Guide for Immigrant Entrepreneurs
What You Need to Know to Move to the U.S. and Start a Business
America has always been the top destination for immigrants wishing to start new businesses - according to research from the Center for American Entrepreneurship 216 of the companies on the Fortune 500 (43 percent) were founded by immigrants or the children of immigrants. This includes household names such as Apple, Google, Netflix, Tesla, Pfizer, Procter & Gamble, and many others. If you are a foreign national wishing to emigrate to America to open a business, this guide for immigrant entrepreneurs will help get you started.
Immigrant Entrepreneurs: Statistics by Industry
According to a study of immigrant business owners commissioned by the U.S. Department of Commerce the most common industries for immigrant entrepreneurs are (by percentage of total for all sectors):
|Industry||% Immigrant Entrepreneur|
|Professional, scientific, and technical services||13.7%|
|Services other than public administration||11.8%|
|Real estate, including renting and leasing||10.0%|
|Health care and social assistance||9.2%|
|Accommodation and food services||7.3%|
Immigrants tend to make up a high percentage of main street business owners. For example, 61 percent of gas station owners are immigrants, as are 58 percent of dry cleaners owners, 45 percent of nail salon owners, and 38 percent of restaurant owners.
The states with the highest percentage of immigrant entrepreneurs among small-business owners are:
|State||% Small Bus. Immigrant Owners|
There are various types of visas available for foreigners wishing to move to the U.S. and start businesses:
The main purpose of the L-1 visa program is to allow qualifying foreign businesses to temporarily transfer currently employed workers to existing branches in the U.S. or to start affiliated U.S. branches:
- Workers must be executives or managers (L-1A), or have specialized knowledge or experience (L-1B)
- L-1A visas are granted for an initial period of three years, extendable to a maximum of seven
- L-1B visas can be extended to a maximum of 5 years
- There are no annual limits to the number of L-1 visas issued (unlike H-1B visas)
- L1 visa holders can apply for permanent resident status (green card) during their stay
- Spouses and children of L-1 visa holders can be brought to the U.S., and are eligible to work if they qualify for Employment Authorization Documents
- The employer must first file Form I-129 (Petition for Non-immigrant Worker) with U.S. Citizenship and Immigration Services (USCIS). The form cannot be filed by the employee. Once the approval is granted and the application fees are paid, the employee continues the process by filing Form DS-160 online. The applicant must also have an interview at the U.S. Embassy they are applying from.
- Along with the application, a business plan must be submitted which should include the physical address of the business in the U.S. and other documentation that demonstrates the need for the temporary worker
For more information on the L-1 visa program see the U.S. Citizenship and Immigration Services website.
The E-2 visa allows individuals to start or purchase businesses in the U.S. The business must create jobs and benefit the economy:
- E-2 visas are only available to eligible countries that have treaties with the U.S. (list here). Note that countries such as China, Russia, and India do not currently have E-2 treaties with the U.S.
- If the business is a corporation, it must be at least 50 percent owned by nationals from a treaty country
- Must be renewed every two years, but there are no limits to the number of renewals
- Requires a large enough investment to capitalize and operate the business (the amount depends on the industry and type of business - a service oriented business may require as little as $50,000)
- Accompanying spouses and children under 21 are also eligible for E-2 visas. Spouses are permitted to work
- E-2 visa holders can apply for residency (green card)
- Applicants normally apply at the U.S. Embassy or Consulate in their country of residence
- In addition to the eligibility requirements, applicants must submit a business plan that clearly demonstrates a sufficient level of investment and economic benefit to the U.S. market
EB-5 Immigrant Investor Visa
The EB-5 visa is ideal for wealthy immigrants who are willing to invest a substantial amount of capital in a new or existing business in the U.S. In return the investor and his/her immediate family are eligible for permanent residency status.
