Canada: A Look At Channels For Immigrants Wanting To Start A Business

Last Updated: June 15 2016
Article by Rita R. Tripathy

Since the demise of the federal Immigrant Investor and Entrepreneur Investor Programs, the available channels for immigrants wanting to invest in or start a business have narrowed. One avenue still available to business-minded immigrants is the Temporary Foreign Worker Program's ("TFWP") owner/operator Labour Market Impact Assessment ("LMIA") process. By utilizing the owner/operator LMIA stream, immigrants can receive a work permit and support their application for permanent residency through the Express Entry program. In short, this strategy involves:

  • Finding an established business to buy or starting one's own business;
  • Applying for an owner/operator LMIA and corresponding work permit;
  • Operating the business; and
  • Applying for permanent residence through the Express Entry system.

When applying under the Express Entry program, a positive LMIA is worth 600 points. Invitations are regularly issued to applicants in the 450-500 point range, making an invitation to anyone with a positive LMIA highly probable.

As an added bonus, applications under the owner/operator LMIA stream do not have to advertise the position — unlike traditional LMIA applications. Unfortunately, the current guidance available from Employment and Social Development Canada ("ESDC") regarding the owner/operator LMIA stream is vague, and at times, contradictory.

Owner/Operators Defined

Based on the ESDC's website and a 2011 ESDC TFWP bulletin, an owner/ operator:

  • Is a foreign national;
  • Is classified under National Occupation Classification Type 0 (Management), A (Professional), or B (Technical/Trade);
  • Has an ownership stake in a business;
  • Has demonstrated that he/she is:
  1. integral to the day-to-day operation of the business; and
  2. will be actively involved in business processes/service delivery in Canada;

It appears that consideration is also given to whether the owner/operator has demonstrated that such temporary entry will result in the creation or retention of employment opportunities for Canadians and permanent residents and/or skills transfer to Canadians and permanent residents.

This leaves open questions regarding the level of required ownership, the timing of its acquisition and the amount of involvement in the business.

Ownership Considerations

Applicants to the owner/operator LMIA stream need to consider the following factors1:

  • Level of Ownership: a 2011 ESDC bulletin outlines that applicants can be Sole Owners (100%), Principal Owners (>50%) or Co-Owners (<50%). While experiences have varied, various commentaries suggest that the ownership interests of 25 to 40% will suffice.
  • Timing of Acquisition: if applicants acquire their ownership interest prior to being approved for a work permit, they risk the chance of the ESDC refusing to issue the LMIA — leaving the applicants with a stake in a business and not being in Canada to run the business. On the other hand, commentators have noted that the ESDC also does not like purchase agreements that are conditional on an LMIA and work permit being issued. Since the purchase agreement is conditional, some ESDC officers have taken the stance that the applicant is not actually yet an "owner/operator."
  • Form of Ownership: commentators suggest that the ESDC requires applicants to hold their ownership in the business directly — not through a holding company.

Operations Considerations

An applicant must use the documents in the application package to demonstrate that he/she is integral to the day-to-day operation of the business and will be actively involved in business process/service delivery in Canada. Application packages should include:

  • A job description for the owner/operator, focusing on the owner/operator's day-to-day involvement;
  • Supporting documentation demonstrating that the applicant can perform the described work;
  • Proof of the owner/operators ownership in the business;
  • Any evidence of benefit to Canadians such as plans for new jobs or training of current employees; and
  • Supporting documentation particular to the business operations, including:
    • Financial statements, tax filings etc. showing the business's profitability and ability to employ the owner/operator and any current employees;
    • A business plan outlining the future of the business; and
    • Proof that the business has a location or that the location is at least secured (if a start-up)

In addition, the applicant should sufficiently know the business operations which will help establish the applicant's intentions as a genuine owner/operator. The ultimate goal of the application package is to help the ESDC officer understand the basic premise of the business and to clearly demonstrate that granting the owner/operator's application would have a positive (or at least neutral) effect on the labour market.

Provincial Nominee Programs for Permanent Residency Available for Business Owners

If an applicant does not have sufficient points under the Express Entry program, he/she still has other options for permanent residency. Under the Provincial Nominee Programs, successful applicants can apply to the Government of Canada's Department of Immigration, Refugees and Citizenship Canada ("IRCC") for permanent residence in the Provincial Nominee class. While various provinces have different nominee programs, this article will focus on the AINP and the BC Provincial Nominee Program — Entrepreneur Immigration stream ("BCPNP").

AINP – Farmers Only

In Alberta, the only owner/operator focussed stream is the Self-Employed Farmer Stream. To qualify for this stream, an applicant must:

  • Hold a valid work permit or positive LMIA (can be accomplished through the owner/operator LMIA stream);
  • Prove that he/she has farm management skills by providing
    • Financial documentation of the existing farm business
    • Education, training, and work experience documentation;
    • A proposed business plan for the farming enterprise being considered in Alberta; and
    • Proof that a Canadian financial institution is willing to finance the proposed farming business; and
    • Prove that he/she will invest in a primary production farming business by
  • Documenting the investment intentions in the business plan.

Priority will be given to applications that represent the best opportunity for growth in Alberta's targeted agri-foods.

BCPNP – No LMIA Required

In contrast to the AINP, upon a successful initial application to the BCPNP, the applicant will be issued a Letter of Confirmation to support his/her application for a work permit. The BCPNP requires at a minimum, that applicants:

  • Meet a minimum net worth threshold of CAD$600k;
  • Invest a minimum of CAD$200k in eligible expenses (including a business) and create at least one new job in the proposed BC business;
  • Demonstrate active management of the day-to-day operations of the business in BC;
  • Have an established history of business experience of at minimum

 

  • More than three years as an active business owner-manager (10% or more ownership); or
  • More than four years as a senior manager (<10% ownership and supervising at least 3 employees); or
  • A combination of at least one year as an active business owner-manager and at least two years as a senior manager;
  • Demonstrate residency within 100km of their business, for at least 75% of the work permit period (usually two years).

 

BCPNP registrants are ranked by a scoring system and only the highest scoring are invited to apply. Once an applicant is accepted, he/she must sign a Performance Agreement, which if successfully completed will enable an application for permanent residency under the Provincial Nominee class.

Concluding Thoughts

While the demise of the federal Immigrant Investor and Entrepreneur Investor Programs has made immigration more difficult for business focused individuals; there are still excellent opportunities available. In Canada at large, the owner/operator LMIA stream is a viable stepping stone to an application under the Express Entry program. In British Columbia particularly, business immigrants can take advantage of both the owner/operator LMIA stream as well as the BCPNP. Both programs have the potential to attract industrious, entrepreneurial new Canadians while fostering Canadian businesses and creating new jobs.

Footnotes

1 See Jeffrey S Low & Stanley WH Leo, Business Immigration Options – Creative Work Permit Strategies and Meghan Felt and Sarah McInnes, The Nuances of Labour Marketing Impact Assessments (LMIA): 2 Key Exemptions to Minimum Advertising Requirements for more discussion of the topics in the next two sections.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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