White House to Review Entrepreneur Parole Rule

Thinking about forming your startup in the U.S.? Hold that thought for now. The Trump Administration has recalled a published rule for entrepreneurs to enter the U.S. in parole status.

The International Entrepreneur Rule was created by the Obama Administration to bring in more foreign entrepreneurs to the U.S. The final rule was published on January 17, 2017 and was supposed to go into effect on July 17, 2017. However, the Trump Administration has recently sent the rule back to the Office of Management and Budget for "further review". As such the future of the rule has become uncertain. It is expected that the rule will be amended, postponed or even cancelled.

Most countries such as Canada and Australia have some form of "startup visa" to allow entrepreneurs to enter to start a business venture. America does not such a visa. The International Entrepreneur Rule designed by the Obama Administration came as close to a startup visa as one can get.

This rule would allow entrepreneurs to enter the U.S. in parole status and work on their startup businesses for a period of 30 months, with another 30 months of extension possible if certain criteria are met.

This rule is based on the parole authority of DHS in the immigration regulation, which allows the government to parole certain individuals into the country for emergency, humanitarian and public interest reasons. The entrepreneur parole rule was promulgated based on the premise that allowing investors to establish their startups in the U.S. would bring in capital and create jobs, which are public interests.

Under the rule, an investor would be required to have invested at least $250,000 in a startup created within the last five years. The investor's ownership interest of the business must also be at least 10%. Further, there must be evidence that the startup business has potential for rapid growth and job creation in the U.S.

As parolees, the investors would be allowed to work and develop their businesses. The parole status is less desirable than employer visas such as H-1B, and can be revoked at any time. However, these entrepreneurs may apply for green cards subsequently if they are qualified otherwise. Upon completion of the initial 30 months, DHS may in the exercise of its discretion grant an extension of 30 months. An extension would only be approved if at least five full time positions have been created for U.S workers.

Various organizations and trade groups have urged the Trump Administration to green-light the parole rule for entrepreneurs. However, President Trump so far has not made any public statements on this particular program. On the one hand, the Trump Administration campaigned on promises of job creation and economic opportunities, which would seem consistent with the startup parole rule. On the other hand, the same administration has also taken tough positions on immigration issues. Hence, it is difficult to predict exactly what they are going to do. A likely outcome would be some sort of compromise - the rule will be permitted to move forward but with some changes of terms and conditions.