Small businesses may compete for federal dollars through the Small Business Innovation Research Program (SBIR), or its sister program, the Small Business Technology Transfer Program (STTR).
SBIR is a $2 billion federal funding program that encourages small businesses to develop commercially viable technologies or innovations. Organized as a competition, SBIR allows small companies the opportunity to test high-risk theories and develop innovative technologies. To compete for SBIR dollars, small businesses respond to program solicitations issued by participating federal agencies.
Federal Departments and Agencies that Solicit SBIR Proposals
The following ten federal departments and agencies are required to reserve a portion of their R&D funds for SBIR. These agencies designate R&D topics and accept proposals:
- Department of Agriculture
- Department of Commerce
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services
- Department of Transportation
- Department of Homeland Security
- Environmental Protection Agency
- National Aeronautics and Space Administration
- National Science Foundation
Click here for information about Solicitation Dates.
The SBIR Three-Phase Program:
Following submission of proposals, agencies make SBIR awards based on small business qualification, degree of innovation, technical merit, and future market potential. Small businesses that receive awards or grants then begin a three-phase program.
- Phase I is the startup phase. Awards of up to $100,000 for approximately 6 months support exploration of the technical merit or feasibility of an idea or technology.
- Phase II generally awards up to $750,000 for up to two years, and expand upon Phase I results. During this time, the R&D work is performed and the developer evaluates commercialization potential. Only Phase I award-winners are eligible to apply to Phase II.
- Phase III is the period during which Phase II innovation moves from the laboratory into the marketplace. No SBIR funds support this phase. The small business must find funding in the private sector or other non-SBIR federal agency funding.
How Proposals are Evaluated
Proposals are primarily evaluated based on their scientific and technical merit and on the basis of their originality. Federal scientists, engineers and other subject matter experts in the particular topic area provide the review. The agency considers the qualifications of the principal investigator and key staff, the technical merit of the proposal, potential commercial applications, and the benefit to the particular agency. SBIR monies are not awarded to mere improvements and applied technology.
Criteria for Participation
Organizations eligible to participate in the SBIR program must meet the following criteria:
- At least 51% U.S.-owned and independently operated
- For-profit
- Principal researcher employed by business
- Company size limited to 500 employees
STTR is modeled after the SBIR program. It was designed to encourage small companies and researchers at non-profit research institutions (such as universities) to work together as a team to move ideas from the laboratory to the marketplace, and foster high-tech economic development. A minimum of 40% of each STTR project must be carried out by the small business, and a minimum of 30% of the effort must be performed by the research institution. To compete for STTR dollars, small businesses respond to program solicitations.
Federal Departments and Agencies that Solicit STTR Proposals
The following five federal departments and agencies are required to reserve a portion of their R&D funds for STTR. These agencies designate R&D topics and accept proposals:
- Department of Defense
- Department of Energy
- Department of Health and Human Services
- National Aeronautics and Space Administration
- National Science Foundation
Criteria for Participation
Small businesses that wish to participate in the STTR Progra must meet certain eligibility criteria:
- At least 51% U.S.-owned and independently operated
- For-profit
- Principal researcher need not be employed by small business
- Company size limited to 500 employees
Nonprofit research institutions (there is no size limit for nonprofit research institutions) must also meet certain eligibility criteria:
- Located in the US
- Meet one of three definitions:
- Non-profit college or university;
- Domestic nonprofit research organization; or
- Federally funded R&D center (FFRDC)
The SBIR and STTR programs are administered by the US Small Business Administration Office of Technology, 409 Third Street, SW Washington, DC 20416, 202-205-6450.
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About SBIR and STTR