Jul 11 2017
The U.S. Citizenship and Immigration Service officially released its notice to delay the implementation of the International Entrepreneur Rule to March 14, 2018. The Notice seeks public comment on the prospect of rescinding the plan.
Had the plan been left to go live on July 17, 2017 this year, entrepreneurs seeking to remain in the U.S. who were poised start hiring U.S. workers could stay in the U.S. to run their enterprises for 30 months. If their start-ups were successful during that time period, they could renew for an additional 30 more months. They could bring their spouses and children to the U.S. to develop their business and expand their operations. This program would have been the closest solution to the lack of a start-up visa the last five sessions Congress have failed to pass into law.
Meanwhile, Canada, Australia, the United Kingdom, Chile, Brazil, France and many other countries are all too eager to provide start-up packages for entrepreneurs willing to relocate their new endeavors there. Though, the reality is that there is only one Silicon Valley and the start-up community is inherently different and unique to the Bay Area. Many entrepreneurs come to the Bay Area to make connections in hopes of being the next big unicorn.
It’s disappointing that the Notice that was published today, fails in an epic way, to explain exactly what aspects of the International Entrepreneur Rule would have a significantly negative impact on job creation or security in the U.S. Rather, the Service explains that logistically, it would be unfair to expend USCIS resources beginning July 17th if the rule were to be ultimately scrapped down the road. Unsurprisingly, the Trump Administration remains conveniently silent on this matter.
One can only hope that a newer, better International Entrepreneur Rule will take it’s place but if the rewrite of the current Health Care bill is any indication of progress, we’re in for a long ride!
Jun 23 2017
This week is Tech Summit week at the White House, where many top-level officials from leading technology companies are convening with the President and his team to discuss ways to modernize the government. Yet, amidst the talk of modernization, the White House had recently pulled the plug on a scrappy program that would have created thousands of jobs in the U.S.: Parole for Entrepreneurs. While the program technically is still on the books, its fate is appearing less and less vibrant as the days pass with only matter of time before its likely to be scrapped entirely.
Although far from the perfect, the Parole for Entrepreneurs program would have allowed foreign entrepreneurs who were ramping up business to stay in the U.S. to run their company. If they met goals of creating more jobs for U.S. workers, they would be eligible to renew for additional 2.5 years. (Read more about it here.)
On May 25, 2017, the final rule was pushed back to the Office of Management Budget (OMB) for further review by the Administration. The OMB regularly reviews draft regulations prior to it becoming a final rule and rolled out to the public in order to determine economic and other impacts to stakeholders, as well as consistently with furthering government policies.
On June 16, 2017, the OMB concluded its review of the Parole for Entrepreneur program.
During the course of OIRA’s review of a draft regulation, the Administrator may decide to send a letter to the agency that returns the rule for reconsideration. Such a return may occur if the quality of the agency’s analyses is inadequate, if the regulatory standards adopted are not justified by the analyses, if the rule is not consistent with the regulatory principles stated in EO 12866 or with the President’s policies and priorities, or if the rule is not compatible with other Executive Orders or statutes. Such a return does not necessarily imply that either OIRA or OMB is opposed to the draft rule. Rather, the return letter explains why OIRA believes that the rulemaking would benefit from further consideration by the agency.
It’s particularly telling that no “return letter” was issued to USCIS on any potential negative impact by the program. Having returned the rule back to the USCIS, time will tell if the program will be rolled out. Rumors indicate that the Trump Administration plans to scrap the program, but not without strong comment from at least four senators Republication Senators: Orrin Hatch (R-UT), Jeff Flake (R-AZ), John McCain (R-AZ) and Jerry Moran (R-KS).
In their June 20, 2017 letter, the four Senators site to Canada and France as welcoming foreign entrepreneurs to their countries. Canada’s Immigration and Citizenship bureau has already implemented a similar program. France also has implemented a similar program for startups call French Tech Ticket.
What’s particularly confounding about the Administration’s pullback is that the Parole for Entrepreneur program aims to promote and produce U.S. jobs, goals that are entirely consistent with the Administration’s stated policy. It’s no secret that small businesses are the bulwark of job creators in the U.S., according to the Small Business Administration. The reality is that while other countries may offer a friendly process to start up a company, there is only one Silicon Valley and it sits in the Bay Area and that’s where most Entrepreneurs want to be.
For this Administration to stay true to its stated policy, it must develop an even better program, and soon, if the current one is to be abandoned. What do you think? Is the Administration being fair to foreign entrepreneurs? We’d love to hear your opinion on this matter.
