The Problem Immigrant Entrepreneurs Face

A number of foreign national entrepreneurs face significant difficulties in obtaining permission to work and engage in the kind of entrepreneurship and job creation the economy needs.   Currently, the H-1B temporary work visa program is off-limits to many individual entrepreneurs, as a result of the January 8, 2010 Neufeld Memorandum which required each H-1B work visa petition to show that the petitioning employer has the right to control, including to hire and fire, the foreign national employee.   Most often entrepreneurs are the owners or have a controlling interest over a company, and the right to control in many cases cannot be shown.   Effectively, the Neufeld Memorandum prohibited H-1B self-sponsorship for foreign entrepreneurs.   For background, please see our prior articles relating to the Neufeld Memorandum.

Similarly, the permanent work visa program (or green card) limits the ability of foreign entrepreneurs to obtain benefits due to the lack of employer-employee relationship in many cases.    Other than the EB-5 category (see more below), in most cases, immigrant entrepreneurs must have a U.S. sponsor employer which can provide the employer-employee relationship, in a way discussed above.    Due to the fact that the EB-5 green card category requires an investment of $1 million, among other requirements, few foreign entrepreneurs qualify for it, at least at the initial stage of their endeavors.

Finally, the EB-5 category, as discussed above, has qualifying requirements and processing procedures which are not suitable for many small businesses.   The EB-5 category, in addition to having relatively high capital requirements, takes a long time.   Entrepreneurs who have the capital and decide to apply must go through several months of paperwork to find out whether their permanent residency visa is approved.   This uncertainty, and the possible inability to engage in employment in the U.S. during this time, make the EB-5 option difficult for many.

USCIS Clarifications:  H-1B Self-Sponsorship Possible With Specific Corporate Governance Structure

As a result of increased criticism and hoping to spur job creation and growth, USCIS has clarified the rules with respect to H-1B temporary work visas for the benefit of foreign entrepreneurs.   An H-1B petition would still have to show the employer-employee relationship between the sponsor entity and the entrepreneur; but in cases where the foreign entrepreneur is also an owner, USCIS has clarified that this can be done by structuring the company’s corporate governance in a way to allow a board (or similar entity) to exercise control over the entrepreneur (and employee).    For example, if there is a board of directors (or a committee of the board) which has the right to control (including to hire and fire) the entrepreneur-employee, then USCIS, under the new clarification, should deem that the right to control has been established.

USCIS has provided a “Frequently Asked Questions” document which seeks to provide additional information and answers to common questions.    It makes clear, however, that the Neufeld Memorandum remains unaffected.

USCIS Clarifications:  EB-2 NIW Self-Sponsorship Possible When Job Creation/Growth Can be Shown

Additionally, with respect to self-sponsored EB-2 National Interest Waiver (NIW) permanent visa category, the government has clarified that a foreign entrepreneur may qualify for a self-sponsored EB-2 NIW category if he/she can show that the business enterprise would benefit the national interest of the United States.

The EB-2 visa classification includes foreign workers with advanced degrees and individuals of exceptional ability in the arts, sciences, or business. Generally, an EB-2 visa petition requires a job offer and a Department of Labor certification. These requirements can be waived under existing law if the petitioner demonstrates that approval of the EB-2 visa petition would be in the national interest of the United States.

Prior to the current clarification, the EB-2 NIW category was used most often by professionals whose work can be shown to benefit the U.S. by providing a specific benefit or service.    Now, USCIS has clarified that job creation and economic growth, either direct or indirect, could be considered to be in the U.S. national interest and could allow foreign entrepreneurs to obtain permanent residency under the EB-2 NIW category.

USCIS has published a “Frequently Asked Questions” document on its website clarifying this new approach.  USCIS has indicated that they will complement these FAQs with internal training on the unique characteristics of entrepreneurial enterprises and startup companies.

Changes to Streamline the EB-5 Investor Green Card Program

The EB-5 immigrant investor program is also being further enhanced by transforming the intake and review process. In May, USCIS proposed a number of changes to streamline the EB-5 process which include: extending the availability of premium processing for certain EB-5 applications and petitions, implementing direct lines of communication between the applicants and USCIS, and providing applicants with the opportunity for an interview before a USCIS panel of experts to resolve outstanding issues in an application.   USCIS is developing a phased plan to roll out these enhancements and is poised to begin implementing the first of these enhancements within 30 days.   Hopefully, this would provide the kind of fast processing and additional certainty about the process many foreign investor entrepreneurs need.

Premium Processing to Expand to Include EB-1 Multinational Executives and Managers

Additionally, USCIS has announced that it intends to reinstate the premium processing option for EB-1 I-140 petitions filed on behalf of multinational executives and managers.    A processing time of 15 calendar days under the premium processing option would address a frequent concern by foreign managers and executives that it may simply take too long for them to be able to join a business operation in the U.S.  The USCIS announcement is unclear on the effective date of this change, but we will monitor the availability of this option and provide an update.

Conclusion

We welcome USCIS Director Mayorkas’s announcements and welcome the “clarifications” and changes he has just announced.   At the same time, we realize that these “clarifications” must be properly communicated to the field officers and adjudicators so that when a properly prepared self-sponsorship H-1B or EB-2 NIW petition is filed, it is given the due benefit under the new guidance.   Our office will be monitoring new developments on this topic and we would be providing relevant updates on our website and via our weekly newsletter.  In the meantime, please do not hesitate to consult us if we can be of any assistance.

