Setting up a new business in the U.S.: Choosing between L-1 or E visa

Setting up a new business can be quite exciting. But there are also many challenges. In-depth market research and planning can minimize the risks. Foreign nationals setting up a business in the US face another challenge – which visa do they use to be able to enter the US to operate the business once it has been established? Generally L-1 visas are used to set-up a new entity in the U.S. when it is a subsidiary, parent, branch, or affiliate of an overseas company. However, foreign nationals from countries with certain treaty with the U.S. have the choice of using E-1, E-2 or L-1 visa for establishing a new entity in the U.S. Let us first understand the situations under which each of these visa options can be used.

E-1 visa: The E-1 treaty trader visa allows nationals of an E-1 treaty nation to enter the U.S. and carry out substantial trade. Trade means the international exchange of goods, services and technology. The item of trade, and title of that item, must pass from one party to the other in exchange for consideration. The international trade between your home country and the U.S. must be ‘substantial’ in the sense that there is a sizable and continuing volume of trade. More than 50 per cent of the international trade involved must be between the U.S. and your home country.

E-2 visa: The E-2 treaty investor visa allows foreign entrepreneurs from E-2 treaty nations to enter into the U.S. for the purpose of directing and developing the operations of an enterprise they have invested in, or are in the process of investing, a substantial amount of capital. Investment activities include purchase of a new business. The investment must be significantly proportional to the total investment, that is, usually more than half the total value of the enterprise or, if a new business, an amount normally considered necessary to establish the business.

L-1 visa: The L-1 intra company transfer visa allows foreign nationals to enter the U.S. to open a new office in the U.S. of a foreign corporation, provided that premises for the U.S. office have been secured and money has been invested in or set aside for operation of the business. To qualify for an L-1 visa, the applicant must be an executive, a manager or an employee with specialized knowledge of the company’s business and its products and services, and the employee must have worked for the company overseas for one year in the three years before applying for the L-1 visa. Further, a qualifying relationship (such as parent-subsidiary, branch or affiliate) must exist between the foreign and the U.S. business entities.

Factors governing the choice of appropriate visa

Following are the basic issues that determine the choice of the most suitable visa category to set-up a new office in the United States:

1. Country of nationality

E-1 or E-2 visas can be used only if a treaty of commerce and navigation or a bilateral investment treaty exists between the U.S. and the country of nationality of the foreign company or investor. If the foreign national does not belong to a treaty country, the choice is generally limited to L-1 visa.

2. Nature of business

E-1 visa can be used by foreign entities not having a substantial investment in the U.S. but having a substantial trade with the U.S. The substantiality of trade is determined by the volume of trade, number of transactions and the recurrence of these transactions. E-2 visa can be used to set-up an entity in the U.S. if the investment involved is substantial. L-1 visa does not have the requirement of substantial investment in the U.S. It can be used for any venture by international companies to set-up a branch, subsidiary or affiliate company in the U.S.

3. Employment with foreign entity

To qualify for an L-1 visa the applicant must be an executive, manager or a specialized knowledge employee who has been an employee of the foreign company for at least one continuous year within the last three years. There is no such requirement for E-1 or E-2 visas. A treaty national with no foreign employer intending to make an investment or set up a business entity in the U.S. does not have much of a choice other than the E visa, if the rest of the conditions are satisfied.

4. Qualifying relationship

The L-1 visa can be used to transfer an employee of a foreign entity to set-up, manage or work for a related organization in the U.S. The qualifying relationship may be in the form of a parent, subsidiary, branch or an affiliate company. For using E-1 or E-2 visa, the company or the individual engaging in trade or investment in the U.S. must have the same nationality as the treaty country.

5. Processing Authority

E visa applications are generally filed with the embassy or consulate in the home country of the applicant. Once the consulate registers the trading or investing enterprise for E visa purposes, the treaty national may apply for a visa to enter the U.S. On the other hand, L-1 visa is a two-step process. A petition is first filed with the appropriate Service Center of the U.S. Citizenship and Immigration Services (USCIS). Once the petition is approved the applicant can apply for a visa at the consulate abroad. An applicant who changes to E status in the U.S. by filing a petition with the USCIS may still have to repeat the entire application process at the consulate the first time he departs the U.S. An applicant changing status to L-1 in the U.S. needs to only obtain an L-1 visa stamp in his passport to reenter after he departs the U.S.

6. Processing Time

Even though E visa petitions are processed directly at the embassy or consulate, the adjudication is complex and time consuming, and may take several weeks depending upon the consulate. Generally it takes two to three months for most of the consulates to adjudicate an E visa application, with practically no provision of expediting the process. An L-1 visa petition generally takes several weeks to process at the USCIS Service Centers; however, the processing time can be reduced to less then two weeks by utilizing the premium processing service.

7. Period of Initial Employment

E-1 or E-2 visa may be granted initially for a period of two years whereas an L-1 for a new company is granted initially for a period of one year. After the expiry of the first year on L-1 status, the applicant has to show that the new U.S. company has been doing business during the past year, and continues to require the services of the applicant as a manager, executive or an employee with specialized knowledge. Companies that anticipate a “slower start” to get established in the U.S. may use E visa option that gives them a two year initial period to set-up their operations.

8. Limit on Employment

An E-1 or E-2 visa can be extended indefinitely for up to two years at a time provided that the stay of the applicant remains temporary. An applicant in L-1 status in the U.S., however, cannot extend his/her L-1 stay beyond a period of 5 years (for specialized knowledge employees) or 7 years (for managers or executives). Once the employee has spent one full year outside the U.S. they can start their time in L-1 status again.

9. Intention of obtaining a Green Card

The L-1 may be the best route in cases where the intention of the applicant is to ultimately apply for a green card during his/her stay in the U.S. An L-1 visa holder may pursue permanent residency and still maintain L-1 status and apply for extension of stay. This may not be possible for E-1/E-2 nonimmigrant. E-1 and E-2 visas, though they can be extended for an indefinite period of time, still require the applicant to maintain nonimmigrant intent. Starting the permanent residency process may affect the applicant’s ability to maintain or extend E-1 or E-2 status; however the USCIS and the consular officers generally will accept the statement of the applicant with respect to his or her nonimmigrant intent.

10. Evidentiary requirements

An E-1 or E-2 visa application entails complex evidentiary requirements as the applicant needs to prove the substantiality of trade between the U.S. and the treaty nation, or the substantiality of investment in the U.S. Further, since E visa applications are generally adjudicated at the consulate, no formal appeal or recourse to administrative or judicial review in the U.S. is available for adverse decisions of the consulate. L-1 visa applications for a start-up enterprise require evidence related to the business and revenues of the foreign entity; the qualifying relationship between the foreign and the U.S. entity; and a detailed business plan explaining the potential of the new entity and its capability to meet business expenses, including the staffing requirements. However, a decision made by a USCIS Service Center can be reconsidered at various stages by the administrative and judicial machinery within the United States.


Finding your feet in a foreign land can be quite challenging, often difficult. As noted above, nationals or enterprises from treaty countries have an advantage of choosing between E and L visa categories for setting up a new entity in the United States. And when different options are available, it is important to make a strategic, well-reasoned selection. Since your new U.S. entity may be a realization of your dreams, it becomes all the more important to entrust the process to or seek the advice of experienced professionals who can guide you through the entire process.

VisaPro offers multiple services across multiple locations and is able to work with you regardless of your physical location. VisaPro gives the right tools to companies expanding their operations into the United States. Our ability to deliver fast, easy and economical service has helped VisaPro build a well-earned reputation of trust and efficiency within the business immigration community.