E2 Visa Attorney: What is a Marginal Investment?

Many clients often ask me what is considered to be a Marginal Investment for E2 visa Purposes? The marginality of a business is also one of the most common reasons why investors in smaller businesses are denied E-2 visas. For this reason, investors must pay very close attention to this factor.

In order to qualify for E-2 status, the applicant must not have invested in a marginal enterprise solely for the purpose of earning a living for him– or herself and his or her family. A marginal business is an enterprise that does not have a present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and his or her family. However, an enterprise that does not have the capacity to generate such income but does have a present or future capacity to make a significant economic contribution is not considered a marginal enterprise.

In other words, if the investment will indirectly expand job opportunities locally or otherwise have a positive significant impact on the local economy, the applicant may still qualify even though the income from the business may only be enough to sustain the investor and his or her family. For example, an investment that indirectly creates jobs in the local area should be able to establish that it is not a marginal business.

The projected future capacity (either to generate more than marginal income or to make a significant contribution) should generally be realizable within five years from the date the alien commences normal business activity of the enterprise. Therefore, a treaty enterprise does not necessarily have to realize this projected future capacity within the first year. Of course, the sooner the better.

It was previously possible to establish that the treaty enterprise was not a marginal enterprise by showing independent sources of income to support the applicant and her dependents. If the applicant possessed other sources of income for support, the treaty enterprise would not exist solely to earn a living for the applicant and his or her family; it therefore could not be a marginal business. However, this is no longer possible. The applicant must now establish that the income from the treaty business alone is sufficient.

It is recommended that the investor submit a reliable business plan to verify the capacity to realize a sufficient profit within a maximum of five years. It also may be a good idea to obtain one or more expert opinions from business consultants or other experts who are familiar with the type of business in the area where the treaty enterprise will commence business activity.

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