How should an investor document and demonstrate “marginality” avoidance when scaling a small business under E-2 rules?

Table of Content

Some E-2 investors operate businesses that are active and ongoing, yet still question how their financial position will be evaluated under the E-2 marginality standard. U.S. immigration authorities do not assess marginality based on business labels or subjective impressions. The evaluation focuses on whether the enterprise has the present or future capacity to generate more than a minimal living for the investor and their family, as defined by U.S. Citizenship and Immigration Services (USCIS).

Because this standard is outcome-based, questions often arise around financial documentation. USCIS does not publish a required list of documents for marginality. Instead, officers review the totality of the evidence submitted to determine whether the business shows sufficient income capacity. That review relies on financial records already associated with the business.

 

Financial Documents That Can Support an E-2 Marginality Analysis

Financial information in an E-2 case is reflected across multiple types of records. Each category below corresponds to a different part of the business’s financial activity.

 

Income and revenue documents

These documents can support the analysis by recording income generated by the business. Income records reflect whether business activity produces revenue beyond personal subsistence.

Examples include:

  • Federal business tax returns
  • State business tax returns, where applicable
  • Profit and loss statements
  • Sales reports
  • Issued invoices
  • Contracts or agreements reflecting paid business activity

 

Bank and cash records

These documents can support the analysis by recording the movement and availability of business funds. Cash records reflect how income is received and used in ongoing operations.

Examples include:

  • Business bank statements
  • Merchant account statements
  • Deposit records
  • Cash flow statements

 

Expense and operating cost documents

These documents can support the analysis by recording ongoing business expenses. Expense records place income figures in context by reflecting operating costs tied to business activity.

Examples include:

  • Payroll records
  • Lease agreements and rent payment records
  • Utility bills
  • Vendor invoices
  • Insurance payment records

 

Investment and asset documents

These documents can support the analysis by recording funds and assets committed to the enterprise. Asset and investment records reflect capital allocated to business operations.

Examples include:

  • Proof of transferred investment funds
  • Equipment purchase receipts
  • Inventory purchase records
  • Asset schedules

 

Projection and planning documents

These documents can support the analysis by recording anticipated business figures over a stated period. For enterprises that are still developing, projections relate to future income capacity within the period allowed under E-2 rules.

Examples include:

  • Revenue projections
  • Expense forecasts
  • Break-even analyses

 

Sources:

  1. USCIS.
    https://www.uscis.gov/working-in-the-united-states/temporary-workers/e-2-treaty-investors
  2. Electronic Code of Federal Regulations (eCFR).
    https://www.ecfr.gov/current/title-8/chapter-I/subchapter-B/part-214/section-214.2

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