and are at risk.
- Transferring Funds to the Seller:
- Alternatively, you can transfer the funds directly to the seller’s personal account as payment for the ownership share. This method clearly shows that the investment is irrevocably committed and at risk.
Unlike EB-5, an E-2 visa does not focus as much on where the funds are transferred from.
Documentation and Evidence
When applying for an E-2 visa, it’s crucial to provide clear evidence that your investment meets the above criteria. This may include:
- Bank Statements: Showing the transfer of funds and subsequent business expenditures.
- Receipts and Invoices: Documenting purchases made for the business using the invested funds.
- Contracts and Agreements: Detailing the terms of the business purchase and the investment structure.
- Statements or documentation showing what is required to get the business up and running.
Conclusion
While transferring funds directly to the business bank account can be part of your investment strategy, it is essential to ensure that these funds are at risk and irrevocably committed. Properly documenting your investment and demonstrating active use of the funds in the business will strengthen your E-2 visa application.
If you have questions about the E-2 visa investment process or need assistance with your application, take advantage of our free resources and book a consultation with our experienced legal team.
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