Immigration options for entrepreneurs in Canada
As Canada begins its economic recovery from the COVID-19 pandemic, immigration is playing an important role. While much of the focus has been on increasing the skilled workforce to fill gaps in the labour market, this also includes entrepreneurs beginning businesses and creating job opportunities. In a 2019 study, Statistics Canada found that immigrant-owned firms tended to be younger and more likely to be job creators than Canadian-owned firms.¹ The importance of new immigrant entrepreneurs is only increasing in light of the recent pandemic.
There are a number of methods that entrepreneurs can consider to come to Canada including both temporary residence and permanent residence streams. These options are discussed below. If you would like to explore whether one or more of these options is a possibility for you, please contact Stewart McKelvey to discuss this further.
Temporary residence options
There are work permit options available to allow entrepreneurs to enter Canada and work in the country for a temporary period.
There are two main pathways to a work permit, they are Labour Market Impact Assessment (“LMIA”) work permits and LMIA-exempt work permits.
LMIA work permit
The normal LMIA process is two steps: the employer first submits the LMIA application to Service Canada for assessment, and once the LMIA application is approved then the individual uses the approved LMIA to apply for their work permit. LMIAs generally require the company/employer to advertise the position they are seeking to fill for at least four consecutive weeks in the three months prior to the date the LMIA application is submitted to Service Canada. The company must review each applicant who applies for the position and determine whether they are suitable for the positon being sought. If there are no suitable Canadians, then the company can submit the LMIA application.
As of April 1, 2021, Service Canada is no longer applying the former recruitment variation that was available for “Owner/Operator” LMIA applications. Applications for owner/operators will now be assessed using the normal process, which, as above, includes advertising and recruitment efforts to demonstrate that there are no suitably qualified Canadians or permanent residents for the position being filled.
While not impossible, this standard LMIA process is not ideal for an owner/operator as they would be advertising to fill their own position in the business that they own, and would need to seriously vet any candidates. LMIA-exempt work permit options may be more suitable for most entrepreneurs for this reason.
LMIA-exempt work permit
Alternatively, there are also several LMIA-exempt work permits that are outside the LMIA regime. To qualify for an LMIA-exempt work permit, the individual must meet the requirements of a LMIA-exempt work permit category. This will typically require that the employer/company submits an online offer of employment (or Employer Compliance Submission) for the individual through the Immigration, Refugees and Citizenship Canada (“IRCC”) Employer Portal. The individual would then apply for a work permit showing how they meet the requirements for the LMIA-exempt work permit category that they are applying under.
There are quite a few LMIA-exempt work permit categories, but not all of them are applicable to owner/operators. Only the most relevant options for owner/operators are outlined below.
Entrepreneurs / self-employed
This category of work permit is available for individuals who are seeking to enter Canada to own and operate their own business and who can demonstrate that their entry to Canada to operate the business could create significant economic, social, or cultural benefits or opportunities for Canadian citizens or permanent residents. When considering whether the business would create a significant benefit, officers consider a number of factors including, but not limited to:
- whether the business is viable in Canada,
- whether it will create job opportunities for Canadians or permanent residents,
- whether it will result in development in the region, and
- whether it could result in advancement of the Canadian industry such as technological development or product/service innovation.
The officer will also consider the entrepreneur’s background and steps taken to begin the business when assessing whether they qualify for this program.
In addition to showing a significant benefit to Canada, the entrepreneur also has to demonstrate that they own at least 50% of the business that they are coming in to operate.
Unlike the “entrepreneur” category mentioned above, the “significant benefit” work permit does not require that the individual show that they have ownership of the business, but instead that their presence in Canada on a work permit would result in a significant benefit to Canada and Canadian citizens and permanent residents. The application will be reviewed to determine the social, cultural, and economic benefit that would result from the individual working in Canada. The bar on what is considered to be a significant benefit is quite high when seeking to apply for a work permit through this pathway, and it is not to be used for the sake of convenience. Rather, it is to be used when the social, cultural, or economic benefits of the individual being issued a work permit are clear and compelling (and, generally, when no other route is available).
When considering a significant cultural or social benefit the individual would be providing to Canada, the officer will consider the individual’s past record as an indicator of whether they would be providing a significant benefit to Canada. This includes looking at membership in world class organizations, evidence of recognition in the individual’s field, and awards received, among other factors. If the benefit is economic in nature, then the applicant will need to provide documentation supporting that they will provide an important or notable contribution to the Canadian economy.
While a significant benefit work permit may be available for certain entrepreneurs, it should first be carefully considered whether another option would be more suitable and whether the applicant’s significant benefit to Canada can be supported by documentation.
There is an LMIA-exempt work permit category for investors under various trade agreements, including the Canada-United States-Mexico Agreement (“CUSMA”), among others. Under CUSMA specifically, the investor work permit may be available to certain American or Mexican citizens who are associated with an American or Mexican enterprise, respectively, and where there is a substantial investment being made. Therefore, this route may be suitable, for example, for an American national who wishes to start a new business in Canada, or purchase an existing business in Canada to run, as that enterprise may consequently have American ownership once the American national creates or takes over the business in Canada. The set-up costs for a new business and/or the purchase of the existing business may meet the requirement of a substantial investment in Canada, although this will be a case-specific assessment.