Jan 15 2017
Hurray for USCIS, who worked quickly to release the Final Rule for Parole for Entrepreneurs. The rule is officially published on January 17, 2017 and will go live in 180 days – July 17, 2017.
A few highlights and thoughts on the Final Rule before we dig into the common questions that I know are on your minds.
Overall, USCIS was quite thorough in reviewing over 763 comments (including mine) received over a 45-day comment period. It took USCIS about three months to review and issue the Final Rule. USCIS lowered the threshold private investment amount from USD $345,000 to USD $250,000 and expounded on the “alternative” criteria in greater detail. This was a sticky point on my comment so I’m glad USCIS indulged me.
In sum, the Parole option will be attractive but only for a small number of entrepreneurs. Many will not qualify because funding a startup can be tricky and very difficult. Funding a startup with “qualified” investors is even trickier. For the brave and lucky, it’s worth a shot. The fact that the Entrepreneur is required to depart the U.S. (if they are already here), and then reenter the U.S. is inconvenient, but a necessary procedure. Although USCIS declined to publish its applicant data (minus identifying information), it did take my comments under consideration. I suspect that the annual number of applications will exceed the estimated 2,940 applicants, but the number of applicants approved will be much lower.
Parole is but a salve until Congress commits to real meaningful immigration reform. For now, here are some frequently asked questions (FAQs) about Parole for Entrepreneurs. We’ll be hosting a webinar, open to all entrepreneurs, interested in learning more. Sign up here.
When will USCIS start accepting Parole Applications?
The rule goes into effect, and USCIS will begin accepting applications on Monday, July 17, 2017.
What Does Getting “Parole” Actually Mean for an Entrepreneur?
Parole is the legal immigration term that allows an individual to enter the U.S., with the permission of USCIS, without having to go through the official process of obtaining a visa from the Department of State while bypassing the requirements applicable to Inadmissible Aliens. Read about the difference between Parole and a Visa.
I’m Already in the U.S. in Another Nonimmigrant Status; Must I Depart the U.S. and Reenter Seeking Parole?
Yes, you must depart the U.S. USCIS had indicated the rules for Parole require applicants to depart and then reenter. Although USCIS is aware of the “Parole in Place” option, it declined to allow “Parole in Place” for Entrepreneurs.
What Are the Limitations for Using Parole?
Yes. When entering the U.S. on Parole, an individual is not officially “admitted” to the U.S. There is no “status” issued. A Parole entry is a legal way to enter the U.S. but it is not considered an official admission to the U.S. The individual must either renew their parole period prior to its expiration, or depart the U.S. before the parole period ends. In this sense, travel is somewhat restricted during the parole period. Entrepreneurs should not depart the U.S. in the middle of the parole period unless they are willing to reapply for Parole in order to reenter the U.S.
How Does an Entrepreneur Qualify for Parole?
The Final Rule outlines some changes from the Proposed Rule (released September 2016). The update criteria are:
- Startup Entity must be formed within the last five (5) years
- Entrepreneur must own as least 10% of the startup
- Entrepreneur must play an active/central role in the startup’s operations (mere passive investor is not sufficient)
- No more than three (3) entrepreneurs for any one startup may apply for Parole
- The startup must have received significant funding from either:
- A qualified Investor(s) of USD $250,000 or more, within 18 months immediately prior to application; or
- Government grant of USD $100,000 or more, within 18 months immediately prior to application; or
- Alternative criteria that the company will provide a significant public benefit to the U.S.
What “Alternative Criteria” Can Be Used to Qualify for Parole?
USCIS has indicated a number of factors, including, but not limited to:
- The number of users or customers;
- The revenue generated by the start-up entity;
- The social impact of the start-up entity;
- The national scope of the start-up entity;
- The positive effects on the start-up entity’s locality or region;
- The success using alternative funding platforms, including crowdfunding platforms;
- The applicant’s academic degrees;
- The applicant’s prior success in operating start-up entities as demonstrated by patented innovations, annual revenue, job creation, or other factors; or,
- The selection of the start-up entity to participate in one or more established and reputable start-up accelerators or incubators.
Can You Renew Parole for Entrepreneurs?
Yes, but the total amount of time allotted for one entrepreneur is a total of five (5) years, from the date the first parole period was initially issued. Any time that is spent outside the U.S. is counted as well.
What Are the Criteria to Renew a Parole for an Entrepreneur?
In addition to submitting the appropriate documentation and application fees timely, entrepreneurs must satisfy these criteria:
- The entrepreneur must continue to operate the startup in an active role
- The entrepreneur must own at least 5% of the startup
- The startup must have sustained growth during the Parole period, via
- Having received additional investments or grants (additional USD $500,000)
- Generate revenue at least USD $500,000
- Created at least five (5) full-time jobs in the U.S.
