E-2 Versus EB-5

January 23rd, 2020 Kyle Behring

E-2 Versus EB-5

In light of the November 21st, 2019 regulatory change the EB-5 program has undergone, many prospective EB-5 investors have been considered alternative pathways to the U.S. One such pathway is the E-2 visa.

The E-2 nonimmigrant classification allows a national of a treaty country (a country with which the United States maintains a treaty of commerce and navigation”) to be admitted to the United States when investing a substantial amount of capital in a U.S. business.  Certain employees of such a person or of a qualifying organization may also be eligible for this classification.

See U.S. Department of State’s Treaty Countries for a current list of countries with which the United States maintains a treaty of commerce and navigation.


Permanent Residence Status


Individuals seeking admittance to the U.S. via investment have two visa options: E-2 and EB-5. One notable difference between these two options is that the EB-5 visa is a path to long term permanent residence (a “green card”) whereas E-2 can allow for long term presence in the U.S. but does not directly provide a pathway to permanent residence or citizenship.

E-2 has been the visa of choice for nationals of countries which maintain bilateral investment treaties with the U.S., however, the primary users of the EB-5 Visa, nationals from China, India, Vietnam, Brazil, and South Africa (among others) are not eligible to utilize E-2 as their countries do not have bilateral investment treaties with the U.S. at this time. Unlike EB-5, E-2 does not consider an investor’s country of origin, but rather their citizenship status. Nationals from these countries can utilize the E-2 visa option by first obtaining citizenship in a country which maintains a bilateral investment treaty with the U.S., such as Grenada or Turkey.

EB-5 leads to a permanent resident status (“green card”), and ultimately the option of applying for U.S. citizenship after 5 years of lawful presence within the U.S. The E-2 visa is valid for 5 years at a time (with the Grenada or Turkey citizenship), and can be renewed for 5 years at a time indefinitely, so long as the investment business remains viable. Some investors may consider this to be advantageous compared to EB-5, as obtaining U.S. permanent resident status may result in taxation on worldwide income, whereas investors entering the U.S. on an E-2 visa may be able to avoid taxation on worldwide income with some tax planning and by limiting the total number of days per year spent within U.S.

EB-5 petitioners are able to spend an indefinite amount of time outside of the U.S. prior to obtaining permanent resident status after the application of petition I-829, but it is necessary for those petitioners to regularly to apply for re-entry permits to not be considered by USCIS as abandoning their U.S. residence, whereas an E-2 visa holder can spend as much or as little time within the U.S. as they desire.


Children’s Enrollment in U.S. Universities


While E-2 does allow for the children of the visa holder to study in public school, private school, or university, one notable disadvantage of the E-2 visa is that once the child of the E-2 visa holder becomes 21 years of age or becomes married, that child no longer benefits from their parent’s E-2 visa status. If a child of an E-2 visa holder is enrolled in a U.S. university, they would be required to undergo a change of status to an F-1 visa in order to remain enrolled at that university. Once the child of an EB-5 petitioner has obtained their EB-5 visa as a dependent beneficiary, they will be considered a permanent resident of the U.S. and would not share this restriction.


Investment Amount


E-2, in contrast to EB-5, has a lower investment requirement. Most E-2 applicants invest between $250,000 and $400,000, although there is not an explicit mandatory minimum investment requirement. EB-5’s current minimum investment thresholds are $900,000 for TEA projects and $1,800,000 for non-TEA projects.

Prospective EB-5 investors also have the burden of documenting lawful source of funds and overcoming currency export restrictions for much higher amounts of funds. Documenting source of funds was often difficult for investments at the previous EB-5 minimum investment threshold of  $500,000 level, but it will be more considerably more difficult and in some cases unviable at the new $900,000 or $1,800,000 investment thresholds. Similarly, overcoming currency export restrictions, may not be possible for many prospective investors at the new  EB-5 investment thresholds. In contrast, while E-2 investors must also prove that their funds were lawfully obtained, there is no requirement of documenting the source of every dollar invested at the level required for EB-5.



While E-2 and EB-5 are both investment-based immigration routes, E-2 provides more flexibility. Most EB-5 opportunities take the form of projects sponsored by EB-5 regional centers, and all EB-5 investments are required to create 10 full-time jobs U.S. employees within a defined period. An E-2 investment can be a franchise, a subsidiary of an overseas company, a startup company, or purchase of more than 50% of an existing company. Although the magnitude of employment and economic impact is are usually taken into consideration for E-2 approvability, there is not an explicit number of employees required. E-2 also requires that the investor (or other nationals of the investor’s country of citizenship) must own at least 50% of the business.

When investing through an EB-5 regional center, prospective EB-5 investors do not need to be involved in the management of the investment company. Similarly, E-2 investors have the option of managing their company or hiring a manager. However, the E-2 investor must justify to the adjudicating officer that they will “develop and direct” the investment.


Processing Times and Quotas


Unlike EB-5, E-2 does not have per-country caps or quotas on immigrant country of origin. As investors from China, India, and Vietnam know, EB-5 Adjustment of Status and Consular Processing petitions have significant backlogs of between 6 to 15 years, depending upon the investor’s country of origin and I-526 petition priority date.

Additionally, EB-5 petitioners are currently subjected to historically long USCIS processing times. As of the writing of this article, USCIS provides an estimated range of 32.5 to 49.5 months. Given the large number of EB-5 petition filings in the fiscal quarter preceding the November 21st EB-5 regulatory changes, there is some speculation among EB-5 practitioners that processing times could worsen. Conversely, E-2 visa applications are typically processed in approximately three months or less. The processing time for citizenship in one of the 3 countries that offer have both Citizenship by Investment (“CBI”) and bilateral investment treaties with the U.S. (Grenada, Turkey, and Montenegro) is typically about three to six months. By gaining citizenship through investment in one of the three aforementioned countries and filing an E-2 petition, a national of China, India, or Vietnam could gain non-immigrant status in the U.S. within one year’s time.

E-2 as a Springboard to EB-5


Given that E-2 does not provide a permanent residence pathway to investors, many E-2 visa holders eventually apply for EB-5 as their long term U.S. immigration solution. Investors may choose to file an E-2 petition and an EB-5 petition concurrently, or they may file an EB-5 petition after having immigrated to the U.S. with E-2.


Final Thoughts


E-2 and EB-5 share many similarities, and each visa category has their own sets of positive and negative aspects. The best path forward for an immigrant investor is variable and heavily dependent on case-by-case factors. If you are interested in learning more about E-2 and EB-5, click the following link or the image below to schedule a consultation with a member of our team:


Content in this article has been adapted from the Klasko Immigration Law Partners, LLP, article “Investor Choices Post-November 20: E-2 vs. EB-5”, originally posted on January 14, 2020. Read the full original article here: