Business Plans and RFE Response

Do responses to Requests for Evidence need business plans? What if the RFE for an I-526 petition includes this dread sentence “Upon reviewing the business plan, USCIS finds that the evidence in the record does not establish that the business plan is Matter of Ho compliant.” Should the RFE response submit an updated/revised business plan, or take another strategy?  Which forms of evidence will be most compelling to USCIS and most effective for the petitioner, when addressing USCIS questions and concerns related to the I-526 business plan?

The question is important, because Requests for Evidence have become so common and lengthy as to constitute, effectively, an additional stage in the EB-5 process.  The official EB-5 process includes the I-526 stage, which provides a business plan to reasonably predict prospective job creation, and the I-829 stage, which provides evidence to document actual job creation. The unofficial EB-5 process introduces the I-526 RFE stage, which preemptively asks for verification of actual job creation, masked as request for evidence that business plan predictions are reasonable.

It’s necessary to read the RFE carefully, to identify the concerns behind the requests. A statement in the RFE that “the I-526 business plan is deficient” has four possible meanings, each calling for a distinct response.

1. “Not Up-to-Date”: The I-526 plan may be fine as a plan, but we (USCIS) are not interested in a plan anymore. Over the 2-4 years of processing delay, the business has had time to develop. Now we don’t care whether the petitioner established eligibility at the time of filing based on having a reasonable plan for the future. Rather, we want the petitioner to demonstrate eligibility as of today based on what’s already happened. Therefore we shall issue an RFE that calls the I-526 plan deficient just because it is a plan. In place of a plan and projections, we want a laundry list of evidence for past activity. For example, to quote recent RFEs: NCE tax filings to date, payroll records to date, bank records to date, and evidence for schedule milestones accomplished. This is justified by the idea that the only way to show that a business plan projection is reasonable is to prove that it already came true.
2. “Not Complete”: The I-526 plan was deficient at the time of filing. Had we reviewed this plan promptly, while it was still up-to-date, we would still have found that it was not comprehensive and credible. The plan lacks the detail and supporting evidence that would normally be required to assess the credibility of a plan for the future.
3. “Clarification Needed” The I-526 plan includes a few points that cause confusion — usually internal discrepancies, or discrepancies between the plan and external evidence. The RFE requests clarification on these points.
4. “Underlying Fact Problem” The I-526 plan might be beautiful as a document, but it describes a business that does not fit EB-5 requirements. Problematic elements might include prohibited debt arrangements, the wrong kind of structure, the wrong kind of job creation, unsuitable timing, failure to fit TEA requirements, or unacceptable immaturity or unpredictability.

Depending on the underlying concern, the RFE response may or may not need to include an updated business plan.

