How to Demonstrate At-Risk Investment in Your Business Plan

What is “at-risk investment”? If you said, “It’s money I’m at risk of spending on fun things like a new Tesla,” well, keep reading (because that ain’t it).  U.S. Citizenship and Immigration Services, or USCIS, says, “For the capital to be ‘at risk,’ there must be a risk of loss.” It’s money allocated for your business that you have no guarantee of getting back.

For example, say you live in France and want to open a French bakery in New York. If you put down a deposit on a space and pay a web developer to create your website, all that money is “at risk.” Even if your business fails, you can’t get that money back. It’s proof that you’re committed to your business. This can be money you’ve already spent or are planning to spend.

USCIS not only wants to see that you’re committed to your business, but that you’re investing money into the U.S. economy. People who are applying for an employment or investment-based immigration visa must contribute to American jobs. After all, a key part of the EB-5 program is job creation. When you pay a commercial real estate agent, marketing firm, and internet service provider to service your new business, you’re helping sustain American workers and companies.

One caveat: If you buy land for your business, that money isn’t “at risk” because you could probably sell the land and get your money back fairly easily. But if you buy land and then pay architects and construction workers to begin building your facility, that money is at-risk. Plus you’re directly supporting U.S. jobs.

Now let’s back up for a moment and talk about why at-risk investment matters. Demonstrating at-risk investment has always been important for an immigration visa application, particularly the EB-5. But it’s even more important in today’s political climate, when requests for evidence are 45% higher than they were in 2016. The current administration is challenging immigration visas more often than almost any point during Obama’s presidency. You don’t want to give USCIS any reason to deny your application.

You want to make it as easy as possible for USCIS to approve your visa. You can do that by clearly spelling out how much money you will invest and what specifically you’ll spend it on, whether it’s a commercial real estate agent or a frozen yogurt machine.

And that all comes down to your business plan. Specifically, the use of funds section of your financial projections.

The use of funds section is exactly what it sounds like: a breakdown of how you’ll use your funding to launch your business, whether it’s money already spent or yet to be spent..

With an E2 visa, you should be investing at least $50,000. I recommend somewhere between $70,000 and $100,000 to be on the safe side. With an EB-5 visa, the minimum is much higher--either $500,000 in a target unemployment area or otherwise $1 million.

Your use of funds section will list your total investment amount and split it into how much you’ve spent on assets--physical things like inventory, office furniture, equipment, etc.--and expenses, which include fees for services like website development, lease and utility deposits, legal fees, taxes, payroll, and marketing. This is where you clearly lay out exactly what you’ll pay for, line by line, and then total it up. You want to be as exact as possible--this is not the place to estimate or be vague.

If you aren’t comfortable creating financial statements like a use of funds, it’s worth hiring an accountant or a professional business plan firm like Masterplans.

Ultimately, there’s no way to guarantee that USCIS will approve your visa application, because they take a lot of different factors into account. However, demonstrating at-risk investment in your business is a great way of improving your chances.

Disclaimer: The information in this blog post is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your situation. Consult with legal and financial experts before making financial investments.