E-2 Visas Can Propel Rust Belt Comebacks

Immigrants have been a reliable source for population growth across most of the so-called "rust belt cities" in the American Midwest including Cleveland, Detroit, Pittsburgh, and St. Louis, among others. For instance, between 2000 and 2015, immigrants provided half of the population growth and offset population declines within nine of the largest twenty-five metropolitan areas in the upper Midwest.¹ They also have played a significant role in reversing Philadelphia's sixty-year population decline.² Moreover, immigrants are important contributors for economic growth. Across the Great Lakes region, immigrants own one out of five 'main street' businesses such as laundries, gas stations, and restaurants.³ Nationally, they represent thirty percent of new entrepreneurs.⁴ Startup companies are a vital component of development efforts as research conveys that private-sector job growth is more in areas that have a higher number of startups. These companies generated more than three million new jobs in 2020. Also, fifty-five percent of American startups worth $1 billion or more were founded by at least one immigrant.⁵  In 2020, approximately forty-four percent of Fortune 500 companies had at least one founder who was either an immigrant or a child of immigrants; these companies generated $6.3 trillion in revenue in FY2019.⁶ Immigrants have proven to have dynamic attributes for transforming the economic and social life of a rust belt city struggling to make a comeback. America's rust belt cities, therefore, have an opportunity to increase the role of immigrant contributions by encouraging potential E-2 visa holders to invest in them.

The E-2 visa allows a citizen of certain foreign counties to enter the U.S. to finance and manage a business. In fact, this practice of welcoming non-citizens to start businesses in America through forging treaties has been in place for over two-hundred years.⁷ To qualify, an applicant must live in a treaty country. The United States has trade agreements with over eighty countries; any applicant from these countries can buy an ownership stake in an existing American business or start a new company in the U.S. Nationals of treaty countries need to arrive in the U.S. to engage in substantial trade in qualifying activities that principally involve matters between the U.S. and the treaty country.⁸ The applicant must invest a substantial amount of capital in the business while directing and developing it as well. The U.S. government has not defined what a "substantial" amount constitutes as the requisite amount varies by the type of business. The reviewer of the E-2 visa application may compare the amount which was invested against the business's total value when determining whether a substantial fiscal amount was allocated.⁹

Further, the applicant must have money or assets at risk in the business. The fiscal contributions cannot be revocable. If a foreign business is technically investing into a U.S. business, then the applicant must have over fifty percent ownership interest in the foreign business.¹⁰ If the applicant does not have a controlling interest, the applicant can still qualify if over nationals of the same treaty country own fifty percent of the business. Moreover, the business receiving the investment must show interest in making a profit by conducting a form of entrepreneurial activity - passive investments will not qualify for the E-2. The applicant should own or lease commercial property to show how the business has operating ability.¹¹ To convey how a business is not marginal in nature, an applicant can expound upon how it has the current or future capacity to make a "significant economic contribution." This capacity can be established by showing how the enterprise currently employs or will employ multiple workers.¹²

Many E-2 visa holders choose to invest in franchises because of their detailed business plans. Also, their operating cost projections give investors a precise understanding of what will constitute as a "substantial" investment. The franchise option also provides investors with training and other types of support. If an applicant wishes to leverage professional skills and experience, opening a consulting firm can provide an E-2 visa. Such a plan comes with lower start-up costs and profits can be attained quicker. Creating a detailed business plan will be helpful as it will reveal how the business is expected to grow – while also supporting the applicant. Even multinational companies can benefit from E-2 visas. The applicant would need to share the same nationality as the company's majority owner and be a citizen of a treaty country. The E-2 visa applicant should be hired as an executive, manager, or an essential knowledge employee.¹³

As an E-2 visa holder can make a "significant economic contribution" to a community by opening a business, hiring residents, while living in the city as well. Many of these cities and their collaborative partners already have programs in place that work to welcome immigrants and encourage E-2 investments. For instance, a non-profit named Global Detroit assists immigrant entrepreneurs with business development programs. The St. Louis Mosaic Project, a regional initiative, works to attract and retain international students in the city.¹⁴ The Immigrant Welcome Center in Indianapolis assists immigrants with assimilating to the area by connecting them to local resources.¹⁵ So, rust belt cities have already made efforts to increase their immigrant populations. These efforts can be augmented by placing more of an emphasis on E-2 visas. Immigrant entrepreneurs can bring their unique talents and perspectives to communities while offering much needed services. The importance of immigrant workers will only increase over time. It is estimated that two-thirds of U.S. counties will have fewer 'prime working age' residents in 2037 than they did in 1997. Studies have shown that immigrants are more likely to be of 'prime working age'; thus, correspondingly, they will be a vital source for communities handling a shortage in talent and available workers.¹⁶ Further, immigrant contributions are compounded by producing job opportunities for city residents. Collectively, E-2 visa holders can play a significant role in fostering a dynamic atmosphere that can encourage in-state and out-of-state residents to move into rust belt cities. In turn, such strategies can create win-win outcomes for immigrant entrepreneurs as they pursue career goals and for rust belt cities as they continue to increase population, strengthen their respective tax base, and develop energetic environments that attract further investments and opportunities.

Footnotes

1. Mitchell Schnurman. "Detroit, St. Louis, and Other Rust Belt Cities Look to Immigrants to Revive their Economies." The Dallas Morning News, May 29, 2018: https://www.dallasnews.com/opinion/commentary/2018/05/29/detroit-st-louis-and-other-rust-belt-cities-look-to-immigrants-to-revive-their-economies/

2. Steve Tobocman. "How Immigrants are Helping to Rebuild Rust Belt Economies." We Global Network: https://www.weglobalnetwork.org/how-immigrants-are-helping-to-rebuild-rust-belt-economies/

3. Schnurman, The Dallas Morning News: https://www.dallasnews.com/opinion/commentary/2018/05/29/detroit-st-louis-and-other-rust-belt-cities-look-to-immigrants-to-revive-their-economies/

4. Adrian Furnham. "Why Immigrants Make Great Entrepreneurs." The Wall Street Journal, November 26, 2017: https://www.wsj.com/articles/why-immigrants-make-great-entrepreneurs-1511752261

5. Richard Burke, "Immigrant Business Owners are the Key to Supercharging America's Economy." Entrepreneur, January 12, 2022: https://www.entrepreneur.com/article/392926

6. New American Economy: https://www.newamericaneconomy.org/issues/entrepreneurship/

7. Paraprin Capital: https://www.paraprincapital.com/the-history-of-e2-visa/

8. EB5 Brics: https://www.eb5brics.com/e-2-visa

9. Ashoori Law: https://www.ashoorilaw.com/e2-visa/

10. EB5 Brics: https://www.eb5brics.com/e-2-visa

11. UpCounsel: https://www.upcounsel.com/e2-visa

12. Ashoori Law: https://www.ashoorilaw.com/e2-visa/

13. Aga Asbury. "The 5 Best Businesses for E-2 Visa Investment." Ford Murray: https://fordmurraylaw.com/the-5-best-businesses-for-e-2-visa-investment/

14. Schnurman, The Dallas Morning News: https://www.dallasnews.com/opinion/commentary/2018/05/29/detroit-st-louis-and-other-rust-belt-cities-look-to-immigrants-to-revive-their-economies/

15. Immigrant Welcome Center: https://www.immigrantwelcomecenter.org/

16. Steve Tobocman. "Building a Welcoming Economy." Economic Development Journal, Winter 2021, vol. 20, no. 1, pp. 1 - 12. https://globaldetroitmi.org/wp-content/uploads/2021/03/The-IEDC-Economic-Development-Journal.pdf

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