How Canadian Investors in the U.S. Can Apply for an E-2 Visa
The E-2 treaty investor visa allows Canadian citizens to buy or start a business in the U.S. In order to qualify for an E-2 visa, the business must be active, substantial, at risk, and the investor must oversee and direct the day-to-day operations. For Canadians, the E-2 visa is valid for five years at a time, and may be renewed indefinitely so long as the business continues to operate.
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Can a Canadian apply for an E-2 U.S. investor visa before buying or starting a business?
This is one of the most common questions when it comes to an E-2 visa, and the short answer is “No.” The Department of State requires all E-2 applicants to put their investment at risk before applying. In other words, the business must be purchased or fully set up before submitting their application. If you have $200,000 sitting an account that you intend to use to purchase or start a business, this will not be sufficient to qualify for an E-2 visa.
What does a Canadian need to do first in order to start or buy a business in the U.S.?
To start a U.S. business and to qualify for an E-2 visa, the Canadian investor needs to first make a full investment into the U.S. enterprise. That means setting up a legal business structure (such as an LLC, C-Corp, etc.), getting a Federal Employer Identification Number (FEIN), and opening a business bank account. Depending on the business, it may also mean obtaining necessary permits, inspections or licenses.
The Small Business Association is a good resource for launching your business.
What is an E-2 active commercial enterprise?
To qualify for an E-2 visa, the Canadian citizen investor must either purchase an existing business, or start a new business from the ground up. “Active commercial enterprise” means that the business must be offering a tangible good, product, or service. Examples of an E-2 business include:
- Restaurant
- Retail or convenience store
- Gas station
- Dental or medical clinic
- Nail or beauty salon
The business cannot be passive, idle or speculative. This means that real estate investment, such as buying and flipping real estate; or financial investment, such as buying and selling stocks, do not qualify.
How does a Canadian look for a U.S. business to purchase in order to apply for an E-2 visa?
Canadian citizens looking to purchase a U.S. business can contact a business broker in the state that they are looking to move too. Other options may include looking for websites that list businesses for sale.
What is considered a substantial investment for a Canadian to qualify for an E-2 visa?
The Foreign Affairs Manual (FAM) does not quantify or define what is considered a “substantial investment” to qualify for an E-2 visa. There is common belief that the investment amount should be at least $100,000.00. However, that is not a hard and fast rule. In fact, applications with less investment than this have been approved. Often, the amount of required investment depends on the nature of the business. For example, a small deli may only require $70,000.00 of investment to be fully operational and thus an E-2 may be approved. For situations where an active Canadian company is looking to expand to the U.S., the E-2 investment amount may be lower and still be approved. In these types of situations, the investor may also want to consider an L-1 visa.
What does ‘at risk’ mean?
As stated, to qualify for an E-2 visa, the Canadian citizen investor must have already spent the money towards the startup or purchase of a U.S. business. In other words, the investment must be at risk of being lost of the business is unsuccessful. If an applicant had $100,000 in a bank account and tried to apply for an E-2 visa, it would not be considered at risk because the applicant has not irrevocably committed the funds towards the enterprise.
Canadian E-2 visa ownership requirements
To qualify as an E-2 investor, the Canadian citizen own at least 50% of the U.S. business. If they own less than 50% of the enterprise, they may still be able to work in the U.S. as an E-2 employee so long as more than 50% of the U.S. enterprise is Canadian-owned.
Should I buy an existing business or start a new business for an E-2 visa?
A question that often comes up with whether it is easier to obtain an E-2 visa by buying an existing business or starting a new business. First of all, starting any type of business is a major decision and requires a lot of emotional, financial and physical investment. So the decision to buy an existing business or to start a new business should be based on personal decisions that fit best with your goals.
That being said, there are significant procedural and evidential differences when applying for an E-2 visa based on the purchase of an existing business or the start of a new business. Read more about the differences between buying an existing U.S. business and starting a new U.S. business.
Can a Canadian apply for an E-2 visa based on a contingent investment in a business?
The dilemma with the E-2 visa is whether to risk investing in a business without any assurances of getting the visa. You’re asking “why should you invest the money when there’s no guarantee of a visa?” However, the U.S. Consulate is asking “why should we give you a visa if you haven’t invested any money?” Spoiler alert: the Consulate wins.
