On Aug 21 2017 by H. Ronald Klasko

Citizenship by Investment and E-2 Visas: A Possible Solution to EB-5 Quota Backlogs and Delays

By H. Ronald Klasko 

The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.

The China quota backlog for EB-5 has reached a period of time beyond what most investors would consider acceptable. Hopefully, a legislative solution, such as that suggested by Senator Cornyn, will be forthcoming. However, as of this date, a legislative solution is at best highly speculative.

USCIS processing times for all EB-5 petitions keep increasing. In most cases, an EB-5 immigrant from a country other than China will not be able to enter the U.S. for 25 to 30 months or more.

Whether the amount is $900,000, $1 million, $1.3 million or $1.8 million, the amount of investment required for EB-5 will be increasing. Some investors will not be able to afford the increased investment amount, but want to make an investment in the U.S. and immigrate based on that investment.

Assuming there is no change in the law, what options are available for Chinese and other investors who wish to live in the U.S. some or all of the time during the waiting period or who can’t or won’t invest the higher amount?

E-2 Visa Solution:
For most investors, the best and often the only option is the E-2 visa. This can be a solution to fill the gap until the investor is able to immigrate to the U.S., or it can be an option instead of EB-5.

The E-2 (treaty investor) visa has many advantages, including

  • 5-year visa issuance;
  • 2-month processing time;
  • Possibility of avoiding taxation on worldwide income;
  • Ability of child to go to school in the U.S., including public school, and possibly qualify for in-state tuition;
  • Ability of spouse to work in the U.S.;
  • Ability to get extension for unlimited 5-year periods after the first 5 years;
  • And no application to USCIS required.

So, what’s the catch? The catch is that E-2 visas are only available to nationals of countries with bilateral investment treaties with the U.S. China, India, Vietnam, Russia, Brazil, Venezuela, South Africa and many other countries whose nationals are frequent EB-5 applicants do not have such a treaty.

Answer: Citizenship by Investment

The answer is “citizenship by investment” (CBI). Presently, 17 countries in the world have CBI programs. However, only one of those 17 countries has a bilateral investment treaty with the U.S. That country is Grenada. For an investment between $200,000 and $400,000 in Grenada, a Chinese or other country’s citizen can obtain Grenadian nationality in approximately four (4) months, which enables him or her to apply for an E-2 visa to the U.S.

Although this blog is not intended to be a comprehensive analysis of the E-2 visa process and requirements, it will hopefully be sufficient to enable an investor or advisor to determine if E-2 might be an acceptable alternative option. The author and other members of his law firm have successfully processed at least hundreds (and more likely thousands) of E-2 visas for nationals of countries around the world. The main criteria include:

  • Qualifying Treaty. See above re: Grenada.
  • Nationality. The treaty investor must possess the nationality of the qualifying treaty country. The new Grenadian citizen must own at least 50% of the investment business in the U.S. Alternatively, a company owned by the Grenadian citizen can own at least 50% of the investment business.
  • Invested in or in the Process of Investing in a New or Existing U.S. Business. Much like the “at-risk” requirement for EB-5 visas, the E-2 mandates that applicants’ funds or those of the investing business be irrevocably committed and subject to partial or total loss. The investment can be in a new business, in a franchise or for the purchase of an existing business. Unlike EB-5, there is no specific employment creation requirement.
  • U.S. Enterprise must be Real and Active. The business in which the applicant invests must be engaged in the provision of goods or services for profit.
  • Investment must be Substantial. There is no minimum investment amount for E-2 visas; the amount invested must be sufficient to create or develop the type of enterprise in which the investor is investing. In order to determine whether an investment is substantial, adjudicators apply a “proportionality test,” which compares the amount invested to the total amount required to establishing the same or similar business. In other words, a $100,000 investment may not be sufficient to create a sports arena. However, it may be more than enough to create a company that develops applications for a mobile phone, or to open a small store. While investments under $200,000 are permitted under this program, investors should be aware that the less costly the business is to establish, the larger the proportion of the total cost the investment must be in order to be deemed “substantial.” A good business plan is critical to document that the amount invested is substantial enough to create a successful business.
  • U.S. Enterprise must be more than Marginal. While there is no minimum job creation requirement, the business must be able to create and sustain jobs for persons other than the investor and his or her family.
  • Investor will Develop and Direct the U.S. Enterprise. In simple terms, this means the investor must own at least 50% of the U.S. enterprise. However, passive ownership is not enough. The investor must play a role in overseeing the business’s future development. The investor can manage the business or hire a manager.
  • Intent to Depart. The foreign national may not have the intent to remain in the U.S. permanently at the time of applying for the visa and seeking admission as a port of entry. E-2 applicants must satisfy a U.S. consular officer of their intent to depart and intent to apply for permanent residence, if at all, at the U.S. Consulate outside the U.S.

I have prepared the following chart to summarize the similarities and differences between E-2 and EB-5: 

  EB-5 E-2
Minimum Investment Amount $1 million or  $500,000 (TEA) No, but must be “substantial”
Type of Business New or purchase of business created after Nov. 29, 1990 New or purchase of existing U.S. business
Minimum Job Creation Requirement 10 full-time positions for U.S. workers No, but must sustain jobs for more than the investor and his/her family
Ownership Requirement Yes, but limited partnership is sufficient. Yes. At least 50%
Management requirement Limited partnership is sufficient Must develop and direct the
U.S. business
Trace Source and Path of Funds Yes Yes, but less extensive than EB-5
Limit On Available Visas Yes No
Permanent Residency Yes No
Self-Petition Yes Yes
Timeline for Adjudication In excess of 18 months at USCIS Average processing time of 60 days at U.S. consulate abroad
Foreign Business as Investor No Yes, if E-2 will be executive or supervisory employee


I have just completed a fact-finding mission to Grenada at the invitation of the Grenadian Consul General to the U.S. During this fact-finding mission, I met with the Prime Minister of Grenada, the head of the CBI program in Grenada and many Ministers and high-ranking government officials in Grenada. In addition, I met with the U.S. Ambassador to Grenada at a meeting at the U.S. Consulate in Barbados, which has jurisdiction over E-2 visa applications of citizens of Grenada. A comprehensive report of that fact-finding mission, including a Grenada/E-2 FAQ, is available from the author of this blog (rklasko@klaskolaw.com). For investors interested in the Grenada CBI/E-2 visa options, our firm has developed a turnkey solution working with our collaborating firms.