E-2 real and operating enterprise and the marginality test: what counts and what doesn’t

Where these two tests come from

The E-2 regulation, 8 CFR 214.2(e)(2), describes the investor as someone who has invested a substantial amount in a “bona fide enterprise”, as distinct from a relatively small amount in a marginal enterprise solely to earn a living. That one sentence produces two requirements that consular officers and US Citizenship and Immigration Services (USCIS) check separately from the investment amount: the business must be bona fide (real and operating), and it must not be marginal.

They are often confused with the substantial-investment test, which compares what you put in with the cost of the business. A business can be well funded and still fail either of these tests, and a modest business can pass them.

Sources: 8 CFR 214.2(e)(2)(i)

What does “real and operating” mean?

Under 8 CFR 214.2(e)(13), the enterprise must be a real, active and operating commercial or entrepreneurial undertaking that produces services or goods for profit. It must also meet the legal requirements for doing business in the place where it operates, for example the registrations and licenses that its activity requires there.

Three things follow. It must be commercial and for profit, so a non-profit organization cannot be the E-2 enterprise. It must produce something, a service or a product, for customers. And it must be operating, or about to operate, rather than existing only on paper.

Sources: 8 CFR 214.2(e)(13); 9 FAM 402.9-6(C)

Active versus passive: what doesn’t count

The Foreign Affairs Manual (FAM), the State Department’s guidance to consular officers, gives the examples of what falls outside the definition: a paper organization, and an idle speculative investment held for potential appreciation in value, such as undeveloped land, or stocks held by an investor without the intent to direct the enterprise.

The dividing line is activity and direction. Money placed in assets that you simply hold, hoping they rise in value, is passive. Money placed in a business that sells goods or services, which you are coming to develop and direct, is active. Whether a particular arrangement is on the right side of the line depends on its facts: what the business does day to day, who does it, and whether it earns its income from operations.

Sources: 9 FAM 402.9-6(C)

Does the business have to be open before you apply?

Not necessarily. For a new enterprise, the FAM says the officer must be convinced that it will be a real and active undertaking producing a service or commodity if the visa is issued. But there are limits. To be “in the process of investing”, the investor must be close to the start of actual business operations, not still signing contracts that may be broken or scouting for locations and property.

A physical office is not itself a requirement. The FAM says having office space may be relevant to whether the requirements are met, but it is not required to qualify. A business that operates from a client site, online or from a shared space can still be real and operating if the other evidence shows it.

Sources: 9 FAM 402.9-6(C); 9 FAM 402.9-6(B)(e); 9 FAM 402.9-4(D)

What is the marginal-enterprise test?

A marginal enterprise is one without the present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and his or her family. The E-2 business may not be marginal.

There are two ways to pass. The first is income: the business has, or will have, the capacity to earn more than a minimal living for the investor’s household. The second is contribution: a business that cannot do that, but has a present or future capacity to make a significant economic contribution, is not marginal either.

Neither the regulation nor the FAM sets a dollar figure for a “minimal living”, or defines “significant economic contribution”. The State Department’s DS-156E instructions phrase the test as capacity to generate significantly more income than just a living for the investor and family, or a significant economic impact in the United States. How an officer weighs a particular business depends on the facts presented.

Sources: 8 CFR 214.2(e)(15); Form DS-156E instructions (06-2018 edition)

The five-year window, and the date it runs from

A new business does not have to earn more than a minimal living on day one. The regulation says the projected future income-generating capacity should generally be realizable within 5 years from the date the investor commences the normal business activity of the enterprise. The FAM uses the same five-year window and the same starting point.

The USCIS E-2 page, last updated 20 August 2026, words the start date differently: it says a new enterprise should have the capacity to generate that income within five years from the date that the investor’s E-2 classification begins. The two dates can differ, for example where trading starts long before or after E-2 status. The regulation and the FAM use the commencement date; the USCIS page is agency guidance. If your timeline depends on which date applies, raise it with a qualified adviser rather than assuming.

The regulation also says “generally”, so it does not state five years as an absolute limit.

Sources: 8 CFR 214.2(e)(15); E-2 Treaty Investors: Marginal Enterprises

What evidence usually shows each test?

The FAM’s suggested document checklist is a guide, not a required list, and each embassy or consulate can publish its own. The State Department’s Form DS-156E instructions name these categories:

• Real and operating: occupational and business licenses or permits, sales tax receipts, utility and telephone bills, business transaction records, account statements, supplier invoices and promotional material (FAM checklist), plus annual reports, catalogs, sales literature and news articles (DS-156E).
• Not marginal, for an operating business: payroll records, IRS Form 941 (the employer’s quarterly federal tax return), business and personal tax returns, and evidence of other personal assets and income.
• Not marginal, for a new business: the FAM checklist asks for financial projections for the next five years, supported by a thorough business plan, and any payroll records so far. The DS-156E says that where a business is not yet fully operational, estimates and projections of income, job creation and sales should be given.

Sources: Form DS-156E instructions (06-2018 edition); 9 FAM 402.9-11(B), parts V and VI (suggested document checklist)

Common problems

• Unverified, unaudited financial statements built only from the applicant’s own figures. The FAM says these are normally insufficient to establish the nature and status of an enterprise.
• A business plan with no sign of activity: no lease, no contracts, no customers, nothing purchased.
• Projections that, even after five years, show the business supporting no more than a minimal living for the investor’s household, with no case made for a significant economic contribution.
• A holding structure, such as land or a share portfolio, presented as a business without operations the investor directs.
• A non-profit or charitable vehicle used as the enterprise.

Sources: 9 FAM 402.9-6(D)(d); 9 FAM 402.9-6(C); 8 CFR 214.2(e)(15)

How Visa Trouble can help

Free route discovery at Visa Trouble covers the E-2 treaty investor route, including the treaty-country check. We’re building application preparation for E-2 investors; it is planned, not open yet. Visa Trouble is not a law firm and does not give legal advice.

You can begin free route discovery at visatrouble.com.