E-2 Visa Through Buying a Small Business in the U.S.: How to Choose and Perform Due Diligence
The E-2 visa is a nonimmigrant visa that allows citizens of certain “treaty countries” to live in the United States by investing in and actively managing a real business. Unlike a passive investment, such as buying stocks, the law requires you to put money at risk and prove that the business is real, active, and has the capacity to create jobs. For many first-time investors, the simplest path is to purchase an existing small business or franchise that already has customers, employees, and cash flow.
If you are new to these terms: “substantial investment” means the money must be large enough to run the business successfully. “At risk” means your funds are actually spent or committed before your visa interview, not just sitting in your bank account. “Non-marginal” means the business should generate more than just enough to support you — it should contribute to the U.S. economy by paying taxes and hiring workers. “Develop and direct” means you personally must manage and make decisions, not just invest passively.
“The investment must be substantial, funds must be committed and at risk, and the enterprise must not be marginal. The investor must direct and develop the business.” — summarized from USCIS E-2 and U.S. Department of State guidance.
Beginner-Friendly Due Diligence Checklist (explained step by step)
1) Financial Health
- Profit & Loss Statements: Ask for at least 3 years of income and expenses. Compare with bank statements to confirm the numbers are real.
- Revenue Quality: Are sales recurring, seasonal, or dependent on just a few customers?
- Taxes: Were state and federal tax returns filed properly? Any payment plans or fines?
- Debts: Check for loans, leases, or liens (UCC filings) that could reduce the value of the business.
2) Legal Framework
- Company Documents: Ownership papers must prove at least 50% is held by citizens of a treaty country.
- Lease: Make sure the office or shop lease can be transferred to you and is valid for enough years.
- Licenses: Check if the business has valid state and city permits (restaurant, construction, daycare, etc.).
- Disputes: Look for lawsuits, penalties, or regulatory issues (health and safety, consumer complaints).
3) Market and Customers
- Competition: Identify main local competitors and the unique advantage of this business.
- Profit Margins: Does the business earn enough after expenses to grow and hire?
- Owner Dependence: Will the business survive without the seller? Make sure training is included.
- Critical Licenses: In industries like food or health, missing licenses can shut down operations.
4) Operations & Technology
- Systems: Does the company use bookkeeping, CRM, or scheduling software that can be transferred to you?
- Equipment: Check machines, tools, or vehicles — are they in working condition and owned outright?
- Digital Assets: Make sure websites, domains, and online accounts are included in the sale.
- Employees: Understand who works in the business and whether they will stay after the sale.
5) Immigration-Specific Points
- Money “at risk”: Funds in escrow (waiting for visa approval) usually don’t count as risk. USCIS wants proof of actual spending or binding contracts.
- Job Creation: A plan to hire at least a few U.S. employees is critical to avoid being considered “marginal.”
- Source of Funds: Keep records of where your money came from (savings, sale of property, etc.).
- Your Role: You must show you will manage daily operations, not just invest and walk away.
What Makes a Strong E-2 Deal and Which Businesses Are Easier to Run
Healthy Deal Criteria
- Substantial funds: The price of the business plus working capital should be reasonable compared to the size of the operation.
- Non-marginal plan: You need a business plan showing new jobs and growth, not just self-employment.
- Clean legal background: Check for unpaid taxes, hidden debts, or regulatory issues.
- Operational independence: The business should not collapse if the seller leaves. Processes should be transferable.
Visa Application Routes
- Consular Visa: Apply in your home country’s U.S. consulate. Advantage: you get a visa to travel in and out. Downside: wait times for interviews.
- Change of Status (I-129): If you are already in the U.S. with another visa, you can switch to E-2. Advantage: faster. Downside: only valid while you stay in the U.S.
Industries with Fast Onboarding (easier for beginners)
Cleaning & Maintenance
Recurring contracts, predictable income, low equipment costs. Make sure to check employee background checks, insurance, and state licenses.
Light Home Services
Simple services like lawn care, pool maintenance, or small repairs. Easy to learn, but make sure you comply with safety and permit requirements.
E-commerce Stores
Businesses with ready-made listings and suppliers. Verify intellectual property rights, customer returns, and dependence on one marketing channel.
B2B Services
Small subscription-based services like marketing or IT support. Stable if contracts are recurring. Watch for client concentration risk.
Red Flags — Signs of a Bad Deal
- Financial statements don’t match bank records — risk of fake numbers.
- Loans or liens on key equipment that you would inherit.
- Overdependence on the seller, no written procedures.
- Passive assets only (like property with no activity) — not valid for E-2.
- No working capital left after the purchase — business may be “marginal.”
- Licensing or health inspection issues.
- Unclear source of your investment funds.
- Seller financing without your own funds at risk.
Practical Tips for Beginners
Check for UCC Filings
Every U.S. state has an online database to see if assets (like vehicles or machines) are pledged as collateral. Search by business name before closing the deal.
Franchise vs Independent
Franchises come with structure and support, but less flexibility. Independents are more flexible but require more due diligence. Always review lawsuits and financial disclosures.
30/60/90 Day Plan
Plan the first 3 months: hire staff, transfer licenses, update marketing, and set measurable goals (sales, customer satisfaction).
Immigration Link
Always tie your business plan to E-2 rules: show future employees, tax contributions, and your role in running the business daily.
Cost Breakdown of an E-2 Business Purchase
Costs vary by state and industry, but here is a beginner-friendly example if you buy a business for $250,000. Treat this as a planning guide, not a quote.
- Business price (asset deal): $250,000
- Working capital (3–6 months): $40,000–80,000
- Lawyers & accountant: $12,000–25,000 (purchase + immigration)
- Due diligence checks: $5,000–15,000 (financial, legal, technical)
- Appraisal / escrow / closing fees: $5,000–10,000
- Licenses, permits, insurance: $3,000–8,000
- Reserve for repairs / branding (CAPEX): $10,000–30,000
Official Sources (for your own reading)
- USCIS — E-2 Treaty Investors
- U.S. Department of State — 9 FAM 402.9 (Treaty Traders & Investors)
- Travel.State.Gov — E-1/E-2 overview
- USCIS — Form I-129 (change of status) + instructions + filing addresses
- U.S. Small Business Administration — Buying an existing business or franchise
- FTC — Franchise Disclosure Document guidance
- Secretary of State UCC search portals (NY, IL, CO, CA) for lien checks
- FinCEN — Beneficial Ownership Information; IRS — BOI overview
