E-2 visa helps many non-U.S. citizens start small firms
A noncitizen of the U.S. can come to this country and start a business under an E-2 treaty investor visa for an investment as low as about $50,000. And that business owner, as well as members of his or her family, can live here legally as long as the business is a going concern.
But meeting the requirements of the E-2 visa is not easy, and if the business hits hard times, the owner can lose the right to stay in the country.
First of all, the visa applicant must make a “substantial” investment in the planned business, according to the U.S. State Department, that is “sufficient to ensure the successful operation of the enterprise.”
Denmark native Mia Pedersen went through the process in order to start up an ice cream store, Paradis, in the Montrose Shopping Park in 2009.
“You have to have your business almost 80% ready to go before you can apply,” said Pedersen, who with her husband and brother spent several hundred thousand dollars to open Paradis.
And even a small business, such as a single ice cream shop, has to prove it will provide some benefit to the local economy by creating jobs or by other means.
“The U.S. government is not interested in what they call marginal investments — businesses that are too small to make any meaningful contribution to the American economy,” said Bobby C. Chung, an El Monte-based immigration attorney who specializes in E-2 visa law.
An E-2 visa can be renewed every two to five years, but every time it comes up for renewal the business owner may be called upon to show that his or her enterprise is providing economic benefits.
That could be a struggle for Brush Strokes Inc., a remodeling and interior design firm in Folsom, Calif., owned by Jane and Mike Reed. The couple, who are from England, got E-2 visas eight years ago.
But the business is down to one employee from the four it had before the recession.
“I don’t know now if we went today for our renewal, whether that would be acceptable,” Jane Reed said.
The E-2 is not the only visa that allows a person to come to the U.S. to start a business, but it is less expensive than others. The amount of investment depends on the type of business that’s being started, and although there’s no set rule, immigration attorneys said $100,000 is often enough and $50,000 could be sufficient.
“E-2 is really for small businesses,” said attorney Louis Piscopo, who spoke on the topic at a recent meeting of Orange County business brokers.
By comparison, the EB-5 immigrant investor visa requires a minimum outlay of $500,000 and has far more rigid criteria regarding employee counts. But it provides a pathway to a green card and permanent residency.
The E-2, of which 25,500 were issued by the government in fiscal 2010, is intended for what the State Department calls “temporary visitors.” And children of E-2 visa holders can’t stay in the country once they turn 21 unless they qualify for a different type of visa.
In the last two years, bills have been proposed to allow E-2 holders to eventually earn permanent residency. But it’s doubtful proponents of the new rules will be successful anytime soon. The efforts have been caught up in “the larger politics of immigration,” said Bob Litan, vice president at the nonprofit Ewing Marion Kauffman Foundation, an entrepreneurship research and advocacy group in Kansas City, Mo.
In the meantime, Pedersen is thankful for the opportunity the current program has given her family. On Saturday she and her family held a grand opening for the second Paradis shop, on Vermont Avenue in Los Angeles in a former Pinkberry frozen-yogurt store.
With the opening of the new shop, the company’s employee count went from three to five. In the future, Pedersen hopes to sell franchises of the operation.
“If we can make it here, we can really make it,” she said. “It’s a big country.”
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