Permanent resident options
Entrepreneurs looking to take up residence in Canada on a permanent and full-time basis may also want to explore their options for permanent residency in conjunction with, or instead of, the work permit options discussed above.
There are numerous permanent residence application streams that are available to entrepreneurs. These will depend on the applicant’s qualifications, province of residence and the nature of the business that the applicant will be looking to operate in Canada. A few of the primary options are listed below.
While Express Entry is not specific to entrepreneurs, it remains an option for individuals seeking to immigrate to Canada as permanent residents. Express Entry is a points-based system in which each applicant is awarded a score based on the information in their Express Entry profile. If they are awarded sufficient points, they will be issued an Invitation to Apply (“ITA”) for permanent residency. The applicant’s points will be calculated based on various human capital factors including age, language ability, work history in and outside of Canada, education and more.
However, aside from having enough points to receive an ITA, applicants also have to qualify for one of three federal programs. One factor to note for entrepreneurs is that self-employed work experience in Canada does not count as Canadian work experience. Therefore, foreign national entrepreneurs who have owned and operated businesses in Canada and only have self-employed work experience in the country will not be able to apply under the Canadian Experience Class, but instead will need to apply under the Federal Skilled Worker Program. The Federal Skilled Worker Program has yet another points threshold the applicant would have to meet, which is based on factors similar to those mentioned above.
While this program is not specifically designed for entrepreneurs, it may be one of the fastest and most straightforward pathways to permanent residency in Canada for an entrepreneur, depending on their qualifications.
Start-Up Visa Program
The Start-Up Visa Program was designed to target immigrant entrepreneurs who possess the skills to build innovative businesses in Canada that create jobs for Canadians and permanent residents. This program is discussed in detail in a previous article found here.
There are several requirements to qualify for this stream. These include:
- Get the support of a designated organization
Applicants must secure the backing of a designated organization – a venture capital fund, angel investor group, or business incubator – that has been approved to invest in or support start-ups under the program.
- Have a qualifying business
In order to qualify for the Start-up Business Class, a business should be properly incorporated at the time a commitment is made to bind the applicant to a designated entity. Also, each applicant must hold 10% or more of the voting rights attached to all shares of the corporation. Together, the applicants and the designated organization must jointly hold more than 50% of its total voting rights.
Also, at the time the applicant receives their permanent residence status, they must be providing active and ongoing management of the business from within Canada and an essential part of the operations of the business must happen in Canada.
- Meet personal eligibility requirements
In addition to the business, the individual needs to meet the program’s criteria. This includes the applicant demonstrating that they can communicate in English or French and that they have sufficient funds to support their settlement in Canada. Sufficient funds is determined by the applicant’s family size.
Applicants who are an essential part of the operations of the business and have secured a letter of support from a designated organization can obtain a work permit under the program while the permanent residence application is being processed. This allows entrepreneurs to come to Canada and start working in their business while they wait to obtain permanent resident status.
Self-Employed Persons Program
The Self-Employed Persons Program allows applicants to immigrate to Canada permanently if they have relevant experience in cultural activities or athletics and are able to provide a significant contribution to the cultural or athletic life in Canada.
Applicants through this stream must demonstrate that they have relevant experience and intend to become self-employed in Canada in the arts or athletics. This includes either having taken part in cultural activities or athletics at a world-class level or having been a self-employed person in cultural activities or athletics. Relevant experience for a self-employed person is set at two years, and there are various ways to reach this threshold.
If the relevant experience requirement is met then the applicant will need to demonstrate that they score a minimum of 35 points out of 100 in the selection criteria. This selection criteria awards points based on education, experience, age, English or French language ability, and adaptability.
Provincial nomination programs
Each province in Canada has its own provincial nomination programs (“PNPs”) under which they can nominate individuals to apply for permanent residence. Generally, interested applicants must first apply to the province for a nomination. Once the applicant has the nomination, they will have to make a second application to IRCC for permanent residency. So while PNPs are provincial programs, the application will ultimately be assessed by the Federal Government.
Each province will set criteria that must be met for an applicant to be nominated, but many provinces have specific programs for entrepreneurs or self-employed individuals who are seeking to come to Canada to own and operate a business. The requirements for these programs vary depending on the province, so it is important to determine where you are seeking to take up residence before moving forward with a provincial nomination application.
Entrepreneurs are important to the growth of the Canadian economy and for job creation in Canada. This is particularly true in light of the required economic recovery from the COVID-19 pandemic. There are many different options for individuals seeking to come to Canada to own and operate their own business, but it can be cumbersome to determine the best pathway. The individual’s circumstances and intent to remain in Canada on a temporary or permanent basis are important to consider when planning a route to Canada.
This update is intended for general information only. If you have questions about the above, please contact a member of our Immigration group.
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