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A Portugal Cove-St. Philip's marine-services operator buying a U.S. boatyard where the seller finances part of the price must understand that only the portion of the price actually paid from the investor's own funds and placed at risk counts as the investment. A seller note secured on the boatyard itself is not the investor's capital at risk, though a loan secured on the investor's personal assets can be. The structure also has to leave the investor in control and the business real, operating and more than marginal.
What counts and what does not
Hypothetical example: a Portugal Cove-St. Philip's operator who runs a haul-out and repair yard agrees to buy a U.S. boatyard for a price of which the seller will finance forty percent by a note secured on the yard's assets. The sixty percent paid from the operator's savings and the sale of equipment in Canada is capital at risk. The seller-financed portion is not, because if the business fails the seller recovers the yard rather than the operator losing personal funds. Had the operator instead borrowed the forty percent against a Canadian home and paid the seller in full, the whole price would be at risk and would count. Renegotiating the financing before signing can change the E-2 result.
Substantiality with a smaller counted investment
Because only the sixty percent counts, the proportionality test compares that sum with the total cost of the enterprise, the full purchase price plus working capital. Whether sixty percent is substantial depends on the total cost and the proportionality analysis; an established operation with staff, equipment and customers is at least a real enterprise on day one. The marginality question is answered by the yard's existing payroll and accounts: if it already supports employees beyond the owner, it is not marginal. The operator should obtain the seller's financial statements, payroll records and customer contracts, and confirm which staff will remain, before relying on the yard's history as evidence of capacity.
Control, licensing and what to ask the seller
A seller who remains a creditor may ask for covenants, a board seat or approval rights over major decisions while the note is outstanding. Some of that is normal commercial protection, but if the seller retains the power to direct the business, the operator may fail the develop-and-direct requirement. Ask the seller to limit protections to financial covenants and to leave hiring, pricing and operations with the buyer. Ask who holds any state or local permits for hauling, fuel or environmental compliance and whether they transfer. Ask for a closing conditioned on E-2 issuance, with the operator's cash held in escrow until then. An E-2 spouse may work incident to status; children study only, and E-2 offers no direct path to permanent residence.
What else is on your mind?
Is there one minimum investment that guarantees E-2 eligibility?Is holding money or owning an asset enough for E-2?Editorial source review: 2026-09-07. General preparation guidance, not an individual assessment.