IN THIS GUIDE · A business acquisition includes prepaid client deposits
Start with the E-2 eligibility and application overview
Read the deposit balance as an obligation
Ask the seller what each prepaid deposit buys: undelivered installations, prepaid service months, retainers, or gift balances. Those amounts sit on the books as cash but represent work the buyer must perform after closing. For an E-2 review, the useful figure is what the investor irreversibly commits to the U.S. enterprise, not the gross bank balance transferring with the company. Document the deposit schedule by customer, date, and remaining obligation. Reconcile the schedule to the closing statement and customer contracts, then identify which obligation survives closing. That work prevents an account balance from being presented as free operating capital when it is already committed to another party's service.
Price the working capital you still need
Deposits already spent by the seller become the buyer's delivery cost. Build a post-closing cash plan showing payroll, materials, rent, and the expense of honouring inherited obligations, then show where that money comes from. Reserve figures used in planning are examples chosen for the business, not legal thresholds. Substantiality is measured against the cost of this enterprise, and non-marginality can rest on present or future capacity beyond minimal family living or on a significant economic contribution. Test the forecast against the work that prepaid customers require. The decision is whether the business can fund delivery while reaching a non-marginal operating position; invoices, staffing assumptions, and supplier terms are more useful than a bare sales projection.
Keep escrow and holdback terms under review
Acquisition agreements often hold part of the price in escrow against deposit shortfalls or misstated liabilities. Whether those funds count as committed and at risk depends on the actual release conditions, revocation rights, and who bears loss if the business fails. Nothing here classifies every holdback or refundable amount the same way. Give counsel the signed agreement, escrow instructions, and any earn-out schedule so the treatment is decided on the real terms. Hypothetical example: a custom accordion-restoration shop places an escrow deposit for its tools, but the amount returns if financing is declined. The decision is whether the terms create a genuine risk of loss; the signed cancellation clause, not the label on the account, controls that review.
Show ownership, control, and the money trail
Confirm that treaty nationals hold at least fifty percent of the U.S. enterprise and that the applicant will genuinely develop and direct it — Canadian citizenship, not Canadian residence, supplies the treaty nationality. Owning shares does not by itself authorize the investor to perform work in the United States. Trace both the lawful origin and the movement of the purchase funds; a closing statement and an account balance alone do not show that path. Identify the applicant's ownership, voting rights, and actual authority in the records of the enterprise. The decision-maker needs to see who will develop and direct the operation, not simply who supplied money at closing.
Sources reviewed 2026-09-07. This guide covers a preparation focus; it is not an individual eligibility assessment.