EB-5 vs E-2? Which is better suited to your client’s goals?
September 23rd 2019
An important service that can be offered to clients is providing different options towards meeting their immigration needs. To better provide this service, it is imperative to gain as much insight as possible to the various investment opportunities in the United States and abroad.
For international clients who wish to live and work in the United States, there are a number of difficulties. For citizens of China and India, the time it may take to gain appropriate resident status could exceed a decade with staggering costs.
While some people have heard of the E2 visa, very few people truly understand the opportunities it presents compared to the more widely known EB-5 investor visa. This paper will present the E2 visa and compare how advantageous it can be for many clients compared to the EB-5.
EB-5 vs. E2 Per-Country Limits
- The EB-5 has an annual limit of 10,000 approvals. Per-country limits provide that no more than 7.1% of the total number of visas in this category can be granted to citizens of a single country. These restrictions have created major problems for persons who wish to enter the program from countries such as the People’s Republic of China, Vietnam and India where there are a high number of applicants.
- The E2 visa has no limit with respect to the number of people granted it in a given year. In 2018 alone, over 40,000 E2 visas were issued. The number is expected to rise as there are no limitations for the number of people from a single country, and no limits to the amount of visas issued in a given year.
EB-5 vs. E2 Nationality of Investor
- With the EB-5, the primary applicant of any country in the world may submit an application. However, nationals from China, Vietnam and India have experienced a backlog of cases (effectively delaying their approval). A foreign national’s country of origin is determined by his or her country of birth. However, if the applicant is married to a person from another country, they may choose “chargeable” to the spouse’s country. Possessing a passport from a different country will not provide the applicant an easy fix.
- The primary applicant of an E2 visa must be from a treaty country. This means a person can be given an E2 visa if they possess a passport from any treaty country. However, other than the primary applicant, a spouse or other dependants do not need to possess a passport from a treaty country. Once a passport from a treaty country is approved, there is no waiting period to apply for the E2. A good example is the Grenada passport as an option for individuals applying for an E2 visa but who are from a non-treaty country.
EB-5 vs. E2 Time Frame
- The time period of an EB-5 approval can last up to 2 to14 years. Chinese, Indian, and Vietnamese nationals have experienced waiting periods of over a decade. Foreign nationals from non-backlogged countries have experienced a minimum of two years. The time period can be stressful with the amount of money invested without legal rights to live and work in the United States. For international clients wanting to gain resident status for their children to further their offsprings’ education, long waiting periods are not a realistic option.
- Approval for the E2 visa can happen in as little as 3 to 6 months. The E2 visa status is non-immigrant. This makes the task simple and the process faster. The typical time for the Department of State to review before setting the interview is less than two weeks. After the interview, it may take as little as a week to be issued the E2 visa in the investor’s passport. The time that it takes for the client to gather appropriate documents will be the longest extent of the process.
EB-5 vs. E2 Cost
- The cost of investment for the EB-5 is set to increase up to $900,000 and even $1,800,000 (as of November 2019). The EB-5 investor visa will also increase the minimum investment of $900,000 as of the end of 2019. While the EB-5 investor visa has been one of the best-priced residency programs, the sudden increase in the minimum investment options may cause this option to be unavailable to a number of clients. For clients who can afford the $900,000 initial investment, may still look for better options instead of tying up their money in the program.
- The investment range for the E2 visa is around $100,000 to $400,000. The E2 visa has no minimum investment required to obtain approval. The investment must meet the requirements that can reflect the amount is “substantial” according to the type and location of the project. For example, investing in a sports bar in Hollywood requires larger investments than a grocery store in Little Rock, Arkansas. With such broad guidelines, it may be difficult to know what amount is enough to secure the E2 visa. However, it is generally accepted that less than $100,000 may not be sufficient. There have been cases where investments of less have been approved, but each case is special. The invested amount is also not tied to a single geographically designated area.
- The investment project for an EB-5 may be a number of business ideas, and investors are not required to work continuously. The EB-5 visa investment may apply to a number of businesses. The USCIS states that most, nearly all EB-5 visas issued were through Regional Centers. For investors who decide to take a more direct investment approach may have to operate the business from abroad. This risk may be difficult for investors attempting to get their EB-5 visa approved. When investors are granted the green card, work options are limitless. The permanent resident status is what appeals to a number of investors.
- The investment criteria for an E2 visa is that it must be legal and a for profit operation. The investor is required to work the business and cannot work in another business. The E2 investor is not limited to the business they build or purchase. Investors may choose to find a business or invest in shares or start up a franchise. The important factor the client should consider is the amount of interest taken in the business. E2 investors are encouraged and required to direct and develop their business. Daily work in the business is required for the operation to be successful. The investor’s business which is a part of the approved is documented on the E2 visa. The investor has no authorization to work at a different company other than the printed organisation.
EB-5 vs. E2 Travel Flexibility
- Once the EB-5 visa process enters its last phase and permanent resident status is granted, investors have the freedom to travel abroad as they wish. However, investors must keep in mind that they cannot stay longer than six months of a year abroad or they face serious immigration concerns. It is also important for the green card holders to stay within the US for six months of each year to prevent immigration issues.
- With the E2 visa holder, traveling may depend on the nationality of the person. A number of treaty countries have different arrangements with the United States. Because of these agreements, flexibility may vary. Countries that have more flexible agreements such as Grenada may allow multiple entries abd exits coming from the United States. The agreement may as such as five years may pass prior to a renewal. However, countries less flexibility may only allow entry in the US and no exits. The visa holder from such country would gain the visa to enter the United States and remain for two years. If the investor leaves the US, they will be required to reapply at their own country’s US consulate.
EB-5 vs. E2 Long-Term residency in the US
- For EB-5 investors, a green card and permanent residency can be obtained as it is the common goal. Once the EB-5 investor has been granted permanent resident status, they receive rights, privileges and freedom as associated with the program. After a five year period, the investor may apply for naturalization to become a United States citizen. Permanent resident status gives the freedom of travel as long as the investor can show their strong ties to the U.S.
- The E2 investor visa is renewable indefinitely if the business still meets qualifications. However, the visa does not lead to permanent residency or citizenship. Of the options for investor visas, this is the greatest drawback of the E2. Even if investors have long extended history in the U.S. and have created jobs and millions in tax revenue, they are unable to gain the same rights and privileges as permanent residents. It the investor sells the business or decides to retire, they will be required to exit the United States as the E2 visa will not be valid. However, this may be avoided if the E2 investor chooses to apply for a different visa option.
EB-5 vs. E2 Children
- Under the EB-5 investors visa, children are able to come unless they “age out”. Due to the backlogs on a number of EB-5 petitions children could end up ageing past the limit allowed before approval of the primary applicants case. When filing, the child's birthdate is important. The Child Status Protection Act may be complicated, and should be further advised by an attorney.
- The E2 visa allows children to enter the U.S. until their 21st birthday. For parents seeking to have their children educated in the United States, the E2 visa program is ideal. E2 visa derivatives are able to attend school until their 21stbirthday. Once the child has reached 21, they will require a different type of visa or return to their home country. However, for students that are 21, there is an option of F1 student visa.
There are key differences between the EB-5 and E2 visas. The series comparing the two will continue in the near future.