The main purpose of the program is job creation. From 1990 - 2015 foreign investors from China, Canada and the Middle East created thousands of American jobs through the EB-5 program by investing more than $6.8 billion in American businesses. In return more than 29,000 U.S. Visas were awarded. Up to 10,000 EB-5 visas are granted annually, with a per country cap of seven per cent. China, Vietnam, and India are the most common applicants.
The main criteria for obtaining an EB-5 Visa are:
- A minimum investment of $1,000,000 in a city settings, or US $500,000 in a rural or Targeted Employment Area (TEA), that is, an area that has an unemployment rate of at least 150 percent of the national average
- Funds can be directly invested in a new or existing business or passively in an EB-5 Regional Center. Regional Centers are approved organizations that use invested funds to finance/capitalize job-creating projects in TEAs. A Regional Center Investment does not require the investor to manage a business or live in the project area, and the Regional Center is responsible for meeting the job creation criteria; however, the invested funds are "at risk" and pay relatively low interest
- The funds come from a legitimate source, and can be in the form of cash or cash equivalents, inventory, equipment, or property (valuation is based on fair-market value in U.S. dollars)
- The investment must result in the creation of at least 10 full-time jobs for U.S. workers within the two year period following the issuance of conditional permanent residency
- The investment can be used to create a new business or purchase an existing one (an existing business can be expanded to meet the minimum investment and employment requirements)
- Applicants must demonstrate that the investment funds or capital comes from a legitimate source, i.e. not illegally obtained. Evidence required includes banking records, business and/or personal tax returns, etc.
Applying for an EB-5 visa is a complex process that requires numerous supporting documents - most applicants consult an experienced immigration attorney to help guide them through the process.
EB-5 visas typically require at least a year for conditional residency and two years for a green card, although investors from some countries such as China have had the EB-5 process take longer to complete.
H-1B Visas are issued to immigrants on an as needed, temporary basis to fill vacant job positions with employers in the U.S., particularly in industries such as high tech. An H-1B visa holder can start a business in the U.S. as an investor, however they cannot work for the business––only for the employer who sponsored the visa.
Future Changes to Immigrant Entrepreneur Programs
In response to groups pushing for reductions in the number of foreign workers and immigrants, the Buy American and Hire American Executive Order came into effect on April 18, 2017, which aims to make it more difficult for immigrants top open businesses in the U.S.:
- EB-5 Visa - Numerous accusations of fraud and abuse have been leveled at the EB-5 program in the past, raising debate among lawmakers and lobbyists. Possible upcoming changes include raising the minimum investment required and/or increased scrutiny against fraudulent applications.
- E-2 Visa - Applicants will now need to demonstrate a clear intent to depart the U.S. upon expiry of the visa (previously an applicant was able to sell their foreign residence before moving to the U.S.)
- H-1B Visa - The executive order calls for better screening of immigrants to crack down on potential abuses in the H1-B system. In response, Silicon Valley giants such as Apple and Google are pushing back and asking for increases in the current H-1B cap.
- L-1 Visa - The criteria for eligibility for L-1 visas has been tightened, particularly with renewal applications. Being previously granted an L-1 visa no longer increases the chances of extension - each renewal application is now treated as an entirely new petition.
The Startup Act
Given the criticism of the current system and the long and arduous process faced by immigrant entrepreneurs who wish to start businesses in the U.S. a group of U.S. Senators has proposed the bipartisan "Startup Act", which among other proposals includes resolutions to:
- "Establish limited entrepreneurial visas for 75,000 legal immigrants, so they can remain in the United States, launch businesses and create jobs;
- Create a new limited STEM visa so 50,000 U.S.-educated foreign students, who graduate with a master’s or Ph.D. in science, technology, engineering or mathematics, can receive a green card and stay in this country where their talent and ideas can fuel growth and create American jobs;
- Eliminate the per-country caps for employment-based immigrant visas, which hinder U.S. employers from recruiting the top-tier talent they need to grow."