On Jan 25 2017

New Rule Provides Work Authorization for International Entrepreneurs

By Elise A. Fialkowski and Andrew J. Zeltner

On January 17, 2017, U.S. Citizenship and Immigration Services issued an International Entrepreneur Rule. The Rule amends the regulations to implement the Secretary of Homeland Security’s discretionary parole authority to increase and enhance entrepreneurship, innovation and job creation in the United States.

Under the new Rule, international entrepreneurs will be eligible to apply for work authorization if they have established a business in the U.S. and can demonstrate substantial potential for rapid business growth and job creation. Such potential may be evidenced by the receipt of capital investment from U.S. investors or obtaining awards or grants from government entities. The criteria will be discussed in more detail below.

The final version of the Rule includes several positive changes from the proposed regulation, including changes suggested by our firm and its advocacy partners. These include a lower funding threshold, lower ownership requirements and a longer period of initial stay. Approved entrepreneurs will be paroled into the United States for an initial period of up to 30 months and can apply for a 30 month extension.

A maximum of three entrepreneurs per start-up entity are eligible to apply. Spouses and children are also eligible for derivative parole. Spouses may apply for work authorization in the United States.

Initial Eligibility Requirements

An entrepreneur must meet the following criteria:

  1. The applicant must have established a U.S. start-up business within five years before the application for parole;
  2. The applicant must hold an ownership interest of at least 10 percent;
  3. The applicant must play an active role in the operations of the business, and cannot merely be an investor;
  4. The start-up must have received a capital investment of at least $250,000 from qualified U.S. investors or at least $100,000 in grants or awards from qualifying U.S. federal, state or local government entities;
  5. A qualified investor must have invested a total of at least $600,000 in start-ups over the last five years and at least two of the start-ups must have created at least five qualified jobs OR generated at least $500,000 in revenue with average annualized growth of at least 20% and;
  6. Applicants who can only partially meet the funding requirements can attempt to provide additional compelling evidence of the start-up’s substantial potential for rapid growth.

Applying for an Extension

An additional 30-month extension is available if the entrepreneur meets the following requirements:

  1. The business continues to operate;
  2. The entrepreneur retains at least a five percent ownership interest and continues to play a central role in the business;
  3. The start-up has received at least $500,000 in qualifying investments, government grants or awards, or a combination thereof; and
  4. The business has created at least five qualifying jobs; OR
  5. Generated at least $500,000 of U.S. revenue and averaged 20 percent annual growth during the initial parole period.

It is important to note that applicants who only partially satisfy the extension criteria may also potentially meet the standard by providing other reliable and compelling evidence. Such applicants would need to demonstrate how the start-up would provide a significant public benefit through the potential for rapid business growth and job creation.

We believe that this rule can be of significant benefit for international entrepreneurs. Although the rule does not take effect until July 17, 2017, it is important that prospective applicants begin to review whether they may qualify as there are multiple regulatory requirements that must be satisfied prior to filing. Please contact your Klasko Law attorney with any questions on this new Rule.