How revenue, hiring, projections and the five-year rule affect E-2 marginality
An E-2 visa business cannot be a marginal enterprise. For E-2 purposes, a marginal enterprise is generally one that does not have the present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and family. A business may also satisfy the standard through its present or future capacity to make a significant economic contribution.
A startup does not necessarily need to be profitable or employ a large team when the application is filed. For a new enterprise, credible future capacity can be considered. Department of State guidance generally expects that future capacity to be realizable within five years from the date normal business activity begins.
The E-2 visa is intended for investment in a genuine commercial enterprise, not merely an arrangement that provides a minimal livelihood to the investor. Officers therefore look at the business’s present operations and, where appropriate, its credible future capacity. The analysis can include revenue, profit, customers, staffing, growth plans, market evidence and other indicators of economic activity.
No. Many legitimate startups need time to build customers and reach profitability. A new enterprise can rely on evidence showing future capacity to satisfy the marginality requirement. This makes realistic financial projections, market support and a credible business plan particularly important for startup applications.
There is no universal rule requiring a specific number of U.S. employees. Employment can be strong evidence that a company contributes economically beyond supporting its owner, but there is no general rule requiring two, five, ten or another fixed number of employees. The enterprise is evaluated as a whole.
Potentially, yes. A consulting, technology, professional-services or other low-overhead business may begin with only the investor working in it. The applicant should still demonstrate how the enterprise will grow beyond marginality, using evidence such as customers, contracts, revenue growth, hiring plans, market demand and other commercial activity.
No fixed E-2 revenue or profit threshold applies to every business. A restaurant, consulting firm and manufacturing company have very different economics. Officers therefore evaluate revenue and profit in context rather than applying a single dollar threshold to every E-2 enterprise.
For a new business that does not yet have sufficient present capacity, Department of State guidance allows consideration of projected future capacity. That capacity should generally be realizable within five years after normal business activity begins. This does not impose a fixed five-year revenue or employee target; it provides a timeframe for assessing whether the projected growth of the enterprise is credible.
For a startup, the business plan can be central to demonstrating non-marginality. It should explain what the company sells, who its customers are, how customers will be acquired, the market opportunity, use of investment funds, projected revenue and expenses, expected profitability, staffing plans and how the enterprise is expected to develop over its first five years.
Yes. Existing payroll or a credible hiring plan can help demonstrate economic impact. But projections should be realistic and supported by the company’s expected revenue and business model. Artificially aggressive hiring projections can undermine credibility if the underlying economics do not support them.
Yes. Marginality is a separate E-2 requirement. Even where the investment itself is substantial, an application can face difficulty if the evidence suggests that the enterprise is designed only to provide a minimal livelihood and lacks credible prospects for greater economic activity.
An investor establishes a consulting company and spends $60,000, but the company has no customers, no contracts, no employees, little marketing, modest projected revenue and no meaningful growth plan. Even if the investment is substantial relative to startup cost, marginality could remain a separate concern.
Another consulting company makes the same investment but has begun marketing, signed initial customers, developed a documented sales pipeline, created supportable five-year projections and plans to hire as revenue grows. Those facts can provide a stronger basis for showing credible future economic capacity.
There is no fixed employee requirement. Employment is useful evidence, but the overall economic capacity of the business matters.
Potentially. A startup may have no employees at filing, but it should provide credible evidence of future capacity to satisfy the marginality standard.
Not necessarily at the time a startup applies. Future capacity can be considered.
There is no fixed revenue threshold. Revenue is evaluated in the context of the particular business.
They help demonstrate future capacity during the period Department of State guidance uses to assess a new enterprise’s projected development.
An E-2 business does not need a predetermined number of employees, a fixed level of revenue or immediate profitability. It must, however, demonstrate that it is not marginal. Established companies can rely heavily on operating history, revenue and payroll. Startups may rely more heavily on credible projections, market evidence, customers, hiring plans and other facts showing future economic capacity. For a new enterprise, that projected capacity should generally be realizable within five years after normal business activity begins.
Authoritative source: U.S. Department of State, 9 FAM 402.9, Treaty Traders, Investors, and Treaty Country Nationals.
Disclaimer: This article provides general information about E-2 treaty investor visas and is not legal advice. Eligibility depends on the facts and circumstances of each application.
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