Is the International Entrepreneur Rule Right for Your U.S. Expansion?

USCIS (U.S. Citizenship and Immigration Services) recently announced that the International Entrepreneur Rule would not be withdrawn as it was discussed during the Trump administration. The rule allows certain international entrepreneurs temporary parole in the U.S. to start-up or scale their businesses. Each entrepreneur would be granted parole on a case-by-case basis and the rule is particularly geared towards start-up entities whose founding entrepreneurs’ entry into the U.S. would provide a “significant public benefit through the substantial and demonstrated potential for rapid business growth and job creation.” Initial parole can be granted for up to 30 months (2.5 years).

Are you looking to bring your new business idea to the United States? Entrepreneurs must meet several criteria before being granted temporary entry and must also meet eligibility criteria in order to obtain an extension.

International Entrepreneur Eligibility

In order to prove that a start-up entity would “provide a significant public benefit” and has “potential for rapid growth and job creation” DHS will evaluate entrepreneurs on the following criteria:

• 1) The new start-up entity must be recently formed

The entity must be recently formed in the U.S. and has lawfully done business since its creation. It will be considered recently formed if created within the five years preceding the date of the filing of the initial parole application.

• 2) The applicant is an entrepreneur

The applicant for parole must be an entrepreneur of the entity who is positioned to advance the entity’s business. The applicant can demonstrate satisfaction of the standard by providing evidence that he or she possesses a significant ownership interest in the entity (at least 10%) and has an active and central role in the operations and future growth of the entity. DHS states that this role would be one “such that his or her knowledge, skills, or experience would substantially assist the entity in conducting and growing its business in the United States.” It is important to note that the applicant cannot be a mere investor.

• 3) The entity has significant U.S. capital investment or government funding.

This funding can come from several sources: established U.S. investors, government grants, or in limited cases, alternative criteria. If capital investments come from U.S. investors, they must have established records of successful investments, such as venture capital firms, angel investors, or start-up accelerators. Applicants can meet this standard by proving investments of $250,000 or more from these historically successful investors, within the 18 months immediately preceding the filing for initial parole. Grants from Federal, State, or local government entities with expertise in economic development, research and development, and/or job creation totaling $100,000 or more can also meet the qualifying standards. Alternative criteria may be considered for applicants who partially meet one of the sub-criteria for investment if he or she can also provide additional evidence that his or her entry would provide a significant public benefit to the U.S.

Extensions of Parole

Entrepreneurs can request an additional period of parole if they can demonstrate:

• 1) The start-up entity continues to operate lawfully in the U.S.

The business must also continue to have substantial potential for rapid growth and job creation.

• 2) The applicant continues to be an entrepreneur and well-positioned to advance the business.

The applicant must continue to possess at least a 5 percent ownership interest and continue to have an active role to grow the business. The reduced ownership amount allows start-up entities to raise additional venture capital investment during their initial years of operation.

• 3) The business has generated significant U.S. investment, revenue, and/or job creation.

The applicant must provide evidence of the continued potential for rapid growth and job creation, through additional investments or grants (at least $500,000 in additional funding during the initial parole period), revenue generation (at least $500,000 in annual revenue, with average growth of at least 20 percent during the initial parole period), and job creation (at least 5 full-time jobs for U.S. workers during the initial parole period).

Alternatively, the applicant may partially meet one or more of the above criteria may be considered for re-parole if he or she can provide additional evidence that parole will continue to provide a significant public benefit and that entity has the substantial potential for rapid growth and job creation.

Future of the International Entrepreneur Rule

The Department of Homeland Security believes this rule will “encourage foreign entrepreneurs to create and develop start-up entities with high growth potential in the United States, which are expected to facilitate research and development in the country, create jobs for U.S. workers, and otherwise benefit the U.S. economy through increased business activity, innovation and dynamism.”

Qualifying entrepreneurs will be granted entry into the U.S. for a 30-month (2.5 years) temporary period, but may be eligible for an additional 30-month extension if they can demonstrate the start-up entities have shown signs of growth and continue to have “substantial potential for rapid growth and job creation.” The final rule states that no more than three entrepreneurs may receive parole for any one qualifying entity.

What happens when you have reached the 5-year limit?

The rule states that when the parole period has expired, the entrepreneur and any dependents granted parole under the program will be required to depart unless they are otherwise eligible to lawfully remain in the U.S. The rule states that “individuals may apply for any immigrant or nonimmigrant classification for which they may be eligible.” However, DHS also notes that parole is not considered an admission to the U.S., so parolees are ineligible to adjust or change status under many immigrant or nonimmigrant visa classifications. This does not prevent an individual from applying for the immigrant or nonimmigrant visa, but they would need to depart the U.S. and apply for a visa with the Department of State for admission to the U.S. in the new visa classification.

Are you considering expanding your business or pursuing entrepreneurship in the U.S.? Schedule a consultation with one of our attorneys to discuss all of the available pathways for your professional and immigration goals. Email us at info@challalaw.com to request an appointment.