USCIS Publishes Rule for International Entrepreneurs
On January 17, 2017, the United States Citizenship and Immigration Services (USCIS) published the final rule for international entrepreneurs. The rule takes effect on July 16, 2017. Under the rule, entrepreneurs will be considered for parole (temporary permission to be in the U.S.) to start up businesses and work in the U.S. The purpose of the proposed rule is to enhance entrepreneurship, innovation, and job creation in the U.S. Because of the requirements of this rule, this appears to benefit persons already in the U.S. who already have received U.S. investors. It is believed, at this time, that this new parole will go into effect, even though it was started under President Obama's administration, and President Trump's administration has been critical of the wide use of parole authority for foreign nationals entering the U.S.
Under the rule, the Department of Homeland Security (DHS), using its existing discretionary statutory parole authority, may parole, on a case-by-case basis, eligible entrepreneurs of start-up enterprises.
A maximum of three entrepreneurs per start-up entity will be eligible to apply. An individual seeking to operate or grow his or her start-up business in the U.S. would generally need to demonstrate the following to be considered for discretionary parole under this rule:
- Formation of a new start-up entity: The applicant must have formed a new entity in the U.S. that has lawfully done business since its creation, within the last five years. The start-up entity must meet the definition of a U.S. business entity and includes any corporation, limited liability company, partnership, or other entity that is organized under Federal law or the laws of any state.
- Applicant must be an entrepreneur: The applicant must be well-positioned to advance the entity's business. An applicant may generally meet this standard by providing evidence that he or she: (1) possesses at least 10 percent ownership interest in the entity at the time of adjudication of the initial grant of parole; and (2) has an active and central role in the operations and future growth of the entity, such that his or her knowledge, skills, or experience would substantially assist the entity in conducting and growing its business in the U.S. The applicant cannot be a mere investor.
- Entity must demonstrate substantial potential for rapid growth and job creation: The applicant can prove this standard by demonstrating one of the following:
- Receipt of significant investment of capital (at least $250,000) from U.S. investors with established records of successful investments within 18 months. To qualify as an investor under the rule, the U.S. organization or individual must (1) have made a qualified investment of $600,000 in start-ups over the past five-year period and (2) show that after this qualified investment, at least two of the start-ups created at least five qualified jobs or generated at least $500,000 in revenue, with an annualized revenue growth of 20%.
- A qualified job is one that is full-time U.S. employment that has been filled by a qualifying employee for at least one year.
- Qualifying employees include U.S. citizens, lawful permanent residents, or other immigrants lawfully authorized to work in the U.S. Qualifying employees do not include the entrepreneur's parents, children, or siblings. Two part-time workers cannot equal a full-time worker.
- Receipt of significant awards or grants (at least $100,000) from certain federal, state, or local government entities; or
- Charitable grants, non-money gifts, and money from foreign governments cannot be used to qualify under this factor, but may be considered under the other factors in this test.
- If an entrepreneur only partially meets one or more of the criteria above, they can submit other reliable and compelling evidence of the startup entity's substantial potential for rapid growth and job creation. Such documentation may include:
- Evidence of capital investments other than those mentioned above;
- Letters from relevant government entities, qualified investors, or established business associations with knowledge of the entity's research, products, or services and/or the applicant's knowledge, skills, or experience that would advance the entity's business;
- Newspaper articles or similar evidence that the applicant has received significant attention or recognition;
- Evidence of significant revenue;
- Evidence pertaining to the applicant's role, knowledge, and skills;
- Patents or awards; or
- Any other relevant and credible evidence indicating the entity's potential for growth or the applicant's ability to advance the entity.
Additionally, the following evidence may also be considered as alternative criteria:
- Number of users or customers;
- Revenue generated by the start-up entity;
- Social impact of the start-up entity;
- National scope of the start-up entity;
- Positive effects on the start-up entity's locality or region;
- Success using alternative funding platforms, including crowdfunding platforms;
- The applicant's prior success in operating start-up entities as demonstrated by patented innovations, annual revenue, job creation, or other factors; and/or
- Selection of the start-up entity to participate in one or more established and reputable start-up accelerators or incubators.
DHS proposes that an applicant who meets the above criteria may be considered for a discretionary grant of parole lasting up to 2.5 years. USCIS adjudicators will be required to consider the totality of the evidence, including evidence obtained by USCIS through background checks and other means, to determine whether the applicant has satisfied the above criteria, whether the specific applicant's parole would provide a significant public benefit, and whether negative factors exist that warrant denial of parole as a matter of discretion.
Once paroled into the U.S., entrepreneurs will be eligible to file for both non-immigrant visas or immigrant visas ("green cards") using consular processing. Persons in this parole status are lawfully employed, but they are not maintaining status in the U.S. When applying for any type of immigration benefit, they will likely need to travel internationally.
DHS retains the right to revoke any such grant of parole at any time as a matter of discretion or if they determine that parole no longer provides a significant public benefit, such as when the entity has ceased operations in the U.S. or DHS believes that the application involves fraud or misrepresentation.
Financial Requirements for Parole Status
To maintain parole status, the parole beneficiary must maintain a household income that is at least 400% of the federal poverty line for his or her household size. Under current guidelines, for example, the poverty line for a family of four in the U.S. in 2017 is $24,600; the household income requirement for a parole beneficiary in this case would be $98,400. The U.S. Department of Health and Human Resources is responsible for publishing guidelines regarding household size and the poverty line. The guidelines can be found here.
Applying for an Extension
A subsequent request for re-parole for up to 2.5 additional years is available one time if the entrepreneur meets the following requirements:
- The business continues to operate;
- The entrepreneur continues to have at least a 5% ownership interest in the business;
- The entrepreneur continues to play a central role in the business;
- The start-up received at least $500,000 in qualifying investments, government grants or awards, or a combination of either; and
- The business has created at least five qualifying jobs or the business generated at least $500,000 in U.S. revenue and averaged a 20% annual growth.
If an applicant meets the above criteria, his or her spouse and minor, unmarried children, if any, can also be granted parole into the U.S. The entrepreneur's spouse (not children) would also be authorized for employment incident to the grant of parole by filing for an employment authorization document (EAD).
Who Does This Help?
- This rule is believed to benefit F-1 and J-1 visa holders the most, as they are likely already in the U.S., may have set up a company, are more likely to have received U.S. funding since they are in the U.S., and may not have been selected in the random H-1B lottery;
- This is not likely to benefit individuals who can qualify for E-1 or E-2 visa countries because they will likely have foreign investment;
- This will also help those who are not from E-1 or E-2 visa countries - including but not limited to China, Brazil, and India.
If you have any questions, please contact James E. Morrison at (202) 572-8670 | email@example.com, Michael P. Nowlan at (313) 965-8666 | firstname.lastname@example.org, or another member of Clark Hill's Immigration practice group.