What if foreign born innovators could get special permission to come to the U.S. and start a new business?
The Obama administration believes such a reality would attract investment and create jobs. That’s why the Department of Homeland Security (DHS) recently proposed the international entrepreneur rule, promising to give qualified foreign founders of U.S. start-up companies special permission (“parole”) to live and work in the U.S.
The long-awaited program purports to grant parole status, on a case-by-case basis, to inventors, researchers, and founders of start-up enterprises. It’s a measure that could help those who may not yet qualify for existing business visas such as the E-2 visa, L-1 visa, EB-5 immigrant investor visa, and others.
Here are 20 facts foreign founders and their investors must know about international entrepreneur parole when considering this immigration option:
1. The international entrepreneur rule is not law yet. The government proposed the rule on August 31, and by law, the public has until October 17, 2016 to submit comments. After that, the government will consider the comments and may issue the rule. It’s possible that the new rule could become law by the end of 2016.
2. Parole is not a visa or status. Parole does not give you temporary nonimmigrant or lawful permanent resident status (“green card”). You cannot go from parole status to a visa status such as E-2 or H-1B or even visitor status. There is no “conversion” from parole status to the green card. You have to qualify for the green card or other visa separately.
3. Applications will be considered on a case-by-case basis. Even if you can prove you meet the requirements for parole, the government can deny your request in its discretion.
4. Entrepreneurs with previous immigration violations can apply. Because parole is not an admission, individuals may get parole even if they do not qualify for other visas because of previous immigration violations.
5. Parole is not a guarantee of entry into the U.S. Customs officials at the airport can deny entry to a parolee or reduce the length of the parolee’s stay in the U.S.
6. Parole is temporary and limited. If granted, parole would provide a temporary initial stay of up to 2 years. Re-parole is possible for another 3 years so that the maximum time in parole is 5 years total.
7. Only new start-up businesses qualify. The business must be 3 years old or newer at the time the parole application is filed.
8. The foreign entrepreneur must own a minimum of 15% of the enterprise. U.S. citizens and others can own or invest as long as the parole applicant owns 15% or more of the business. After receiving parole, you must maintain at least 10% ownership.
9. The start-up must be a U.S. business entity. A business formed and operated in the U.S. is required; however, businesses that are”primarily engaged in the offer, purchase, sale or trading of securities, futures contracts, derivatives or similar instruments” would not qualify.
10. Applicant must prove ownership of the start-up. Examples of ownership proof are state certificates of organization, stock or member certificates and ledgers, etc.
11. The parole applicant must play an active and central role in the start-up. You must be more than a mere investor and must actively work in the business, contributing your knowledge and skills to its operations and growth.
12. The start-up must attract significant U.S. investment. To prove that the business has “substantial potential for rapid growth and job creation,” you must show receipt of significant capital from qualified U.S. investors of $345,000 or more.
13. Investors must pass qualification test. Investors in the business must be U.S. citizens or permanent residents and demonstrate a five-year record of investing in at least two businesses that have achieved $500,000+ in revenue or created at least 5 jobs. Also, the investment in your business must be no later than 365 days before the parole application is submitted.
14. Family investment does not qualify. A qualified investment would not include an investment from: (1) you the applicant; (2) your parents, spouse, brother, sister, son, or daughter; or (3) any company directly or indirectly owned by you or your parents, spouse, brother, sister, son, or daughter.
15. Government investment in the start-up company can qualify. If there is no private investment, you can qualify for parole if the start-up company has received $100,000 or more in grants or awards (not contracts) from federal, state, or local agencies “with expertise in economic development, research and development, and/or job creation.”
16. Applicant may be able to meet alternative capital funding requirement. If you can’t meet the described capital investment or government funding requirement fully, parole is still possible if you can provide compelling evidence that your entry into the U.S. would promote rapid economic growth and job creation through the start-up.
17. Three parole limit for each company. Applications for parole are limited to three entrepreneurs per company, each owning at least 15% of the start-up.
18. Work authorization is automatic with a grant of parole. If parole is granted, you would be authorized for employment immediately but only to work for your start-up entity.
19. Spouses can work too. Your spouse can apply for employment authorization and, if approved, can work for any employer or through self-employment.
20. Filing fees are required. Applicants for parole as an entrepreneur can expect to pay $1,285 for the application fee and biometrics fee (for background checks). Spouse and children (under age 21) must each pay $360 plus $85 biometrics fee (if 14 years old or older).
This article is intended to help you understand basic requirements of international entrepreneur parole, is offered only as general information and education, and is not legal advice or legal opinion about your specific circumstances.
This information is provided as an educational service by Ann Massey Badmus of Scheef & Stone LLP. If you have questions about complex immigration rules that challenge you or your business, you are invited to call me at
214-472-2161 or visit my website at http://www.badmuslaw.com.
By Ann Badmus