Proposed Parole for Entrepreneurs: Not For Most Small Businesses

Proposed Parole for Entre…

USCIS published a Proposed Rule on August 31, 2016 which would grant parole to “entrepreneurs of start-up entities.” Parole allows entry into the United States without obtaining a visa, and potentially could simplify the immigration experience for qualifying entrepreneurs. There is no anticipated date for when this Proposed Rule would become a Final Rule, and when entrepreneurs could take advantage of its new benefits, but it is hoped that a Final Rule will take effect in 2017.

Entrepreneur parole is intended for U.S. start-ups with major growth potential and an economic impact that would substantially benefit the U.S. economy, such as creating numerous jobs. Small businesses likely will not qualify, and family investment is severely limited.

Entrepreneur Requirements

  • Must have at least a 15% ownership interest in the start-up entity;
  • Must have a central and active role in operating that entity and be able to substantially assist in its growth and success;

Start-Up Entity Requirements

  • U.S. business entity formed within the last 3 years: any corporation, LLC, partnership, or other entity organized under federal or state law;
  • Must provide goods or services, and cannot be an investment vehicle;
  • Must have lawfully done business since formation, and have substantial potential for rapid growth and job creation;
  • The start-up entity has either:
    • Outside investor(s) contributing at least $345,000 total in the last 365 days—investor(s) must be a US citizen or Lawful Permanent Resident or U.S. organization, and must have prior investments of at least $1 million which either created 5 U.S. jobs or generated $500,000 in revenue with 20% average annualized growth; OR
    • Received at least $100,000 in government awards or grants (for economic development, job creation, etc.) in the last 365 days; OR
    • Partially satisfies one or both of the above criteria in addition to other reliable and compelling evidence of the start-up entity’s substantial potential for rapid growth and job creation.
  • Entrepreneurs and their immediate families may not provide the required investment amount of $345,000, whether personally or through entities that they own.
  • Not intended for start-up entities with limited growth potential, created for the purpose to provide income for the entrepreneur and his/her family.

How to Obtain Entrepreneur Parole (PE-1)

The entrepreneur must file Form I-941 and supporting evidence with USCIS and pay a fee of $1200. Parole will be granted for a 2-year period, and unlimited permission to travel (exit/re-enter the U.S.) will be given. The entrepreneur will automatically obtain work authorization to work only at the start-up entity. Spouses and children must apply separately with Form I-131, and spouses can obtain work authorization by separately filing Form I-765. Re-parole can be obtained, but there is a maximum of 5 years total under parole. The household income must remain at or above 400% of the federal poverty line. There is a limit of 3 entrepreneurs per start-up entity. Parole is discretionary on a case-by-case basis.

This is a general synopsis of some, but not all, of the proposed qualification requirements. This is not a Final Rule, but if you are interested in obtaining entrepreneur parole once the Final Rule is published, please consult with Hill & Piibe to determine if parole status would suit your short- and long-term plans.