E-2 Treaty Investor Visas for Canadians Buying or Starting a U.S. Business

E-2 visas for Canadian citizens starting or buying a business in the U.S.

The E-2 visa allows Canadian citizens to buy or start a business in the U.S. 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. The visa is valid for five years, and may be renewed indefinitely so long as the business continues to operate.

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 the corporate entity (such as an LLC, C-Corp, etc.), getting a Federal Employer Identification Number (FEIN), and setting up a business bank account. Depending on the business, it may also mean obtaining necessary permits, inspections or licenses.

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?

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 get an E-2 visa, it would not be at risk because the applicant has not irrevocably committed the funds towards the enterprise.

Note that if you are purchasing an existing business, you may have the purchase offer contingent on approval of the E-2 visa so long as the funds to be used are placed in escrow. If the E-2 visa is approved, the funds are transferred from escrow to the seller. If the E-2 visa is denied, the funds are returned to the applicant. This is a good way to protect yourself while still meeting the E-2 criteria.

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.

Existing Business

From a procedural standpoint, it is easier to apply for an E-2 visa by buying an existing business than by starting a new business. The primary reason is that the purchase price of the business is the investment amount. For example, if a Canadian citizen purchases a hair salon in Los Angeles for $150,000, then the purchase agreement essentially demonstrates the E-2 investment.

New Business

On the other hand, starting a new business from scratch requires the Canadian investor to spend all the money necessary to get the business to the point of being operational – or close to operational. For example, if a Canadian citizen wants to start a brand new hair salon, she will have to first spend money securing a commercial lease, paying rent, buying equipment, and hiring staff, before she can apply for the E-2 visa.

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.

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.

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.