When it comes time to sell your business in South Florida, a large amount of potential buyers are foreigners wanting to legally enter and live in the United States by obtaining an E2 Visa. Such E2 Visa buyers may be seeking to purchase businesses in many different industries and at all sorts of price points. Most want to live the American dream and provide a better life for their families. Let’s explore and discuss the E2 Visa system and its instrumental role in today’s South Florida business sales.
Defining an ‘E2 Visa’
An E2 Treaty Investor Visa (commonly referred to as an ‘E2 Visa’) is a specially created non-immigrant visa for foreign entrepreneurs from countries of origin who have a Treaty of Trade and Commerce with the United States. Once obtained, the E2 Visa holder (and their family) may legally reside in the United States for up to two years (which is renewable).
Most E2 Visa Applicants Obtain Immigration Attorney
Often there are delays in the visa application process along with many bureaucratic hurdles to climb. For that reason the vast majority of serious E2 Visa applicants obtain a local immigration attorney for assistance. It is imperative that a professional business broker communicate properly and knowledgeably with the immigration attorney, and have immigration attorneys available to recommend.
What Business Types Qualify for an E2 Visa?
There are no industry specific limitations or requirements on the business in order to qualify an E2 Visa. The two general requirements are that the business be a ‘bonafide’ business enterprise (or a ‘bonafide’ new business opportunity) and that the applicant must put forward a ‘substantial’ amount of financial or human capital toward the purchase.
Establishing that the Subject Business is ‘Bonafide’
- In order for the business being sought by the E2 Visa applicant to be deemed ‘bonafide’ by the immigration authorities, the business typically needs to have financials that reflect a sufficiently large amount of sales to be deemed a viable business and have profits sufficient to support an individual or family.
- The tax returns of the business should sufficiently demonstrate that the business is a viable and legitimate business.
- Other documents such as w2 records, profit and loss statements, bank statements, equipment lists, and business licenses also may demonstrate the ‘bonafides’ of the business.
- Additionally, the lease agreement is a critical requirement for most E2 Visa applicants.
- Often, the immigration authorities require that the length of the lease agreement be a minimum of two years in length.
- A new business opportunity may qualify as well but the E2 Visa applicant must at minimum have a detailed business plan, a signed lease, and have demonstrated that they have put funds in escrow to start the business.
Establishing that the Investment in the Business be ‘Substantial’
Generally the E2 Visa applicant must commit at least $100,000 toward the purchase of the business in order to qualify for an E2 Visa. Importantly, the amount of capital must be ‘at risk’ for the E2 Visa applicant. This prevents a ‘sham’ purchase and also would preclude the funding being contingent on anything such a seller’s earn-out (which is tied to unknown future sales or profits). The E2 Visa buyer may run the business in an absentee fashion if they are committing their own funds in a substantial way. The E2 Visa buyer, however, is restricted from working elsewhere except for the business that acted as the Visa sponsor.
E2 Visa Applicants May Invest Their Human Capital
E2 Visa applicants who for whatever reason will own less than 50 percent of the business must demonstrate that they will have operational control of the business in order for the Visa to be granted. The E2 Visa applicant must be employed by the business in an executive or managerial capacity. Unskilled candidates would not qualify, so the E2 Visa applicant must convince the immigration authorities that they are highly skilled and will play an instrumental role in the operations of the business. This clearly is a more difficult hill to climb for most E2 Visa applicants, so an E2 Visa buyer without the funds to purchase should be viewed with extreme caution.
The E2 Visa Can Make Dreams Come True
A qualified E2 Visa buyer willing to commit a substantial amount of capital toward the purchase of a bonafide business enterprise may indeed be able to live the American dream. Likewise, South Florida business sellers may realize their own financial dreams by understanding the E2 Visa process and finding the right E2 Visa buyer for their business.
Give Martin at Five Star Business Brokers of Palm Beach County a call today for a FREE evaluation of your business.