On January 17, 2017, U.S. Citizenship and Immigration Services (USCIS) published a final rule in the Federal Register amending the immigration regulations to expand the use of the government’s “parole” authority to authorize parole for foreign entrepreneurs who can demonstrate that they will provide a significant public benefit to the United States as a result of economic growth and/or job creation resulting from their entrepreneurial activities.
The new regulation will become effective on July 16, 2017, 180 days following the publication of the rule. The six month delay between publication and the effective date is intended to provide the government with time to prepare materials and training for this brand new immigration benefit.
This expansion of the government’s parole authority is a welcome development for foreign entrepreneurs who have been frustrated by the lack of immigration options available through the existing U.S. visa categories, which generally are not oriented to companies that are in start-up mode. President Obama first announced his intention to improve U.S. immigration options for foreign entrepreneurs in November, 2014. This final regulation is the culmination of that effort and comes just days before the end of his 8-year presidency.
The requirements and other pertinent aspects of this new “international entrepreneur” parole immigration option are summarized below.
Applicant Must Qualify as an “Entrepreneur”
To qualify, an applicant must be an entrepreneur connected with a start-up entity who is well positioned to advance the entity’s business. The entrepreneur must own at least 10% of the entity at the time of the application and must demonstrate that s/he 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. Accordingly, a passive investor would not qualify.
The requirement in the final regulation of ownership of at least 10% of the entity is an improvement over the 15% ownership requirement in the original, proposed rule.
The Start-Up Entity Must be “Recently” Formed
To qualify as a “start-up” entity, the enterprise must have been formed within the five (5) years immediately preceding the date of filing the initial parole application and it must have lawfully done business since its creation and have substantial potential for rapid growth and job creation. This 5-year look-back period is an improvement over the originally proposed 3-year period, and it shows that USCIS recognizes that some companies need longer than 3 years to reach a point where they can demonstrate sustained growth.
The Entity Must Demonstrate Substantial Potential for Rapid Growth and Job Creation
The regulation provides applicants with a variety of ways to demonstrate substantial potential for rapid growth and job creation, including any one of the following:
- (a) Investments from Established U.S. Investors: Proof of receipt of investments of capital totaling at least $250,000 from U.S. investors (such as venture capital firms, angel investors, or start-up accelerators) with a history of substantial investment in successful start-up entities. The minimum investment amount of $250,000 is an improvement over the initially proposed threshold requirement of $345,000, and will pave the way for more foreign entrepreneurs to benefit from this new option.
- To qualify as an investor under the regulation, the U.S. organization or individual investor must (1) have made qualified investments of at least $600,000 in start-ups over the prior 5-year period; (2) show that subsequent to such investment at least two such start-up entities created at least 5 qualified jobs or generated at least $500,000 in revenue, with average annualized revenue growth of at least 20%. A qualified job means full-time employment in the U.S. that has been filled for at least one year by a qualifying employee.
- A qualifying employee includes a U.S. citizen, lawful permanent resident, or other immigrant lawfully authorized to work in the U.S. who is not an entrepreneur of the start-up entity or the parent, spouse, brother, sister, son or daughter of such entrepreneur. Independent contractors are specifically excluded from the qualifying employee definition;
- (b) Government Grants: Proof of receipt of awards or grants of at least $100,000 from Federal, State or local government entities with expertise in economic development, research and development, or job creation;
- (c) Alternative Criteria: If the applicant only partially meets one or more of the above criteria relating to capital investment or government funding, s/he may still succeed with the parole application if s/he can provide additional reliable and compelling evidence that s/he would provide a significant public benefit to the U.S. upon receipt of the parole status.
Parole Application and Filing Fee
USCIS is preparing a new application (form I-941) for this new immigration benefit that will carry a fee of $1,285, which includes a base fee of $1,200 and an $85 biometrics fee.
