Immigration Law
This is the first real decision every E-2 investor faces — and it's one that shapes your entire application.
Before you draft a business plan, before you sign a lease, before you wire a single dollar, you need to answer a fundamental question: am I going to build something from scratch, or am I going to buy a business that's already running?
Both paths work. I've helped clients get E-2 visas through startups and through acquisitions, across industries ranging from trucking to consulting to retail. But each path creates a different evidentiary picture, triggers different questions from the consular officer or USCIS examiner, and carries its own advantages and pitfalls that you need to understand before committing your capital.
This article is the deep dive. If you need the basics of E-2 eligibility first — treaty nationality, the investment threshold, the general process — I'd recommend starting with my overview of the initial steps you must take for an E-2 visa and coming back here once you're ready to choose your investment path.
Every E-2 application — startup or acquisition — must satisfy the same core requirements. The difference isn't what you need to prove. It's how you prove it.
Treaty nationality and ownership. You must be a citizen of a country that has a qualifying treaty with the United States, and you must own at least 50% of the business. This "Fifty Percent Rule" applies regardless of where the company is incorporated. Ownership is traced to the individual level — if you're forming a partnership or joint venture, every owner's nationality matters.
Develop and direct. You must enter the U.S. to actively manage the business, not passively collect returns. The officer wants to see that you'll be making strategic, policy-level decisions — not just performing routine tasks.
Substantial investment. Your capital commitment must be proportional to the cost of the business. There is no fixed dollar minimum written into the law, which surprises many of my clients. Instead, the government applies what's called the "proportionality test," which I'll explain in detail below.
At risk. The money must be committed and subject to loss. Funds sitting in a personal bank account with the intention of being invested don't count.
Real and operating. The business must be a genuine, active commercial enterprise — not a shell company or speculative venture.
Non-marginal. The enterprise must have the capacity to generate significantly more income than what's needed to minimally support you and your family.
With that framework in place, let's look at how each path meets these requirements differently.
Most of my clients choose this route. They come to the U.S. with a specific vision — a trucking company, a consulting practice, a service business — and they want to build it themselves. That entrepreneurial drive is exactly what the E-2 visa was designed to facilitate. But a startup requires more documentation work to prove it deserves approval, because there's no operating history to point to.
Proving Your Startup Is "Real and Operating"
This is the first hurdle, and it's where I see the most preventable mistakes. There are no prior-year tax returns, no existing payroll, no revenue history. The officer is evaluating a business that doesn't yet have a track record — and their job is to determine whether it's genuine.
To overcome this, you need to show what I call "forward momentum." By the time your application is filed, the business should look like it's ready to open its doors the moment you receive your visa. That means having your business licenses, your EIN, and your corporate formation documents in order. It means showing executed vendor contracts, purchased equipment or inventory, and a functional website or marketing presence.
What counts as sufficient physical presence depends on the type of business. A trucking company needs commercial vehicles and operating authority. A restaurant needs a signed lease and kitchen equipment. But a consulting firm or an online service business may operate legitimately from a home office — the key is that the evidence must fit the business model. The standard is that the enterprise is real, active, and ready to generate revenue, not that every business must have a storefront.
I work with many clients who open trucking companies on E-2 visas, and these cases illustrate the point well. When the consular officer sees that the investor has already purchased or leased vehicles, obtained operating authority, and secured freight broker contracts, the business looks real. When all they see is a business plan and a bank account, they have reason to doubt.
The Business Plan Is the Backbone
For a startup, the business plan replaces the historical financial data that an established business would provide. It needs to articulate your business objectives, competitive landscape, market analysis, and organizational structure with enough specificity that the reviewing officer can reasonably conclude the venture is viable.
The plan must include five-year financial projections showing revenue growth that scales well beyond your personal subsistence, along with a hiring plan demonstrating you'll create jobs for U.S. workers. There's no specific number of jobs required — this isn't the EB-5 program. But a credible plan projecting multiple hires within the first few years is the most effective way to defeat a marginality challenge.
The key word is credible. Revenue forecasts need to be tied to realistic assumptions about your industry, your location, and your competitive environment. Consular officers and USCIS examiners who review hundreds of E-2 applications can identify aspirational projections that have no connection to market reality.
The Flexibility Advantage
The upside of starting from scratch is control. You design the ownership structure from day one, which makes the nationality requirement straightforward to satisfy. And for businesses with low physical overhead — consulting firms, tech services, logistics coordination — the proportionality test can work in your favor.
Under the "inverted sliding scale," the lower the total cost of establishing the business, the higher the percentage you need to invest. But for a service-based business where total startup costs might be $70,000 to $100,000, investing close to 100% of that amount is achievable. The precedent in Matter of Walsh and Pollard supports this approach — the Board of Immigration Appeals held that a relatively low-dollar investment was substantial because it was sufficient to establish a viable business in that particular industry.
If starting from scratch demands that you build your evidentiary case from the ground up, buying an existing business lets you inherit one.
Built-In Proof of Viability
An existing business comes with a track record. The seller's tax returns, profit-and-loss statements, balance sheets, and payroll records all become part of your E-2 application. This historical data satisfies the "real and operating" requirement in a way a startup simply cannot — it's very hard for a consular officer to argue that a business generating revenue and employing workers is speculative.
For investors who want the strongest possible documentary record, this is a compelling advantage. The officer isn't being asked to predict whether a business will succeed — they're reviewing evidence that it already has.
The Proportionality Test Becomes Clearer
For startups, the "total cost" of the business is an estimate — how much is normally needed to establish a viable enterprise of the type contemplated. Officers can disagree with those estimates, and that subjectivity creates risk.
