Member Article

The International Entrepreneur Rule (“IER”) is a mechanism enacted by the U.S. Department of Homeland Security (“DHS”) in 2017 to help encourage noncitizen investors and entrepreneurs to continue their business ventures in the United States. Under the IER, Entrepreneurial Parole is available for up to three persons who have a substantial ownership interest (at least 10%) in a startup entity created in the U.S. in the past five years. To qualify, these individuals must play an active and central role in a startup that has “substantial potential for rapid growth and job creation” and the startup must have been the recipient of a major capital investment from “qualified” U.S. investors and/or received an award or grant from a U.S. government entity.  

To be eligible for IER, the applicant’s business must have received, and be able to show:

• $311,071 in qualified investments from qualifying investors (up from $264,147) or,
• $124,429 in government awards or grants (up from $105,659) or,
• Some combination of the two.

Additionally, a “Qualified Investor,” must have:

• Made investments in a specified 5-year period totaling $746,571 (up from $633,952);
• The entities invested in by that investor must have created at least five jobs or generated at least $622,142 in revenue (up from $528,293); and
• Realized annualized revenue growth of at least 20%.

Outside of these recent updates to reflect inflation, there were no substantive changes to the IER itself.

This IER is important because DHS’s “parole” authority is a unique feature of immigration law. Essentially, it allows people to legally enter and work in the United States, even though they have not been “admitted” into the country for immigration purposes. Approval of an IER parole application allows for an initial stay in the U.S. of two and a half years with the opportunity to renew for another two and a half years for a maximum of five-year stay. Spouses of IER parolees may be paroled into the United States as well, and can apply for a work authorization card.

It should be noted that the IER requires significant evidence to prove that the business has potential for growth and job creation, and to prove that the requisite qualified investment has been made.  Moreover, due to its lack of an “admission,” if a person who has been given entrepreneurial parole wishes to become a permanent resident of the United States, they need to find an alternative U.S. immigration status prior to making their application while in the U.S.

Alternative Options for Investors

Given the required evidence that must be shown to qualify for the IER, both by the entrepreneur and by the qualified investors that they have worked with, the IER may not be an optimal immigration solution for all investors and entrepreneurs. In addition to the IER, there are other options an investor might consider which include the following.

• L-1 “New Office” nonimmigrant visa. This visa is often utilized by a foreign business that has set up a new affiliate or subsidiary business in the United States that wants to facilitate the intracompany transfer of its managerial or specialized knowledge employees to that new U.S. business. 
• E-2 “Treaty Investor” nonimmigrant visa.  To qualify for this visa, a foreign entity must have a majority ownership structure that matches the nationality of a country that has a treaty with the United States allowing for E-2 investor visas.  A list of these can be found here. There must be a substantial investment in the U.S. business by the foreign entity or investor. If the investor is an individual, he or she must be coming to the U.S. to develop and direct the business.  If the investor is a corporate entity, the transferred employees must be employed in an executive, managerial or essentially skilled capacity in the U.S.
• EB-5 immigrant visa is for foreign investors seeking to apply for permanent residence by putting high-level, capital investments into U.S. companies while participating in the direction and management of the new enterprise.
  • Regional center investments can also be for infrastructure projects, which lower the required investment amount to $800,000.
  • There is also an option to invest passively in a business located within a “regional center,” which are approved organizations focused on economic investment. A list of approved regional centers can be found here.
  • The minimum investment is $1,050,000 (up $50,000 from 2022), unless the investment is in a high unemployment or rural area.
  • The company invested in must be a for-profit, lawful business and the applicant’s investment must directly create 10 jobs.
  • The applicant must be investing in a new commercial enterprise, established, restructured or expanded after November 29, 1990.

Each of these visa and parole options provide their own unique set of benefits and challenges. To discuss these options and more with an immigration professional, reach out to one of our immigration attorneys at Dinsmore & Shohl.

 

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