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Switching from an E-2 Visa to an EB-5 Investment Visa

Switching-from-an-E2-Visa-to-an-EB5-Investment-Visa

A life in the United States is highly sought after among foreign nationals around the world. For foreign investors and entrepreneurs, there exist multiple pathways to gain residency in the world’s largest economy, each with its own pros and cons. Two popular U.S. immigration programs for foreign investors and entrepreneurs include the E-2 visa program and the EB-5 Immigrant Investor Program. Prospective immigrants should consider their individual situation and determine whether the E-2 program, the EB-5 program, or a combination of both is the best route for them.

EB5 Affiliate Network collaborated with Beshara Global Migration Law Firm to present a webinar on making the switch between these two visas and how to make an EB-5 investment by installments. Watch the webinar on YouTube, download the PDF slides of the presentation, or read on to learn more about the process.

The E-2 Visa

The E-2 program is open to entrepreneurs from specific treaty countries to looking to temporarily operate a business in the United States. The visa is valid for two years but may be renewed indefinitely, and spouses and dependent children are also eligible for status. Spouses may apply for work permits within months, but while dependent children may qualify for better chances in college admissions and in-state tuition savings, they cannot apply for work permits.

The E-2 program does not entail any minimum required investment amount, although $200,000+ is often cited as a general recommendation. What the program does require is that the investor owns at least 50% of the investment business. The investor may launch the business themselves or acquire an existing business—all that matters is that they own at least 50% of the business entity. If the primary purpose for purchasing a business is the opportunity to live in the United States, the investor may set up the terms of purchase such that it is only executed if their E-2 visa is approved.

For many prospective investors, the most significant obstacle of the E-2 program is the nationality restriction. Only investors from 81 treaty countries may participate in the program, closing the doors to countries with massive populations and high demand, such as China, India, and Vietnam. Fortunately, there is a solution: Some treaty countries, such as Grenada, offer quick citizenship-by-investment programs.

The EB-5 Visa

The EB-5 Immigrant Investor Program grants U.S. permanent resident status to foreign investors who inject $1.8 million into a qualifying EB-5 project, with the minimum required investment amount dropping to $900,000 if the project is in a targeted employment area (TEA). Permanent resident status is also available to an investor’s spouse and dependent children and comes with a myriad of benefits, including the right to live indefinitely in the United States and work, study, and travel anywhere in the country.

To participate in the EB-5 program, an investor must demonstrate to United States Citizenship and Immigration Services (USCIS) that their investment capital was derived from lawful sources and that they themselves have a clean criminal record. Permanent resident status is initially granted on a two-year conditional basis, and investors can remove the conditions after the two-year investment period if they can prove that their EB-5 investment funded the creation of at least 10 new full-time positions for U.S. workers.

The new commercial enterprise (NCE) into which the EB5 investment capital is injected may be the investor’s own business or a third-party entity—as long as the funds have been lawfully sourced, remain at risk for the duration of the investment, and create the required 10 jobs, the investor and their family are eligible for EB-5 visas.

Converting an E-2 Visa to an EB-5 Visa

For some foreign nationals, the best option may be to combine these two immigration pathways. One key advantage of the E-2 visa is the fast processing times—typically, E-2 petitions are adjudicated within just three months. Given that the average processing time for the EB-5 program is around two years—and even longer for investors from backlogged countries—the E-2 program enables a must faster relocation to the United States.

The first step is to obtain an E-2 visa, which can be completed in a matter of months (a bit longer if the investor must acquire a new citizenship first). Once the investor has settled in the United States and their E-2 business has been operating for at least a year, they may then invest additional funds into the business to meet the EB-5 minimum required investment amount or, alternatively, make an EB-5 investment in a separate business.

To qualify for a green card, the EB5 investment must create 10 new full-time jobs. If the investor is investing in their own business, they may expand their hiring timetable to account for these 10 new positions or partner with an EB-5 regional center to count indirect and induced jobs toward the requirement. Those who opt for the “separate business” route may choose to either directly manage the EB-5 investment or passively invest through an EB-5 regional center, but both options are open to regional center affiliation to reduce immigration risk and relax the job creation requirements.

Partial EB-5 Investments

It is still possible to make an EB5 investment even if an investor doesn’t have the entire $1.8 million or $900,000 available in liquid capital. In such cases, the investor may invest a portion of the EB-5 capital and present a promissory note with a pledged security interest covering the remaining investment funds. The investor then makes installment payments on the rest of the capital, with the note holder retaining the right to force the liquidation of asset in the event of failure to inject the full EB-5 capital amount.

With this setup, a foreign investor can easily obtain an E-2 visa and begin their life in the United States and then switch to an EB-5 investment to attain permanent resident status and stay in the United States indefinitely. The EB-5 program also opens the door to naturalization, as foreign nationals may apply for U.S. citizenship after five years of permanent residency.