Initial Parole Period, Parole for Family Members, Required Updates and Renewals
30-Month (2.5-year) Initial Parole Period
Upon approval of the parole application, the beneficiary of the application would be authorized for a parole period of 2.5 years. To secure parole, three prerequisites are required: the applicant must (1) submit the required parole application (on new USCIS form I-941); (2) receive approval of the application; and (3) enter the United States with the parole status. Parole cannot be accomplished without making a physical entry into the United States. Accordingly, if someone is in the U.S. in a visa status and applies for, and receives approval of, a parole application, s/he must exit the U.S. and reenter with parole in order to assume this new status.
The entrepreneur who is the beneficiary of the parole application is authorized to work for the start-up entity upon entry into the U.S. with parole status. S/he is not required to apply for an Employment Authorization Document (EAD). S/he is not authorized to work for any other entity and must continue to work for the start-up entity described in the parole application in order to maintain parole status.
It is not necessary to be in the U.S. to apply for parole. International entrepreneurs outside the U.S. may apply, but as a practical matter, it may be difficult for many entrepreneurs outside the country to meet all the required criteria if they have not yet worked for the start-up entity in the U.S., or if they have not worked lawfully for the start-up entity.
Financial Requirement for Maintaining Parole Status
There is no required wage obligation for the parole beneficiary, but to maintain parolee status the parole beneficiary must maintain a household income that is greater than 400% of the federal poverty line for his or her household size as defined by the Department of Health and Human Services (HHS). These guidelines can be found here https://aspe.hhs.gov/poverty-guidelines. Under the current guidelines, for a family of four, the 2016 poverty line is $24,300 so the 400% household income requirement is $97,200. Please note that HHS is expected to release its new 2017 poverty guidelines on January 19, 2017.
Required Updates Regarding Material Changes
The regulation requires parole beneficiaries to immediately notify USCIS of any material changes that could reasonably affect the outcome of the determination of whether the entrepreneur provides, or continues to provide, a significant public benefit to the U.S. Such material changes include any criminal charge, conviction, plea of no contest, or other judicial determination in a criminal case concerning either the entrepreneur or the start-up entity; any complaint, settlement, judgment, or other judicial or administrative determination brought by a government entity; any settlement, judgement, or other legal determination concerning the entrepreneur or start-up entity in a legal proceeding brought by a private individual or organization (other than proceedings primarily involving claims for damages not exceeding 10 percent of the current assets of the entrepreneur or start-up entity); a sale or other disposition of all or substantially all of the start-up entity’s assets; the liquidation, dissolution, or cessation of operations of the start-up entity; the voluntary or involuntary filing of a bankruptcy petition by or against the start-up entity; a significant change with respect to ownership and control of the start-up entity; and a cessation of the entrepreneur’s qualifying ownership interest in the start-up entity or of the entrepreneur’s central and active role in the operations of that entity.
The spouse and dependent children (under 21) of the parole beneficiary are entitled to apply for parole status and, once granted, to remain in the U.S. for the same period of time as the principal parole beneficiary.
Spouses and dependent children must file form I-131 to accompany or join the principal parole beneficiary or applicant. Form I-131 carries a filing fee of $575 plus a biometric processing fee of $85 for any applicant aged 14 or over.
Upon arrival in the U.S. in parole status, the spouse of the principal parole beneficiary may apply for an EAD. The children of the principal parole beneficiary are not allowed to apply for employment authorization.
Timed Increases of Investment and Revenue Amount Requirements
USCIS has indicated that the required investment and revenue amounts will be automatically adjusted every three years by the Consumer Price Index and the required amounts will be posted on the USCIS website.
Over the years, several “start-up” visa bills have been introduced in Congress and have never become law. The decision to expand the existing parole authority in the U.S. immigration law to open an immigration avenue for foreign entrepreneurs who benefit the United States economy provides a practical solution for qualifying entrepreneurs. The criteria to qualify are strict, but the criteria in the final regulation represent an improvement over the more burdensome requirements in the proposed rule.
As with any regulation, the incoming new administration could take steps to rescind it. We will alert our readers to any developments concerning this new international entrepreneur regulation.