E2 vs. EB-5 Investment Visas: 8 Differentiating Factors
Updates below in red as of 7/24/19:
Both the E2 (Treaty/Non-Immigrant) and the EB-5 (Investor/Immigrant) visas are great opportunities to consider for a foreign national wanting to live in the United States as an investor or entrepreneur.
On the surface, both of these visas appear very similar since they permit you to live and work in the United States based on making an investment in a US business. But, in actuality, they are different in many ways. Your specific immigration goals and individual situation will determine the correct visa for you.
The chart below reveals 8 main differences between the E2 visa and the EB-5 visa. Read further for details.
|Factors||E2 Visa||EB-5 Visa|
|1) Leads to a green card?||No||Yes|
|2) Nationality Requirement||Yes||No|
|3) Minimum Investment Amount||No*||Yes|
|4) Job Creation||No||Yes|
|5) Source of Funds||Less Strictly Scrutinized||More Strictly Scrutinized|
|6) Timeline||Less Time||Longer, Multiple Steps|
|7) Work Authorization||Principal Investor must work|
for the E2 business
|Principal Investor can work in|
|8) Investment Proximity||Need to live in the community of|
|Depending on direct or indirect, may|
be able to live in one state, while the investment is in another
* There is not a minimum amount stipulated but the business has to be “substantial”.
1. Non-immigrant vs. Immigrant Visa
The first distinction between the E2 visa and the EB-5 visa is that the E2 is a nonimmigrant visa, and the EB-5 is an immigrant visa.
Non-immigrant visas are temporary and do not directly create a path to a green card or citizenship. With the E2 visa, you can live and work in the U.S. but in order to eventually obtain a green card, you will need to “change or adjust status” to the immigrant visa status or apply for an immigrant visa. When applying for the E2 visa, it is mandatory that you have the “intent to depart” once your E2 status expires.
Immigrant visas lead to a green card and lawful permanent residence in the US. With the EB-5 visa, you are eligible to get a green card and become a lawful permanent resident. With the EB-5 visa, there is no requirement that you intend to leave the U.S.
2. Nationality Requirement
Your nationality will determine for what visa you are eligible.
The E2 visa is only available to citizens of countries having a treaty with the United States. To know whether your country has an E2 treaty with the US, you can visit the US Department of State website here:
Major countries such as Brazil, China, India and Russia do not have E2 treaties with the United States meaning that nationals from those countries are not eligible for an E2 visa.
In contrast there is no nationality requirement for the EB-5 visa and as long as the investment requirements are met, a citizen from any country is eligible.
3. Minimum Investment Amount
(Important changes as of 7/24/19 go into effect on 11/21/19)
The next major differentiator between the E2 and EB-5 visas is in regard to the minimum investment made.
For an EB-5 visa, you are required to invest a minimum of
$1 million 1.8 million in a US business. If you invest in a “targeted employment” area, the investment amount is reduced to $500,000 now $900,000. A targeted employment area is either an area of high unemployment (at least 150% of the national average rate) or a rural area (not within a metropolitan statistical area).
Conversely, the E2 visa does not stipulate a set minimum investment amount. For the E2 visa, you need to invest a “substantial” amount in a US business. The regulations do not clearly define a set minimum amount that is considered substantial.
Instead, this minimum investment amount is based on a “proportionality test” meaning that the amount you invest will be compared to the total amount of a comparable established business. For a lower cost business, the investment is expected to be a larger proportion of the total established business cost. For higher cost businesses, your investment can be a lower proportion of the overall established business cost. In general, investments under $250,000 require 100% of the investment amount spent prior to applying. Several legal recommendations advise that not less than $100,000 should be invested although in some cases less may be approved.
4. Job Creation
Job creation is another major difference between the E2 and EB-5 visas.
For the EB-5 visa, the business owner is required to create 10 full-time jobs for US workers. These jobs must be created before the permanent green card is received.
While, with the E2 visa, there are not formal job creation requirements, the business must meet the “marginality” requirement showing that the business will generate enough income to provide more than a minimum living for the owner and family. Another way to meet the marginality requirement is to show that the business will have the need to hire US workers demonstrating a positive impact on the US economy.
5. Source of Funds
For both the E2 and EB-5 visas, investment capital must be earned lawfully and proven as such. What differs is the level of scrutiny of the funds.
When obtaining the EB-5 visa, lawful source of funds are more seriously scrutinized. Much documentation is provided to prove exactly how funds are obtained.
Examples of some lawful sources of funds which can be secured are:
- Earnings/bonuses from lawful employment
- Earnings from investor’s business
- Earnings from the sale of a property
- Earnings from the sale of a business
- A gift
- A loan
- Retirement funds
The length of time to process the E2 vs. the EB-5 visa is also quite different.
It takes much longer to get an EB-5 visa than it takes to get an E2 visa.
The EB-5 process is a very long and multi-step process. First, there is a quota by country. If the quota if filled, the person will wait longer. It generally takes from 18 to 24 months to obtain legal residency through the program. The EB-5 visa leads to a green card (two year conditional resident) when the investment takes place. Usually the investment is approved in approximately 6 months. After 2 years if the investment has created 10 FT jobs per investor and is viable, the conditional status on the green card is lifted and the investor (and family) becomes permanent residents. Five years after, there is the possibility to become citizens.
The timeline is much shorter and the process easier to get the E2 visa: 2-4 months after you invest.
7. Work Authorization
With both the E2 and EB-5 visas, authorization to work is granted. The difference is in the extent to which you can work.
- Authorized to work for any company.
- Required to “engage in the management” of the EB-5 business but still able to work elsewhere at the same time.
- Spouse can also work for any company.
- As the principal investor, the E2 business is the sole employer.
- Required to come to the US to “direct and develop” the E2 business.
- Spouse canapply for work authorization to work for any company.
8. Investment Proximity
Another distinction between the two visas is proximity of the investment.
Since the E2 visa is a direct investment and the principal investor is directing and developing the business, the investor lives in close proximity to the business.
While, with an EB-5 visa, the investment can be direct or through a Regional Center. When direct, depending on the type of investment, the visa holder may need to live close to the business. Investing in a Regional Center project where the investor is not involved directly in the day-to-day operations or running of the business, the visa holder can choose to live wherever desired.
Franchising and E2/EB-5 Visas
The role of Global Business Connect (GBC) is to assist E2/EB-5 visa candidates in finding a suitable franchise business in which to invest-either a new start-up or established resale. Many times the visa is approved by the government for a franchise business over an independent business since it is regarded as a proven system with a history of success. GBC represents hundreds of franchisors who are willing to work with E2 candidates (not all will) and multiple that are appropriate for the EB-5 candidate.
No-charge Franchise Consultation: 855-725-1970 (U.S.); 760-473-4659 (SMS; WhatsApp). email@example.com. View call availability on the calendar or schedule a call at https://app.acuityscheduling.com/schedule.php?owner=16315311
(This article contains general facts organized to explain E2 and EB-5 visas in plain terms. For your specific case, you will need to consult an experienced immigration attorney. Save time, effort and frustration by working with professionals who will prepare documents correctly the first time and guide you through the interviewing process. Contact us for recommendations.)