About the EB-5 Program

In 1990, the U.S. Congress created the fifth employment-based preference category (EB-5) for qualified foreign entrepreneurs seeking to invest in a business that will benefit the U.S. economy and create or save at least 10 full-time jobs. The basic amount required to invest is $1 million, although that amount is reduced to $500,000 if the investment is made in a rural or high unemployment area.  Of the approximately 10,000 EB-5 green cards available each year, 3,000 are reserved for foreign nationals who invest through a Regional Center.

A Regional Center is a private enterprise or corporation or a regional governmental agency with a targeted investment program within a specific region.   The Regional Center Investment Program allocates 3,000 green cards each year for people who invest in designated Regional Centers.  The program does not require that the foreign investor’s enterprise itself directly employ 10 U.S. workers.  Instead, it is enough if 10 or more jobs will be created directly or indirectly as a result of the investment. As a result, he Regional Center Investment Program aids foreign investors by directing and professionally managing their investment in the designated business and geographic focus of their Regional Center.

The Proposed EB-5 Changes

First, USCIS proposes to accelerate its processing of applications for job-creating projects that are fully developed and ready to be implemented.  USCIS will also give these EB-5 applicants and petitioners the option to request Premium Processing Service, which guarantees processing within 15 calendar days for an additional fee of  ($1,225).

Second, USCIS proposes the creation of new specialized intake teams with expertise in economic analysis and the EB-5 Program requirements. EB-5 Regional Center applicants will be able to communicate directly with the specialized intake teams via e-mail to streamline the resolution of issues and quickly address questions or needs related to their applications.

Third, USCIS proposes to convene an expert Decision Board to render decisions regarding EB-5 Regional Center applications. The Decision Board will be composed of an economist and adjudicators and will be supported by legal counsel.

Conclusion

We welcome these changes to the EB-5 program as they seek to make the program more investor-friendly and transparent.   However, especially in times when job-creation by foreign investors should be a priority, these changes are a good step forward which we expect to be followed by more proposed changes to make the program more transparent and investor friendly.   Please feel free to subscribe to our free weekly newsletter for additional updates on this and related topics.

One of the points of the story is that the EB-5 program may be considered as a unfair “pay-to-play” program where foreign nationals “buy” their U.S. visa.  Of course, the story provides plenty of support for the EB-5 program which is considered by many to be a beneficial job-creating and foreign capital-attracting program in these difficult economic climate.

NPR story:  For Some Immigrants, The Ticket To A Visa Is A Check.

Senators Kerry (D-MA) and Lugar (R-IN) have introduced a new bill in Congress seeking to drive job creation and increasing America’s global competitiveness by helping immigrant entrepreneurs secure visas to the United States.  The bill’s title is the “StartUp Visa Act of 2010″ and will allow an immigrant entrepreneur to receive a two-year visa if they can show that a qualified U.S. investor is willing to dedicate a significant sum – a minimum of $250,000 – to the immigrant’s startup venture.   Please see full text of the draft bill and Senator Lugar’s press release.

The Act would amend immigration law to create a new EB-6 category for immigrant entrepreneurs, drawing from existing visas under the EB-5 category, which permits foreign nationals who invest at least $1 million into the U.S., and thereby create ten jobs, to obtain a green card.  After proving that he or she has secured initial investment capital and if, after two years, the immigrant entrepreneur can show that he or she has generated at least five full-time jobs in the United States, attracted $1 million in additional investment capital or achieved $1 million in revenue, then he or she would receive permanent legal resident status.

We will monitor the path of this bill through Congress and provide updates as we have them.

In 1990, the U.S. Congress created the fifth employment-based preference category (EB-5) for qualified foreign entrepreneurs seeking to invest in a business that will benefit the U.S. economy and create or save at least 10 full-time jobs. The basic amount required to invest is $1 million, although that amount is reduced to $500,000 if the investment is made in a rural or high unemployment area.  Of the approximately 10,000 EB-5 green cards available each year, 3,000 are reserved for foreign nationals who invest through a Regional Center.

A Regional Center is a private enterprise or corporation or a regional governmental agency with a targeted investment program within a specific region.   The Regional Center Investment Program allocates 3,000 green cards each year for people who invest in designated Regional Centers.  The program does not require that the foreign investor’s enterprise itself directly employ 10 U.S. workers.  Instead, it is enough if 10 or more jobs will be created directly or indirectly as a result of the investment. As a result, he Regional Center Investment Program aids foreign investors by directing and professionally managing their investment in the designated business and geographic focus of their Regional Center.

Current Regional Centers

An updated list of approved EB-5 Regional Centers can be found at USCIS’ website below:

Immigrant Investor Regional Centers (external link)

As of the date of this article, there are 75 approved Regional Centers and there are approximately 50 Regional Center applications pending for review at USCIS California Service Center.

Contact Us for Information and Help

Please contact us if we can help you  understand the EB-5 Regional Center program, help you establish eligibility and guide you through the process.

I-526 Premium Processing Possible Later in the Year

A review of the question of reinstating premium processing for I-526 petitions will be done during the second quarter of 2010.  USCIS will reinstate premium processing if it determines that it has sufficient resources at the California Service Center to adjudicate I-526 within the 15-calendar day window.

EB-5 Statistics

As of December 14, 2009, USCIS was able to provide only statistics for fiscal year 2009 (FY 2009).  Accordingly, in FY 2009, where were 1,028 I-526 petitions (EB-5 immigrant petition) filed, of which 966 were approved and 163 denied.   Also, in FY 2009, where were 437 I-829 (removal of condition) petitions filed of which 335 were approved and 55 denied.

Note that these numbers do not add up because not all petitions filed during FY 2009 are adjudicated during FY 2009.  Additionally, some petitions filed during FY 2008 are adjudicated during FY 2009 and are included in the numbers above.