Foreign Entrepreneurs – The Facts

by Murtha Cullina
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The United States has long been attractive to foreign entrepreneurs due to the county’s historically open marketplaces and tolerance for new ideas and new products. Foreign entrepreneurs have come to the United States in many different ways; however, there is still no direct “entrepreneur visa” or immigration status for entrepreneurs looking to come to the United States in order to grow a U.S.-based business enterprise. On this account, oftentimes foreign entrepreneurs will run into roadblocks while in the United States as they seek to both grow their businesses and obtain and maintain lawful immigration status.  

More so, with global competition growing, the United States is no longer the default stop for the best and the brightest to set up their shops—in fact, numerous studies have shown that a growing number of would-be entrepreneurs are choosing to start and run their business elsewhere due to financial and societal incentives. Other countries are seeking to prevent their native entrepreneurs from leaving as nations such as China and India set up policies to dissuade would-be entrepreneurial immigrants from leaving their home countries.

Legal Avenues for Foreign Born Entrepreneurs

Entrepreneurial Parole

On January 17, 2017, the Department of Homeland Security (DHS) published a final rule establishing a parole program for international entrepreneurs seeking to improve the ability of certain startup founders to remain in the United States legally in order to grow their companies and help create new jobs for U.S. workers.

On July 11, 2017, less than a week before the final rule was set to take effect, DHS delayed the implementation of the rule, foreshadowing that it would seek to rescind the rule altogether pursuant to an Executive Order (EO) signed by the President on January 25, 2017. DHS originally estimated that approximately 3,000 entrepreneurs will be eligible to apply under this rule annually. If the rule is allowed to take effect, these entrepreneurs would then be granted a stay of up to 30 months, with the possibility of an additional 30-month extension if they meet certain criteria, in the discretion of DHS.

As there are currently limited visa options for international entrepreneurs, this rule would create an avenue in our immigration system for innovators and allow entrepreneurs the opportunity to establish new businesses in the United States, contribute to the economy, and help maintain the United States’ competitive edge in the world marketplace of ideas.

E Visas

Some entrepreneurs may be eligible for an E visa, which is a visa category reserved for nationals of certain countries that have treaties with the United States. Specifically, there is the E-1 and the E-2 visa category—E-1s can be for foreign nationals who conduct “substantial trade” between the United States and their home country, while E-2s can be for foreign nationals who come to the United States in order to develop and direct the operations of an enterprise in which they have invested a “substantial amount” of capital. Also, the E visa applicant must control at least 50% of the company.

E visas are nonimmigrant visas, meaning that they are by nature “temporary”; however, there is no limit to the amount of extensions an applicant may be eligible for, and, in certain instances, it can lead to permanent residence (i.e., a green card).

H-1B Visas

Although most people probably don’t think of the H-1B visa as an “entrepreneurial visa,” with proper planning and advice the H-1B visa category can be a viable option for an entrepreneur looking to start their own company and invest in the United States. For USCIS to grant an individual an H-1B visa they must demonstrate that there is a valid “employer-employee” relationship; this can be an issue with entrepreneurs since they are more often than not their own bosses and therefore will have trouble establishing the requisite employer-employee relationship between themselves and their companies. Even so, one option for the entrepreneur would be to set up an independent board of directors for their company that can exercise control over the entrepreneur’s employment. This requires extremely careful planning and oversight and the assistance of competent counsel. Also, the fact that H-1B visas are statutorily capped at 85,000 per year makes this visa category less appealing for entrepreneurs.

EB-5 Investor Visas

The EB-5 program is a statutory program that allows for investors to obtain conditional permanent resident status (and eventually full permanent resident status) based on a qualifying investment of between $500,000 and one million dollars. The required investment amount is dependent on the type of program in which the investor is participating (whether it be participating in a USCIS-designated regional center, investing in Targeted Employment Area, or direct investment in a new or existing company); however, in any scenario, in order for the investor to eventually obtain their full-fledged permanent residency, they must be able to create at least 10 U.S. jobs within two years. If the investment is successful after the initial 2 year trial period, then the investor may apply for their permanent green card with USCIS.

EB-2 National Interest Waiver

Certain foreign nationals may be eligible for permanent residency pursuant to the National Interest Waiver (NIW) provision of the Immigration and Nationality Act (INA) if they either: (1) are members of the profession holding an advanced degree (or their equivalent); or (2) possess exceptional ability in the arts, sciences, or business, and they will “substantially benefit the national economy, cultural or educational interests, or welfare of the United States.” In most cases, such workers are also required to obtain a Labor Certification from the Department of Labor (DOL) prior to filing their petition with USCIS; however, the INA gives USCIS the authority to waive the Labor Certification requirement, in their discretion, if it is determined that it would be in the national interest to do so. More so, NIW cases allow for so-called “self-petitioners” (meaning that no job offer or employee sponsor is required), which is uncommon in U.S. immigration law. These features therefore make this category extremely desirable as it allows for both skipping the tedious and pedantic Labor Certification process and for petitioning without the sponsorship of an employer (something that is ideal for an entrepreneur seeking to start their own business in the United States).

When a foreign national’s work will be deemed to be in the “national interest” is subject to a three-part test, which includes: (1) the foreign national’s proposed endeavor has both substantial merit and national importance; (2) the foreign national is well positioned to advance the proposed endeavor; and (3) that, on balance, it would be beneficial to the United States to waive the requirements of a job offer and thus a labor certification.  This new standard—which was announced in early 2017—is less demanding than the old standard, but will still undoubtedly provide challenges to immigrant entrepreneurs seeking to utilize the category.

Conclusion

As seen above, there are several solid options for immigrant entrepreneurs seeking to enter the United States in order to start, manage, and run their own businesses. However, petitioning the United States government for any sort of immigration benefit is a complex process which requires competent counsel, proper planning and close oversight.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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