By Suresh Rajan, Executive Chairman and Founder of LCR Capital Partners
The United States has various options to allow entrepreneurs to start and operate a business and in the process work to gain residency. Some are temporary visas like the E-2 which requires the investor to be actively working on the business. Others, like the EB-5, are a permanent visa that gives the applicant all of the rights of a green card holder.
The E-2 visa is good option for entrepreneurs. The E-2 is a nonimmigrant investment-based visa that allows the investor to work for the US enterprise. An E-2 applicant must be a citizen of a country that is a party to the treaty that has an E-2 visa provision. The US entity must be at least 50% owned by the investor or non-green card holding citizens of that country. The US enterprise can be a franchise or any other type of for-profit business entity that requires a “substantial” investment to launch or acquire. What is “substantial” is determined on a case by case basis but generally $100k or more should suffice although it is possible to obtain an E-2 with less.
Once the US entity is established and funded, the applicant can make her application with the US Consulate in her home country. Most US Consulates schedule E-2 visa appointments in about 2 months but we have recently seen some Consulates scheduling 3+ months out. E-2 visas are generally issued for 3 or 5 years. Upon each entry, an E-2 non-immigrant will be admitted into the US in E-2 status for 2 years. E-2 status and the actual E-2 visa can be extended indefinitely, for as long as the enterprise continues to qualify. One can conceivably obtain an E-2 visa and enter the US in as little as a few months. The E-2 is not designed to be a stepping stone to a green card. That said, there is no prohibition on an E-2 nonimmigrant from pursuing a green card.
The EB-5 visa is great option for individuals to pursue their dream of live and prosper in the Uinted States is the EB-5 visa. EB-5 is also investment based and allows for self-sponsorship (not needing a US company to serve as a sponsor). The program requires a person to invest $900,000 in a business that creates at least 10 full time jobs per applicant. When the application is approved, the visa holder is given a conditional green card with all of the travel and working rights of a full green card.
There are 10,000 EB5 green cards available for issuance each fiscal year (October 1-September 30) and no single country can get more than 7% (700) which limits availability. When demand exceeds supply, a queue is formed the length of which varies depending on the demand for specific countries. While countries like China have long waits for approval, in the general it takes 18-24 months for the initial application to be approved and a conditional green card received.
Depending on when an applicant will ideally like to be physically present in the US, a strategy of either just EB-5 or an E-2 and then EB-5 might be worth considering. Distinct from the E-2 visa, the EB-5 visa is a passive investment which means the visa is not tied to the company and the applicant does not need to actively managing the business. In addition to these two visas, there are many other options that entrepreneurs have to start business in the United States, designing a short- and long-term strategy to meet the needs of an applicant is critical.
The recent COVID situation and the tightening of the visas by the Trump Administration has brought about some changes. According to Suresh Rajan, Executive Chairman and Founder, LCR Capital, “Indian entrepreneurs have always looked to move to the United States whether to open a franchise or to work in great VC-backed companies like Airbnb or SpaceX. Traditionally the E-2 visa was the avenue for entrepreneurs and H-1B for technical specialists or students entering the workforce. Today both the E-2 and H-1B programs are under pressure. While the Trump Administration’s executive order suspending immigration didn’t apply to these programs, it does require the Department of Homeland Security to do a review within 30 days.
The Trump Administration has made limiting immigration a constant theme and that makes all immigrants nervous. The H-1B and E-2 are temporary visas that need to be renewed. The EB-5 visa, which is based on a $900,000 passive investment in a US job creating business is in a different category. It was specifically exempt in the executive order and we expect the administration and Congress to work to increase foreign investment as the impact of the Coronavirus shutdowns become clearer.”
Corporate Comm India (CCI Newswire)
