It’s not all bad news
The sub-prime lending market collapse in the US has caused some pretty big ripples around the world and none more so than in the UK. HSBC has recorded losses of $10.6 billion (£5.4 billion), an amount it’s difficult to imagine, and it’s not over yet. The big US banks have reported combined write downs of $120 billion and there are larger estimates out there. The Organisation for Economic Cooperation and Development has advised its own estimate of up to $300 billion and Ben Bernanke, Chairmen of the Federal Reserve, has gone so far as $500 billion. That’s scary money.
Will the greedy lenders responsible for the sub-prime mess be bought to account? Very doubtful. In fact, it is probable that the golden handshakes will keep a third world country going for many months.
The ramifications of the sub-prime debacle are huge.
The numbers of repossessions in the US is growing at an alarming rate and Florida, with its vast numbers of absentee owners, is suffering an epidemic. The tragedy that many are experiencing is devastating for families, and that’s not all. The problem has led to a fairly hard hitting credit crunch and that affects everyone’s pocket. The ripples have reached the High Street and the uncertainty the situation has created has led to a serious tightening of those personal purse strings. Many small businesses are finding it difficult to find customers, and employees are coming under threat of job loss, and it’s spreading. In the UK work place there are estimates that at least 40% of all registered companies will make staff redundant at some point during 2008.
Sound gloomy? Well, yes it does but it’s not necessarily the end of the world, as we know it. The problem has been in the US housing market far longer than in the UK and indications are that the decline in US house prices is bottoming. You always got far more for your pound in the States but current prices are amazing and deals for cash buyers make it even more attractive to buy. The dollar has been weak against most currencies for many months now and this is extremely attractive for holders of sterling. Figures have gone over 2 for 1 on a number of occasions. In the UK most home-owning Brits still hold sizeable equity in their property, thanks to many years of sustained growth. This can be huge in dollar terms. Many are looking to use this windfall equity now as indications are that the free fall of house prices in the US will continue to affect the UK through 2008. It is true that many UK Estate Agents are currently dropping asking prices but equity is still good.
Numbers looking to leave the UK to search for a better life are expected to be at an all time high this year and, in the midst of disaster there is always an opposite and this is no exception. There are silver linings in those dark clouds
From an investment standpoint, buying at the bottom of a freefall means that on the way back up the initial flush of equity growth will outstrip inflation. As long as a purchase does not depend on a successful rental policy, the future is very rosy.
Those small companies in difficulty should also be seen as a potential. Recession is always cyclical and what goes down almost always comes back up. Picking up a business at the bottom of the cycle can be a prudent investment for the future. Companies in recession tend to lose marketing budget first. So those with cash to invest in the development and marketing of a small business can leapfrog in the sales arena.
There are many ways of getting into America, but for those who do not have the great fortune of falling into an immigration type visa the alternative investor type visas can be the only way. There has been much negativity written and spoken of with regard to E1 and E2 and it is true that this visa group is a non-immigrant item and cannot be used to remain in the States like many others. Based on trade treaty between US & UK in the early 1800’s, the investor visa was developed to encourage trade between the US and the partner country. However, is a glass half full or half empty? Depends how you look at it. I have always believed the E visa is a great opportunity for the vast majority to enter and work in the States, and, once you are there and are successful, there are number of opportunities to look into different options for change of status to a route for gaining an Immigrant visa. So it’s very important when looking at this route we must weigh up all the pros and cons.
One major advantage of the E visa is that there is no limit to numbers. It doesn’t matter how many apply it’s the quality of the application content that matters. Immigration numbers are tightly controlled by the US and all immigration visas are capped. That is why the application for other visa types can be a very long winding process with a myriad of frustration points along the way.
Another plus is the size of investment required. It’s extremely low. With the exchange rate as good as is at present, most can gain approval with an investment as little as £75K, as long as the year on year sales estimates and marketing plans stack up. The attractive investment level means the majority of would be applicants, investigating this route have sizeable back up funds for initial survival as well as funds for business development, which is so vital to the success of their business venture.
An E2 holder can live and work in the US along with his/her family a fairly recent development has been the ability for spouses of E2 holders to work independently of the business. This is a huge plus. It allows the husband or wife to get a job outside the business and earn extra funds for E2 business development. It should never be forgotten that the business is what gained entry in the US in the first place and if the business does not reach the levels required in your business plan then you no longer have a visa. So long term success is essential and vital.
However, children are not visa holders in their own right and, reaching the age of adulthood (21 years) they lose the dependant status & would need to be covered under individual visa to remain in the US just like any other visa holder kids who could not change to other status and reached that age. Children can attend the US education system and receive further higher education, changing status to F1 visa at appropriate time opens up an opportunity to gain sponsorship in their own right therefore it is vital to consider these issues on board from day one rather than to consider the situation until it is too late.
The E visa is an arrangement between you and the US under this agreement you agree to invest and develop the venture. They agree to let you and your family live in US for as long as the venture pays dividend in business growth and employment opportunities. Break the agreement you lose the right to remain. Therefore it’s very important to keep to the business plan on which your application was originally made.
The E visa has its faults and has gained bad publicity. That’s unfair. It provides a convenient route for the many thousands of people wanting to live “the dream” in the States. Those individuals who may not be lucky enough to fit into immigration slot.
Peter O’Connell
This article due to appear in the April issue of Emigrate America
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