For an acquisition, the purchase price gives the officer a concrete, market-tested benchmark for the total cost of the enterprise. If you pay $200,000 for a business and invest the full purchase price, the proportionality question is largely answered by the transaction itself. That clarity removes one of the most subjective variables from the adjudication.
Visa-Contingent Escrow: A Powerful Risk Shield
One of the most practical advantages of buying a business is the ability to use a visa-contingent escrow arrangement. The purchase funds are deposited into an account held by a neutral third party, with instructions to release the funds to the seller only after the E-2 visa is issued. If the visa is denied, the deal doesn't close, and the investor gets their money back.
Both the Department of State and USCIS permit this structure. It protects the investor from purchasing a business they can't legally enter the country to manage, while demonstrating that the funds are irrevocably committed to the transaction.
For the escrow to be compliant, the full purchase price must come from qualifying personal funds, the release must be contingent solely on visa approval with no discretionary withdrawal right, and the deal must close promptly after visa issuance.
This protection isn't available for startups, where capital is typically spent incrementally on setup costs. That incremental spending creates its own evidentiary strength, but it doesn't offer the same financial safety net.
If you decide to buy a business, the method of acquisition has immigration implications worth understanding.
Stock purchase. In a stock deal, you buy the entire legal entity — the LLC or corporation itself. The EIN stays the same, and existing contracts and licenses remain in place. Because the employing entity doesn't change, existing employees typically don't need new I-9 verification solely on account of the ownership transfer. The trade-off is that you assume all of the company's liabilities, including any that weren't disclosed during due diligence.
Asset purchase. In an asset deal, you form a new legal entity and purchase specific assets from the seller — equipment, customer lists, intellectual property, brand name. This provides liability protection because you choose what you're acquiring. However, the new entity is a new employer, which means new I-9 forms for all workers. And if any employees held immigration benefits tied to the prior entity, the transition raises questions about whether the new company qualifies as a successor-in-interest to the old one.
Successor-in-interest analysis isn't an E-2 requirement itself — it's a downstream employment-compliance issue that arises when the acquisition affects workers with existing immigration status. But it's something I discuss with clients during the planning phase, because it needs to be resolved before the purchase agreement is signed, not after.
Marginality is the requirement that trips up the most startup applicants.
The standard: your business must have the present or future capacity to generate significantly more income than what's needed to provide a minimal living for you and your family. The E-2 visa is meant to create economic activity and jobs — not simply provide a vehicle for self-employment.
For an existing business that's already profitable and employs workers, the historical financials largely satisfy this test. But there's a caveat: if you're buying a small operation that currently supports only the seller and has no employees, you'll need an expansion plan showing how you'll grow the business beyond its current scale.
For startups, the burden is heavier. You're asking the USCIS examiner or consular officer to accept that a business with no revenue today will generate non-marginal income within five years. You meet that burden through realistic financial projections paired with a concrete hiring plan. A startup that projects hiring three to five employees within the first two to three years — supported by market data — is far more persuasive than one showing the investor working alone indefinitely.
This is exactly where professional legal guidance makes a measurable difference in the outcome.
Franchises occupy interesting middle ground. Legally, they're startups — you're creating a new business. But from an adjudication standpoint, they carry many of the advantages of an acquisition.
The established brand brings standardized financial data, proven operational systems, and franchisor support that increases the officer's confidence in viability. That said, you still need to demonstrate hands-on management — not passive franchise ownership. And the total investment must account for franchise fees, build-out costs, and initial working capital, all of which must be substantial and at risk.
Investors outside the United States generally file through a U.S. consulate. Those already in the U.S. in valid nonimmigrant status can file through USCIS to change their status domestically.
In my experience, consular processing carries more advantages for most E-2 applicants. It results in an actual visa stamp — the validity period depends on your nationality under the reciprocity schedule, though Canadians and most European nationals are typically issued five-year visas. USCIS, by contrast, grants E-2 status but does not issue a visa stamp. After any travel abroad, you would generally need to obtain an E visa at a consulate before returning to the U.S. in E-2 classification.
This is a topic that deserves its own detailed article, and I plan to publish one soon. For now, the key takeaway is that your filing strategy should be part of the conversation from the beginning. You can learn more about the E-2 process on our E-2 Treaty Investor service page.
There's no universally "better" path. The right choice depends on your capital, your vision, and your risk tolerance.
Starting from scratch fits you if you have a specific business concept that doesn't exist in the market you're targeting, you're comfortable with a lower initial investment but a higher documentation burden, or you operate in a specialized or service-based industry where low overhead makes the proportionality test favorable. Many of my clients who open trucking companies, consulting practices, or tech service firms follow this route successfully.
Buying an existing business fits you if you have access to more substantial capital, you prefer a turnkey operational model, or you want the strongest possible documentary record with historical financials and existing employees. The visa-contingent escrow option adds a layer of financial protection that startups can't offer.
Franchises fit if you want the credibility of an established brand with the flexibility of building something new, and you're prepared for a total investment that accounts for all franchise-related costs.
What matters most — regardless of path — is the quality of the legal preparation. A well-documented startup is stronger than a poorly prepared acquisition, and vice versa. The E-2 visa is a legal and financial argument tailored to your specific business, and generic templates don't cut it as adjudication standards continue to tighten.
Every E-2 case is built around the specific business and the specific investor. If you're weighing your options and want to understand which path gives you the strongest case, I'd welcome the chance to walk through your situation. Call me at 410-618-1288 or schedule a consultation here.
You may also find it helpful to read about how to eventually convert an E-2 visa into a green card as you plan your next steps.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Immigration laws and policies are subject to change, and individual circumstances vary. For advice specific to your situation, please consult with a qualified immigration attorney.
Oleg Gherasimov, Esq.
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