L-1 — Road to Nowhere?
Many entrepreneurs who have small businesses (<10 employees, <$500,000 annual turnover) set up similarly small businesses in the US and seek to use the L-1A visa as the path to an EB-1C green card. But a change in USCIS policies has made this harder and harder to realize. The essence of the problem is the interpretation of the L-1A term “executive”. To qualify for the L-1A visa, it is necessary to show that the businessman will be working as an executive for the US company. If the US company is new, it is necessary to show that within one year, the company will be developed sufficiently to support an executive. After the executive receives a one-year L-1A approval to develop the new business and works for 9–10 months, the company must “report” to the USCIS in order to extend the executive’s L-1A approval. If the company shows some significant activity and hires US workers, this will usually suffice to extend the visa.
But when the company petitions for the green card, USCIS starts to throw up obstacles. Notwithstanding the identical criteria for the extension of the L-1A visa and the approval of an EB-1C green card, USCIS questions whether the individual is indeed working as an executive. An inadequate number of subordinate employees; a lack of professional employees; a failure to provide detailed job descriptions; a failure to provide evidence of working in an executive capacity — these are all reasons that USCIS uses to deny the green card petition.
This comes as a shock, especially after the executive spent more than 2 years developing the US company and investing $200–300,000 in the US company. The average US employee earns $2–3,000 each month, and so 6–7 subordinate employees translates to at least $150,000-$200,000 annually. Taxes are high. The cost of office space is not cheap. Insurance, warehouse space, office equipment, etc… It all adds up. And when USCIS pulls a bait-and-switch — approving the L-1 extension allowing you to continue working, but denying the green card — this is appalling.
While the amount of investment is substantial — $500,000 — one thing that EB-5 investors can count on is better predictability than attempting the L-1A/EB-13 path. Decisionmaking in EB-5 is much more predictable, objective, and qualitative with a high approval rate (around 83%) than it is for L-1A/EB-13. The money invested in EB-5 is just that — an investment to be returned after 5–6 years, not a “black hole” of expenses that L-1A/EB-1C often becomes. This is in addition to the other huge benefit of EB-5 versus L-1A/EB-1C — an investment through a Regional Center is passive and turnkey in nature: it is not necessary to actively manage, invest in, hire employees, and build a business in the United States as it is with L-1A/EB-1C. This article on our website provides a very good comparative analysis of EB-5 and L-1.
We would be happy to answer any questions you may have on the two business immigration categories.