On August 26, 2016, U.S. time, the U.S. Department of Homeland Security's agency, the Citizenship and Immigration Services, proposed a new policy that allows certain foreign entrepreneurs to stay in the United States for up to 5 years.
Below are some key points analyzed by attorneys regarding the new policy, let's take a look:
1. Basic Knowledge: According to the proposed policy, individuals seeking a foreign entrepreneur parole must demonstrate: (a) that the business was founded in the United States within the last 3 years from the date of submission of the application; (b) that the applicant must own at least 15% of the business and actively participate in the operation and development of the business as a key individual; (c) that the business has received at least $345,000 in capital investment from qualified U.S. investors, received at least $100,000 in grants or awards from federal, state, or local governments, or can demonstrate that it provides significant economic benefits to the United States. DHS may also adjust the investment and revenue amounts every 3 years based on the consumer price index.
2. Future Use and Costs, and the New I-941 Form. DHS anticipates that 2,940 entrepreneurs will qualify for applications each year, along with 3,234 family members (spouses and children) seeking parole through the primary applicant. Applicants need to submit the foreign entrepreneur parole application form, the I-941 form, along with supporting documents, and pay an application fee of $1,200 and a biometrics service fee.
3. Successful Entrepreneurial Experience. DHS seeks to limit applicant eligibility based on successful investment and entrepreneurial experiences. Applicants must demonstrate (a) that they have invested in one or more startups for at least 3 calendar years within the 5 years prior to submitting the application, and that their equity or convertible debt is valued at over $1 million; (b) that the business created at least 5 jobs or generated at least $500,000 in revenue, with an average annual income growth of over 20%.
It appears that this policy may not provide much benefit to EB-5 investors, particularly those involved in EB-5 regional center projects. Direct EB-5 investments may benefit, but must meet the criteria outlined in the policy in terms of financing.
4. Applicants must maintain household income at least 400% above the federal poverty line while developing their startup.
5. Other Exclusions. DHS may exclude the following types of startups: (a) investment intermediary businesses engaged in the trading of securities, futures contracts, derivatives issuance, purchase, sale, or trading; (b) small businesses whose sole or primary purpose is to generate income for the entrepreneur and their family with limited development potential. Additionally, only 3 partners in the startup can apply for entrepreneurial parole.