- Or alternatively, provided a substantial benefit to U.S.
Can Family Members Apply for Parole as Dependents?
Yes. Spouses and unmarried children under 21 years may accompany the Entrepreneur to the U.S. on Parole. Spouses and children must also submit in advance of entering the U.S., their own applications for Parole.
May Family Members Work While on Parole?
After entry into the U.S., spouses may apply for a work permit but children are not eligible to apply for a work permit.
What Happens When Your Parole Ends?
Entrepreneurs may extend their parole period for an additional 2.5 years (30 months). After that period, they must depart the U.S. Entrepreneurs may apply for a non-immigrant work visa, such as an E-2, E-3, H-1B, O-1 or TN, if eligible. A departure is most certainly required at some point in the future.
What Documents Are Needed to Submit a Parole Application as an Entrepreneur?
USCIS has designated a new form, Form I-941, Application for Entrepreneur Parole. (This form should not be confused with IRS Form I-941, Employer’s Quarterly Federal Tax Returns.) Although a draft form was released in September 2016, due to the recent updates in the Final Rule, the new form has not yet been finalized. Once the form is finalized, it will be available online at USCIS Forms under Form I-941.
Additional, supporting documentation regarding each criteria will be needed along with an application fee of $1,200 and biometrics fee of $85.
Additional fees and forms will apply for dependent spouses and children.
What If I Have More Questions?
We’re hosting a webinar very soon to answer additional questions on Parole for Entrepreneurs. Click here to sign up for more information on how to attend the free webinar.
Nov 22 2016
For the past couple of weeks since the presidential election, many foreign founders have asked what’s going to happen to the Parole for Entrepreneurs that is currently under review by USCIS. You’ll recall that USCIS announced in late August a Parole for Entrepreneurs that would allow eligible foreign founders who have secured at least $345,000 from private venture capital firms or $100,000 from a government source to request permission to stay in the U.S. to operate their startup. The public comment period closed on October 17, 2016.
While we all know it’s a wait and see approach at this point, let’s lay out the options:
Hypothetical #1: Revise the Regulation:
What would revising the regulation look like and how long would it take? If USCIS were to take into consideration new directives from its new boss, it’s theoretically possible that USCIS could substantively revise the regulations as it was initially released back in September 1, 2016. In that event, USCIS could reissue a second proposal for public comment and endure another round of public comment, for either 45 or 60 days, regarding the revised proposal. After USCIS reviews all comments, it could then issue a final regulation at some point in the future. We’re talking at least another six months after January 20, 2017 before a revised regulation.
Hypothetical #2: Block the Regulation:
Another scenario could be if President-Elect Trump decided that Parole for Entrepreneurs was an unconstitutional action by now President Obama, then President-Elect Trump could block the regulation entirely by redirecting the priorities that USCIS should undertake. This could happen because the President has the powers to enforce existing laws of the U.S. In this case, USCIS is overseen by the Department of Homeland Security, which is headed by a Secretary who is appointed by the President. As of the time of publication of this article, the Department of Homeland Security has yet to be appointed by President-Elect Trump. Thus, if the Parole for Entrepreneurs regulation is blocked, then we the public likely won’t see any updates on the regulation becoming a final rule.
Hypothetical #3: Pass the Regulation:
As I stated in my earlier analysis, President-Elect Trump is an entrepreneur himself. He may very well allow the proposed regulation to become final and go into effect. If this were to happen, how quickly could the rule go into effect? Best case scenario, USCIS would need to issue a final rule sometime in the near future and the rule could go into effect 60 days from the final rule. Theoretically, the rule could be implemented as soon as Q1 of 2017. The rule itself, as proposed, has fairly stringent guidelines, targets only a small subset (approximate 2940 entrepreneurs) whose ultimate goals are to create U.S. jobs in order to continue to be eligible for work authorization. It’s really a drop in the bucket.
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Oct 06 2016
Submitted to USCIS on October 6, 2016.
I am Ann Cun, Business Immigration Attorney and founder of Accel Visa Attorneys, PC based in the Bay Area. I have worked with numerous startup founders in helping them navigate alternatives to the H-1B, such as E-2s, O-1s, L-1s and EB-1A visas. I have also volunteered actively with FWD.us with regards to shaping the dialogue on immigration reform and am a long time member of the American Immigration Lawyers Association. My comments represent my own views as a practitioner. They are based on years of anecdotal evidence, my impressions of the immigration bar’s collective experience with USCIS and the lack of meaningful immigration policies towards expanding foreign entrepreneurship in the U.S.
