United States: US Proposes New Immigration Status For International Entrepreneurs

Last Updated: September 1 2016
Article by C. Matthew Schulz

In addition to the many legal solutions already in place to make visas and other immigration opportunities available to qualified entrepreneurs, there will be an additional way to allow entrepreneurs to live and work in the United States for up to two years if a new rule proposed by the US Citizenship and Immigration Services (USCIS) on August 26, 2016, goes into effect. Savvy entrepreneurs will continue to make use of existing law whenever possible, but the proposed International Entrepreneur Rule could create a much needed important new immigration benefit.

The key provisions of the new rule include:

  • DHS may grant the parole in the exercise of its discretionary authority on a case-by-case basis if the evidence shows that the applicant's presence in the US will provide a significant public benefit;
  • The applicant must submit biometric information and may be denied if there is any derogatory information, such as criminal activity or national security concerns; and
  • The startup must have been formed in the US within the past three years; and
  • The startup must have substantial and demonstrated potential for rapid business growth and job creation, as shown by any of the following:
    • At least $345,000 in capital investment from certain qualified investor(s) with established records of successful investments within 365 days immediately preceding the parole application; or
    • Receipt of significant awards or grants of at least $100,000 from certain federal, state or local government entities within 365 days immediately preceding the parole application; or
    • Partial satisfaction of one or both of the above, plus other reliable and compelling evidence of the startup's substantial potential for rapid growth and job creation.
  • The applicant must have an ownership interest in the startup of at least 15% and must maintain at least 10% ownership at all times during the parole; and
  • The applicant must have a role that is both active and central to operations that uses the applicant's knowledge, skills or experience to substantially assist the startup.

"Qualified investor" includes an investor who is a US citizen or lawful permanent resident, or any organization located in the US that operates through a legal entity organized under the laws of the US or any state and is majority owned and controlled, directly or indirectly, by US citizens and residents, but only if such investor regularly makes substantial investments in startups that subsequently exhibit substantial growth in terms of revenue or jobs creation. Further, the investor must, during the five preceding years:

  • Have made investments in startups, in exchange for equity or convertible debt, in at least three separate calendar years comprising a total of not less than $1 million; and
  • At least two of these startups must each have:
    • Created at least five qualified jobs of at least 35 hours per week, in the US and for a US citizen, resident or other immigrant (not including the applicant and the applicant's parent, spouse, sibling, son or daughter); or
    • Generated at least $500,000 in revenue with average annualized revenue growth of at least 20%.

Not counted as part of the $345,000 investment requirement is any investment by the applicant, or the applicant's parents, spouse, brother, sister, son or daughter, or any company in which the applicant or those relatives, directly or indirectly, has an ownership interest.

The applicant entrepreneur and his or her spouse and children would be granted an initial stay of up to two years. An extension of the initial stay of up to three additional years is available, but only if the applicant and the startup continue to provide a significant public benefit as shown by substantial increases in capital investment, revenue or job creation. DHS's proposed additional requirements for the extension generally require additional qualifying investment, creation of at least 10 qualified jobs, or generation of $500,000 in annual revenue, and annual revenue growth averaging 20%.

The proposed rule expressly states that there is no appeal from a denial, nor will the agency consider a motion to reopen or reconsider a denial decision.

The proposed new rule is not any type of immigrant visa or green card, nor is it a new type of temporary visa. Rather, the DHS is utilizing its discretionary parole authority As a way to authorize qualified foreign nationals to travel in and out of the US without a visa. A grant of parole does not confer immigrant status and does not allow a change to another temporary visa status within the US or an adjustment to a permanent resident (green card) status within the US. Parolees are not automatically authorized for employment in the US, but may apply to the USCIS for an Employment Authorization Document (EAD).

Parole authority to allow temporary entry to the US is not new. It is often used for humanitarian reasons, such as to allow aliens to receive urgent medical treatment, to visit a seriously ill American relative or attend an American relative's funeral, to cooperate with law enforcement, to participate in a voluntary disaster relief effort, etc. However, given the unusual application of the parole authority to international entrepreneurs instead of creating a new visa classification through legislative action and especially in the current US election period, the future of this proposed application of parole authority is very unclear. Other extraordinary uses of agency authority by the DHS have been delayed and halted by court order. It is disappointing that the agency chose to use this controversial approach to solve the very important need the US has for better immigration solutions for entrepreneurs.

There is a 45-day public comment period from the date that the proposed rule is published in the Federal Register. The USCIS may change the terms of the proposed rule after review of the public comments. The agency did not state when a final rule will be issued, but there is little time in the current administration and the long-term future of this proposal very much depends on the position taken by next Presidential administration.

Read the full proposed rule at the USCIS website.

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