1. Responding to the “Not Up-to-Date” RFE: In this type of RFE, USCIS does not identify problems with the original business plan as such, but requests evidence for implementation of the original plan. The petitioner could respond fully to this RFE by simply providing the specific evidence documents requested, such as tax, payroll, and permit records. This RFE does not ask for a revised business plan, because business plans treat the future and this RFE wants to know about the past. If actual performance closely followed the original business plan, and if the evidence documents speak for themselves, then an updated business plan would be needless and distracting. An updated plan can be helpful if actual performance has departed or will depart from the original plan.  In that case, a business plan is a good venue for putting new evidence in context, telling a coherent story that bridges the gap between the original plan and current conditions, and making a case for fundamental continuity despite non-material changes. Such an updated business plan must be written with great care and sensitivity to EB-5 requirements, to give the petition its best chance to demonstrate ongoing eligibility while avoiding material change problems. My RFE response service covers this type of business plan. (If actual performance has departed significantly from the original plan, then even the most expert business plan update may fail. But a slim chance of success can be maximized with a plan written by someone who is thoughtful, strategic, and intimately familiar with how USCIS has handled material change policy.) Note that one fair response to the “not-up-to-date” RFE would be “this RFE should not exist at all.” Most petitioners will want to comply instead of argue, to minimize risk and because this RFE response helps prepare the way for I-829, at least.  But arguments exist. USCIS is unreasonable to use an RFE to demand evidence that does not implicate eligibility at the time of filing (because such evidence did not exist at the time of filing), that would not have been requested had the petition been adjudicated promptly rather than delayed for many years, that belongs to the I-829 rather than I-526 stage, that appears to be fishing for material changes to provide denial pretext, and that slows adjudications to a crawl for everyone by doubling/tripling I-526 evidence. And it is impossible to write a business plan that will avoid this RFE. The mere passage of time due to USCIS delays creates  the “deficiency” of being not up-to-date, and of being a reasonable plan for the future rather than evidence of past performance.
2. Responding to the “Not Complete” RFE: This type of RFE points out that the original business plan is deficient as a plan, suffering from content omissions. The RFE response has options: (a) provide the specifically-identified missing content as an amendment to the original plan, or (b) provide an updated business plan that includes the missing content plus takes opportunity to bring the entire original plan up-to-date. For an example, if the RFE just notes the lack of a hiring schedule, then a hiring schedule can be provided in the form of a business plan amendment. If the RFE just complains about lack of credibility due to unsupported market analysis, then a well-documented market analysis can be provided as additional evidence. A completely updated business plan may be called for if the RFE asked more wide-ranging questions, or if the positive factors in a business plan update look likely to outweigh the risk that unsolicited new information could open new questions and be labeled as material change.  Again, drafting such responses requires great care and significant EB-5 expertise. The very fact that USCIS decided to issue an RFE, instead of exercising its right to deny the petition outright for incompleteness, is a good sign for the petitioner. Value the second chance offered by the RFE, and make every effort to take advantage of it.  My RFE response service also covers these types of business plan amendments and updates.  (And note that unlike the “not up-to-date” RFE, the “not complete” RFE can be avoided. My business plan writing service and review service aim for business plans that are sufficiently comprehensive and credible to comply with Matter of Ho from the beginning.)
3. Responding to the “Clarification Needed” RFE: This type of RFE asks for detail clarifications that often do not need a full business plan to answer. “The square footage is 32,000 on page 5 and 33,000 on page 10 of the original plan – which is correct?” A question like that can be answered in a few sentences and with the approved drawings as evidence. No need to revise the entire plan for the purpose of reconciling a few minor discrepancies and clearing up minor ambiguities. (But note to fellow business plan writers – even a tiny discrepancy can lead to months-long processing delay. Implement methods to avoid such errors in the first place.) “The original plan is for a McDonald’s but Google Maps currently shows a KFC at the project address – explain the discrepancy.” That kind of clarification may occupy a full business plan update.
4. Responding to the “Underlying Fact Problem” RFE: This type of RFE points out underlying fact problems that would make the petitioner ineligible at the time of filing. For example, suppose the original business plan indicated that the petitioner made a loan to the NCE, while EB-5 eligibility requires equity. Pursuant to material change policy, such an eligibility problem at the time of filing I-526 cannot be fixed post-filing. Unless it’s possible to argue that the apparent problem did not really exist. Maybe the original business plan document was not written with care by Lucid Professional Writing, but by someone in a rush who made template errors and typos. Maybe the NCE’s operating agreement and tax filings clearly demonstrate that the petitioner’s funds were always in fact equity in the NCE from the beginning, and thus any reference to debt in the original business plan reflects a slip-up by the plan writer, not a problem in the reality upon which the petitioner’s eligibility depends. A business plan update or amendment in the RFE response can make such a case. But if a debt arrangement really existed at the time of filing, the most beautiful business plan revision cannot help. Again, it’s important to think strategically and realistically about what kind of RFE response is worthwhile, considering the facts.  (And for those just starting the process, be sure to get your EB-5 business plan written or at least reviewed by a careful expert.  Because once that business plan has been filed with USCIS, it’s difficult to fix document problems and almost impossible to fix reality problems.)

When thinking about RFE response strategy, I keep in mind the words that USCIS uses to conclude every RFE.

USCIS has determined that the record does not establish eligibility for the benefit sought. Accordingly, USCIS has requested evidence to address the issues outlined above. Petition is not precluded, however, from submitting evidence in addition to the evidence requested by USCIS that the petitioner deems relevant to address such issues. Petitioner must prove by a preponderance of the evidence – in other words, that it is more likely than not – that Petitioner is fully qualified for the benefit sought.

If Petitioner submits updated or revised documents, please note that “[a] petitioner must establish eligibility at the time of filing; a petition cannot be approved at a future date after the petitioner becomes eligibility under a new set of facts. See Matter of Katigbak, 14 I&N Dec. 45, 49 (Comm. 1971). Therefore, a petitioner may not make material changes to a petition that has already been filed in an effort to make an apparently deficient petition conform to [USCIS] requirements.” Matter of Izummi, 22 I&N Dec. 169, 175 (Assoc. Comm’r 1998); see also 8 C.F.R 103.2(b)(1).

This conclusion makes several key points:

• The issue in every RFE is this: to establish by the preponderance of the evidence that the petitioner is eligible for EB-5 benefits. Thus:
  • Any evidence requested by USCIS, or provided by the petitioner in response, should be relevant to that single purpose.
  • The fundamental strategy question is not so much which specific evidence items does the RFE request, but which eligibility factor does USCIS think has not been established. The petitioner should identify that factor, and think about which evidence would best support eligibility in that area. The most compelling evidence may include items not mentioned in the RFE.
  • RFEs usually request sufficient evidence to prove every claim beyond a reasonable doubt, but such a standard is not required for approval. I-526 decisions are to be made based on a preponderance of the evidence standard.
• The RFE exists to give an opportunity to supplement the record with new information and updated and revised documents. But the opportunity comes with a warning: new facts and corrections will actually make the petition un-approvable, if they appear to make any “material” changes to the original petition. This is the rocket science of RFE response: to prepare additional evidence that supports current eligibility without undermining eligibility at the time of I-526 filing.

For additional reading:

• My EB-5 RFE response service
• My EB-5 business plan writing service
• My EB-5 business plan review service
• My post What does Matter of Ho-compliant mean?
• My post Reviewing EB-5 Business Plans
• My article on business plans for AILA “Preparing a Matter of Ho-Compliant Comprehensive Business Plan for EB-5 Petitions,” Immigration Options for Investors & Entrepreneurs (AILA 2019—04 Ed.)