IN THIS GUIDE · A distributor demands a personal guarantee
Start with the E-2 eligibility and application overview
Read the guarantee before valuing it
Ask what the guarantee actually promises. Identify the guaranteed obligation, whether liability is capped, what event triggers it, which assets stand behind it, and how long it survives. A guarantee of a supply account behaves differently from one securing a term loan used to capitalize the enterprise. Ordinary commercial exposure to a distributor is not the same as personal funds irrevocably committed to the U.S. business, and the file should not blur the two. Four clauses answer most questions and are worth locating by name: the guaranteed obligations clause, any limitation of liability, the demand or default trigger, and the release or termination provision. Note the page and clause number of each, so that a later reader is not obliged to re-read the whole instrument.
Borrowing and security: what stands behind the loan
Borrowing is not disqualifying. Assess the security, personal liability, source and actual deployment of the loan proceeds. Funds borrowed against the investor's personal assets, where the investor is personally liable, are generally treated differently from money secured only by the assets of the U.S. enterprise itself, which shifts the risk away from the investor. Set out each loan, its lender, its security and the repayment obligation, and let counsel assess how the arrangement affects the at-risk capital being claimed. The record showing what is actually encumbered is the registration filed against the collateral, not the lender’s summary of it. Obtain a search result and compare the secured party, the debtor and the collateral description against the loan documents. Discrepancies found at this stage are ordinary and usually correctable.
Source and path of funds still have to be shown
A guarantee does not answer where money came from. Both the lawful original source and the path of the funds must be shown, and a bank balance on its own is not enough. Trace each transfer: sale proceeds, business distributions, loan advances, gifts with supporting documents. If collateral is a home or an investment account, show ownership and value. Missing links can usually be supplemented, so identify gaps early rather than hoping they go unnoticed. Ask each institution for statements covering the whole period rather than the single month of a transfer, since a balance that appears without history is the item most often queried. Where funds moved through an intermediary, obtain the confirmation showing both the ordering account and the beneficiary account.
Deposits, escrow and conflicting obligations
Distribution agreements often arrive with escrow terms, refundable deposits, minimum purchase commitments and revocation clauses. None of these can be classified in the abstract: whether a deposit represents capital genuinely committed and at risk depends on the actual contract language and the conditions attached. Where the distributor's terms conflict with the enterprise's other obligations, legal counsel should resolve them. Do not assume a general rule that unsigned documents count for nothing or that signed ones settle the question. Where an escrow holds funds, the operative document is the escrow agreement naming the conditions for release and the person entitled to instruct it. Read that beside the deposit clause; a deposit described as refundable in one document and forfeited on a stated event in another is a conflict to resolve now.
Sources reviewed 2026-09-07. This guide covers a preparation focus; it is not an individual eligibility assessment.