I applaud the efforts set forth in the Proposal by USCIS and offer the following five points for the Service’s consideration during this comment period:
1. Unintended Consequences: Disparate Impact on Women and Minority Founders. It is evident the Service considered multiple research studies on entrepreneurship, including those published by the Kaufmann Foundation. The Kaufmann Foundation 2012 study (See FN 66) categorizes high-growth entrepreneurship into three types: professional-user, end-user and hybrid model. In short, professional-user entrepreneurs receive external financing (private equity, VC and bank loans) at a higher percentage than end-user entrepreneurs. Professional-user Entrepreneurs also have higher rates of advanced degrees, and greater years of work experience, leading to a larger network from which to build. Professional-user Entrepreneurs are overwhelmingly white 87% and male 78.5%. The study shows that Professional-user Entrepreneurs report a higher percentage of revenue over time, greater revenues, higher numbers of full-time and part-time employees, as compared to their End-User Entrepreneur counterparts, who are comprised of a higher percentage of women and minorities, receive less external capital, and start their companies with personal funds at higher rate. Therefore, it is not surprising that with higher education, more experience, and a greater likelihood of receiving external funding, that the data resulting from Professional-user entrepreneurs results in higher revenue and hiring. If the Service were to extrapolate revenue and job creation as the deciding indicia for determining “potential for rapid growth”, the Service would be without fault to do so, as these two indicia appear neutral, on its face.
However, additional studies by the Kaufmann Foundation, American Immigration Council, Small Business Administration, and the Minority Business Development Agency point out that immigrant and native women and minorities face disproportionate obstacles when it comes to obtaining external financing of their enterprises, including obstacles such as bias and discrimination. (See also my article.)
Although addressing the biases that exist at all levels of business financing (whether government or private equity/venture capital) is beyond the scope of this comment, the reality that immigrant women and minorities face when attempting to procure private capital financing is real. By prefacing eligibility solely on financing success procured from limited U.S. sources imposes unnecessary barriers for entry into this promising program. If the Service relaxed the financing threshold to also include additional (alternative) funding sources, so long as source of funds can be established (see my recommendations at #2 below), it would widen the eligibility pool.
2. Revised Alternative Third Criterion for Parole. The Proposal indicates that if an applicant partially meets either the private or public financing threshold, he/she may provide alternative documentation to demonstrate “‘reliable and compelling’ evidence of the entity’s substantial potential for rapid growth and job creation”. The Service should seriously reconsider this alternative criteria and divest it entirely from the need to partially satisfy the other two criteria. Instead, a revised third criterion could allow for reliable and compelling evidence of any of the following, or satisfaction of two or more of the following:
a) Other reliable alternative funding sources, either from abroad or from within the U.S., evidence of source of funding required
b) Participation in a leading accelerator or incubator abroad, as established by press or foreign government support or backing
c) Evidence of substantial revenues already earned, whether in the U.S. or abroad, that exceeds the Income-Related Conditions for Parole.
d) Scope of the business and whether it is in the national interest (e.g. public benefit corporations, focused in a STEM field, etc.)
e) Evidence of intent or engagement with U.S. entities for the duration of the initial parole period.d
3. Data Be Publicly Available. Although the proposal is silent on the issue, to further shape policy and to ensure transparency, making available important data from the Parole for Entrepreneurs Program is critical. Data should include the number of applications submitted, rates of issuance of RFEs, rates of denials/approvals, processing times initially and after RFE response received, along with industry types, financing amounts received at the time of filing, along with applicant demographics, at annual intervals with the goal of gauging program outreach and efficacy.
4. Impact of Parole on Non-Immigrant Intent. The language of the proposal is unclear regarding the nature of the long-term impact the parole period would have on a foreign entrepreneur’s ability to obtain a non-immigrant visa abroad. Will the five years spent in the U.S. impinge on the foreign entrepreneurs’ ability to overcome non-immigrant intent with the Department of State when applying for non-immigrant visas that do not permit dual intent?
5. Delays in processing times. The proposal provides for no avenue to expedite an application. Bear in mind that existing USCIS customers are experiencing lengthy delays on applications and petitions submitted to USCIS; wait times that exceed six months. (Examples include Form I-539 Applications that have been pending for over six months with no ability to expedite via premium processing and H-1B petitions submitted in the most recent fiscal year’s lottery that are still pending despite commencement into this current fiscal year.) What steps will USCIS take to ensure the Parole for Entrepreneur Program allocates proper resources to avoid exacerbating the backlog of existing applications/petitions? Will USCIS dedicate one Service Center to process parole applications for entrepreneurs? How many new staff members will the Service hire, if any, to accommodate the increase this new program?
Thank you for your consideration.