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PELHAM · E-2 FIELD GUIDE

Can the valuation fee be counted automatically as qualifying capital?

Sources checked:

THE DIRECT ANSWER

No. Explain capital qualifying in the enterprise separately from professional charges and other payments. A total transaction budget is not automatically invested capital.

Use the actual payment purpose

There is no universal fixed E-2 minimum, but commitment, risk and source requirements still apply. Do not assume every cost satisfies them.

Funds and assets actually placed into the enterprise count: the purchase price paid, equipment and vessels acquired, leasehold commitments, inventory and working capital genuinely deployed. Substantiality is measured proportionally: the amount committed against the total cost of buying an established enterprise or of establishing a viable new one, with a smaller absolute figure acceptable for an inherently inexpensive business and a larger one expected as costs rise. The investment must be substantial relative to what establishing this enterprise costs, which in a franchise usually means committing essentially the whole of the fee, build-out, equipment and working capital rather than a portion of it. Work out the qualifying figure by identifying the borrower, the collateral described in each security instrument, any financing statement filed against the company, and the payment terms; then reconcile the buyer's own cash against the financed balance without counting a dollar twice.