20229_Carousel-InventionOn Jan. 17, 2017, the Department of Homeland Security (DHS) published its final rule to implement discretionary parole authority to increase, promote, and encourage entrepreneurship, innovation, and job creation in the United States. This final rule will add new regulatory provisions that will allow DHS to grant parole in certain circumstances and by discretion to entrepreneurs of start-up entities who are able to show through evidence the potential for business growth, job creation, and public benefit to the United States. 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. If the parole is granted, the entrepreneur will be allowed a temporary stay of up to 30 months that may be extended for an additional 30 months. The final rule will be effective on July 16, 2017.

Requirements to qualify for parole for entrepreneurs:

  • Meet the definition of entrepreneur:  An entrepreneur is defined as an alien who possesses a substantial ownership interest in a start-up entity and is actively engaged in the operations of the entity, and who has the qualifications to perform such duties. A substantial ownership interest means possession of at least 10 percent of the start-up entity for the first parole application, and at least 5 percent ownership interest if applying for a renewal of the parole.  During the initial period of parole, the entrepreneur must maintain at least 5 percent ownership interest in the entity, and during the subsequent period of re-parole, may reduce the ownership interest, but must always maintain an ownership interest in the entity.
  • Entity must meet the definition of start-up entity:  A start-up entity is defined as an entity created within the five years immediately preceding the filing of the alien’s initial parole application. If the entity has received a grant, award, or investment, then it will be considered as recently formed if it was created within five years preceding the receipt of the above-mentioned items.
  • Definition of a government award or grant: This means an award or grant for economic development, research and development, or job creation that has been given by a U.S. federal, state, or local government entity.

  • Definition of qualified investment and investor:  A qualified investment is defined as an investment made in good faith and must not be from any immediate family member (parents, spouse, brother, sister, son, or daughter), or from any entity owned by such family member. A qualified investor means a U.S. citizen or lawful permanent resident of the United States, or an entity that is U.S. majority owned and operated, that regularly makes substantial investments into start-up entities and has not committed any securities violations. A qualified investor is defined as an individual or entity, that during the preceding five years:
  1. Made investments in start-up entities totaling more than $600,000; and
  2. At least two of the entities, as a result of the investment, created at least five qualified jobs (meaning full-time employment, at least 35 hours per week, by a U.S. citizen or lawful permanent resident who is not an immediately family member as defined above) or generated at least $500,000 in revenue with average annualized growth of at least 20 percent.
  • Any material change may affect the parole:  A material change is defined as any change of facts that could affect the entrepreneur’s activities in the United States to provide a significant public benefit, including criminal charges, complaints, sale of the entity, among other factors.

How to Request Parole:

Any requests for an initial grant of parole as an entrepreneur of a start-up entity must be made on Form I-941 with the USCIS, with required fees, as well as documentary evidence.

  • Initial Parole Request: An alien requesting initial parole must demonstrate that his or her entity is a start-up entity that has either: 1) in the last 18 months preceding the application received a qualified investment amount of at least $250,000 from one or more qualified investors; or 2) in the last 18 months preceding the application received a government award or grant of at least $100,000. If the entity meets the start-up requirement, and partially meets the monetary requirement, he or she may provide other evidence of the entity’s potential for growth and job creation.
  • Additional periods of parole: Additional periods of parole will be filed on the same form and must be based on the same start-up entity. If the re-parole request is filed prior to the expiration date of the initial parole, the entrepreneur is authorized to continue employment with the same start-up entity for a period not to exceed 240 days beginning on the expiration of the parole. It must be demonstrated that the entity will continue to provide a significant public benefit, and that the entity, during the initial parole period, 1) has received at least $500,000 in qualifying funds (investments, grants, or awards; 2) created at least 5 qualified jobs; or 3) reached at least $500,000 in annual revenue and averaged 20 percent in annual revenue growth. If the application partially meets the above criteria, the alien may provide other evidence showing the entity’s potential for rapid growth and job creation.

Spouses and Children: The entrepreneur’s spouse and children must individually file Form I-131 and must include information that he or she has a qualifying relationship to the entrepreneur. Biometrics will be collected for each individual, and the amount of time granted for parole will be the period granted to the entrepreneur. The spouse of an entrepreneur granted parole may file Form I-765 for work authorization after having been paroled into the United States.

Period of Parole: The initial parole period may be granted for up to 30 months, and any additional re-parole periods may be granted for periods of 30 months. There will be no appeal from a denial of parole.  Biometric information of the applicant will be required for each application. There may be no more than three entrepreneurs granted parole based upon the same entity, and the same entity may only be used for the parole application twice, for a maximum period of five years.

Conditions on Parole: The parole granted to the entrepreneur will allow for employment authorization with the start-up entity. In addition, the parolee must maintain a household income that is greater than 400 percent of the federal poverty line for the household size as defined by the Department of Health and Human Services. In addition, the investment and revenue amounts will be automatically adjusted every 3 years by the Consumer Price Index and posted on the USCIS website, and will be effective for all applications filed on or after the beginning of the fiscal year for which the adjustment was made.

Termination of Parole:  Parole will be automatically terminated upon the expiration if no application for re-parole has been filed.  Parole will also be terminated if the USCIS receives written notice that the entrepreneur will no longer be employed by the start-up qualifying entity, or if he or she ceases to have an ownership interest.

We will continue to monitor any guidance that may be published on this rule and how to apply. Please subscribe to our blog for updates.