Consider These 3 Important Factors When Buying A Good E-2 Business

If you are an investor looking to enter the US on an E-2 visa, your best bet for acing the requirements is buying a good E-2 business. While you have the option of starting a business from scratch, buying an existing business can potentially help you make a much stronger application.

You would have the benefit of buying an enterprise with an established financial track record and a strong tax footprint. This allows you to avoid the hassles and costs of starting a business from scratch.

However, buying a good E-2 business is no walk in the park. You want to make the best decision that will favor your E-2 visa application and make sense for you going forward. There are three important factors you need to keep in mind when making your decision as they can be the difference between approval and rejection of your application.

How Big Is The Business?

A business that has full-time US employees is the right kind of business to be considering for your E-2 visa application. This is because a business that does not have employees cannot pass the “marginality” test.

The test requires that your investment be put into a business that can generate more than enough income for you and your family to survive or make a significant contribution to the U.S. economy. You are unlikely to be able to prove this when your business has no employees.

Three full-time employees is a good number, although you could ace the application with less if you can show in your business plan that you intend to expand the business.

Is The Business Profitable?

It is a common business strategy for investors to look into buying businesses that are down on their luck for a knockdown price then work on turning them around. While this may be good business, it may not help your E-2 visa application.

These kinds of businesses are generally sold for much lower amounts, and this could make your investment less “substantial”. The government would also want to see tax returns for at least the past two years and if losses are on the cards, the E-2 visa can get harder to obtain.

If you have bought this sort of business already, what you can do is invest more funds in it, prepare a strong business plan and hire employees before applying. These may help you show that the business has a good future.

Is Financing Required For The Business?

If you are looking into a big business concern, you also need to consider if the business needs financing. This area can be tricky as loans secured by business assets do not count towards your E-2 application. The government would not consider your investment sufficiently “at risk”.

However, if the loans are secured by your personal assets, like your house, then it shows you have something to lose if the business fails to work.

Buying A Good E-2 Business Can Be Risky. Here’s How To Protect Yourself.

It may seem weird, but in an E-2 application, you are expected to have invested the funds before making the application. This can be risky as you would have spent the money even before being sure that the visa will be granted.

A good way to protect yourself is by protecting the funds through an E-2 compliant Escrow agreement. This agreement places the funds in the hands of a 3rd party that will only release them when the E-2 visa is approved. Non-approval means you get your money back.