Using an escrow account
The good news is that the Foreign Affairs Manual does allow for a purchase contingency for existing business E-2 applications. So if a Canadian citizen makes an offer to purchase a hair salon for $150,000 contingent on approval of the E-2 visa, and the buyer agrees, the funds can be put into an escrow account until a decision is made at the consulate interview. If the E-2 visa is approved, the escrow officer will be instructed to transfer the funds to the seller and title to the business will be transferred to the buyer. If the E-2 visa is denied, the escrow officer will be instructed to transfer the funds back to the buyer.
How long are E-2 visas valid for Canadian citizens?
Canadian citizens who are approved for E-2 visas are usually given a validity period of five (5) years. Furthermore, every time a Canadian citizen enters the U.S. in E-2 status, they will be admitted for up to two (2) years on that entry. At that time, they will have to depart and then re-enter at which time they will be admitted for another two (2) years.
For example: Johnny Canuck was approved for a five-year E-2 visa at the U.S. Consulate in Toronto on July 1, 2019. The E-2 visa stamp expires on July 1, 2024. Johnny enters the U.S. in E-2 status on August 1, 2019 and is allowed to remain until August 1, 2021 (2 years). However, Johnny goes home to Canada for Christmas and comes back to the U.S. on January 1, 2020. At that time, he will be admitted until January 1, 2022 (2 years).
Now let’s imagine that Johnny is approaching the end of his 5-year visa which expires on July 1, 2024. He goes back to Canada for a visit on March 1, 2024 and re-enters on April 1, 2024. Even though he only has three months left on his E-2 visa, he will still be admitted to the U.S. for two years – meaning he can stay until April 1, 2026. You may be asking why he can stay in the U.S. beyond his visa expiration of July 2, 2024. The reason is that the visa stamp expiration is different than his I-94 record. When he enters the U.S., his maximum stay is dictated by his I-94 record. When he is outside the U.S., his entry is dictated by the expiration on his visa stamp. So long as he enters before the visa stamp expires, he will get a full two years.
E-2 visas for Canadian employees
If a U.S. company is at least 50% Canadian-owned, you may be able to send Canadian employees to work for the U.S. company under E-2 visas as executives, managers, supervisors or employees with essential skills.
E-2 visas for Canadian spouses and children
Spouses and children under 21 of E-2 investors or employees may accompany the principal applicant. Children are permitted to attend school in the United States. Spouses and children of primary E-2 investors or employees do not need to be Canadian citizens. So long as the principal applicant is Canadian, dependents can be citizens of other countries.
Can a Canadian E-2 spouse apply for employment authorization?
Yes – spouses of E-2 investors are entitled to employment authorization – meaning that they can seek employment anywhere in the United States without restrictions or limitations.
Can a Canadian E-2 visa holder travel outside of the United States?
Yes – all E-2 holders are permitted to travel outside of the United States at any time during the validity period of their visa.
Can a Canadian E-2 visa holder work for another company or employer?
E-2 investors and employees may only perform work for the E-2 company that they were approved under. Spouses of E-2 investors and employees with valid employment authorization cards may work for any employer.
Can a Canadian Permanent Resident apply for an E-2 visa?
E-2 visa eligibility is based on an applicant’s country of citizenship – not residency. So Canadian permanent residents or landed immigrants are only eligible to apply for an E-2 visa if they are a citizen of an E-2 treaty country. For example, a Canadian permanent resident who is an Australian citizen is eligible to apply for an E-2 visa because Australia is a treaty country to the U.S. However, a Canadian permanent resident who is an Indian citizen cannot apply for an E-2 visa because India is not a treaty country to the U.S.
Starting or buying a business during the CoronaVirus COVID-19 pandemic
A lot of Canadians have thought about starting a business during COVID-19. While each person’s reasons for doing so may vary, there is a general consensus that it is a good idea to start a business when the economy isn’t strong. There are a lot of advantages for this, including lower commercial rental rates, a stronger pool of applicants from which to hire, and lower business loan interest rates.
