BUYING A U.S. BUSINESS MAY QUALIFY YOURSELF AND
YOUR FAMILY FOR A U.S. VISA

A treaty investor visa will allow you and your family to come to the United States of America to stay continuously so long as you are engaged in a substantial business.

United States has treaties with various countries, including the Republic of the Philippines, that allow a person from the treaty country to bring his family to the United States, including all of the children under 21 years of age, and the entire family can stay indefinitely so long as they are engaged in a substantial business.

The Alien must have invested or must be actively in the process of investing a substantial amount of capital in a business in the United States. The concept of investment requires that you place a capital at risk in the hope of generating a profit from the capital invested. In other words, there must a chance for a profit and loss. Investment in a commercial loan or a mortgage debt is not an investment as there is no element of risk.

The business must be a substantial business, not a ?om and pop?operation. It must have a substantial number of employees, i.e., about 4 to 5 employees or more, wherein the investor is primarily involved in managing the employees to operate the business. The owner of the business is supposed to supervise and direct the operation. He should not be engaged in actual work. The owner cannot devote more than 10% of his time doing any actual work. 90% of his time has to be in management and supervision.

The Alien must be in the process of investing and must be close to starting the actual business operation. He cannot merely be in the stage of signing contracts or looking for suitable location and property. A mere intent to invest or possession of uncommitted funds in a bank account will not be sufficient. Purchasing a business and placing it in an escrow subject to the issuance of the investor visa (E-2) would likely satisfy this requirement.

Documents and Things Required

The investment documents that you must provide are listed as follows:

1. Any document reflecting a reasonable amount of cash in a business bank account, which is to be used for the routine operations of the business;
2. Any document reflecting a lease on business premises or equipment. In determining the ?ubstantiality?of the business, the lease may be calculated toward the investment in an amount limited to the funds devoted to that expense in any one month. The market value of the leased equipment is not representative of the investment, neither is the annual rental cost, unless paid in advance, as rents are usually paid from the current earnings of the business;
3. Any document reflecting the amount spent for actual purchase of equipment and for inventory on hand; and
4. Any document reflecting the value of goods or equipment transferred to the United States, if the goods or machinery will be put, or are being put to use in an ongoing business, such as factory machinery bought abroad and shipped to the United States to start a factory.

Please note that money placed in a savings account, without any indication as to how it will be invested, does not constitute an investment or part of an investment.

Substantial Business Is Required

The investment required for a treaty investor must be ?ubstantial? There is no set dollar amount which constitutes a minimum amount of investment to be considered for E-2 visa purposes. The requirement is satisfied by the ?roportionality test.?The test is a comparison between the amount of funds necessary to establish a business if it is a newly created business. The amount of the funds or assets actually invested must be from qualifying funds and assets. The cost of an established business is generally the purchase price, which is considered the fair market value. The cost of a newly created business is the actual cost needed to establish a business to the point of being operational.

Different businesses require different investment in order to be operational. The author suggests that the minimal investment for E-2 status in Los Angeles County should be a minimum of $150,000.00 depending on the business and that you should have at least 4 employees or more. However, applications filed with the American Consul usually require an investment of a minimum of $250,000.00 or more. The business must earn at least $30,000.00 or more per year. If you cannot earn this much, then you should show you have other income that you can use to support yourself until you can earn this amount.

A ?om and pop?operation where you are merely creating a job for yourself and making a marginal living is not a substantial business, and will be not qualify for treaty investor status.

An applicant for E-2 treaty investor status must be able to document the nature and extent of a business enterprise with invoices or contracts with substantial purchases of equipment and inventory, market value of the land, buildings, equipment, and machinery or accounting records furnished to various government agencies. Unverified and unaudited financial statements based on information supplied by the applicant are normally not sufficient to establish the nature and status of a business.

A smaller business will require that you invest 100 percent of the required capital and have no debt. A larger business, such as one that is valued at $500,000.00, will generally require a minimum investment of 60% or at least $300,000.00 or more to qualify. In the case of a $1,000,000.00 business, a lesser percentage may be needed and should be about 50% or more. There are no hard and fast guidelines on this issue. It would be better if you could invest 100% of the required capital.

The business, to qualify for treaty investor status, must be a real operating commercial business or enterprise. The business must be productive, or of some service or commodity. The business cannot be a fictitious paper organization or a passive speculative investment held for potential appreciation in value, such as undeveloped land or stocks held with no intent to direct an enterprise.

Develop and Direct Requirement

The Alien must be coming to the United States to develop and direct a business. To meet the ?evelop and direct?requirement, the Alien has to have the controlled interest in the enterprise by means of ownership or possessing the controlling management responsibility.

If the treaty investor will have a business manager, the manager can also qualify for treaty investor status provided that he is qualified to be a manager. In other words, if he has managerial experience in a similar enterprise and is of the same nationality as the owner of the investment. He must be highly trained and specially qualified to be the manager, in order to qualify for treaty investor status. An Alien occupying some minor managerial position is not eligible for treaty investor status.

The Issue of Intent

The Alien must intend to depart from the United States when he or she stops doing business in the United States, i.e., the alien must intend to leave the United States when they are no longer engaged in the operation of the substantial business. However, the Immigration & Nationality Act does not require that an applicant for treaty investor visa to be a resident in the foreign country, which he or she has no intention of abandoning.

Procedure For Obtaining Treaty Investor Status

If you are in the United States, you can file the Form I-129 and E Supplement, with all the supporting documents showing that you have made or in the process of making a substantial investment. The supporting documents should include all the documentation, accounting records, and your substantial capital in your possession that is going to be used for the investment. If you are approved, you will be allowed to remain in the United States for 1 year at a time, which is renewable upon your filing documentation that you are still engaged in a business at the end of one (1) year, doing a substantial business and with a substantial number of employees, and making a substantial income. If you do not have substantial income from the business, it will be necessary that you show that you have other income from other sources to supplement your living expenses in the United States.

If you are overseas in the Philippines, you can submit your application for treaty investor status to the American Embassy in Manila, Philippines, with the supporting documents as if you are here in the United States. The forms used by the American Consul are DS-156, Nonimmigrant Visa Application, and DS-156E, Nonimmigrant Trader/Investor Application, Treaty Investor/Trader, and an Immigrant Investor Supplemental Questionnaire.

If you desire further information as to the forms used by the American Consul or the Immigration Service, or regarding E visas in general, please contact the Law Offices of Wellington Y. Kwan, Inc. by phone (213) 382-1888, by fax (213) 639-1670, by sending an email to info@wellingtonkwan.com, by visiting our website www.wellingtonkwan.com, or by visiting our office at 3580 Wilshire Blvd., Suite 1120, Los Angeles, CA 90010.

Wellington Y. Kwan is a Certified Immigration and Nationality Law Specialist certified by the California State Bar Board of Legal Specialization. Mr. Kwan speaks Mandarin and Cantonese. The Law Offices of Wellington Y. Kwan, Inc. has been serving the immigrant community for over 25 years.