About SBIR/STTR Grant Programs

Federal Grants for Small Businesses Only

Over $2 billion and only for small businesses! Congress has mandated that almost 3 percent, $2.2 billion in 2007, of all the extramural R&D funding each year be designated for small businesses through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs. SBIR/STTR is a competitively awarded, set-aside program for entrepreneurs and small businesses to engage in federal research and development. The research must have the potential for commercialization. The program encourages entrepreneurs and small businesses to explore their technological potential and provides the incentive to profit from its commercialization.

To qualify as a small business:

• American-owned and independently operated,
• For-profit,
• Principal researcher employed by business (this requirement is SBIR only), and
• 500 employees or less.

Here’s how it works! Each year, 11 federal departments and agencies are required by SBIR/STTR to reserve a portion of their R&D funds for awards to small businesses. Over $2 billion was awarded through the program in 2007 and virtually all scientific disciplines are represented in the various Agency Topic Areas of the departments and agencies.

These agencies designate R&D topics and accept proposals at various times throughout the year. Agencies are increasingly developing their own rules & regulations. Funding ceilings, R&D topic areas, and length of performance can vary widely for each participating agency.

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 in which the small business works to prove feasibility/proof of concept. Awards of up to $100,000, for approximately six to nine months, support exploration of the technical merit or feasibility of an idea or technology.

Phase II awards an average from $500,000 to $750,000, but can go over $1 million with some agencies. This phase may last up to two years and has a focus of expanding Phase I results. During this time, R&D work is performed, the developer evaluates commercialization potential, and prototype development and field testing is conducted. Only Phase I award winners can be considered for 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 through other non-SBIR federal funding. Highly successful small businesses are eligible to receive sole-source funding from the government during Phase III.

STTR Differences

STTR can be viewed as a sibling program to SBIR. There are two primary differences between SBIR and STTR. The first difference is that while partnering with, and participation by, a nonprofit research institution is encouraged in the SBIR program, it is required in the STTR program. The second major difference is that the principal researcher does not have to be primarily employed by the small-business concern, as is the case with SBIR. STTR allows the principal researcher to be primarily employed by the nonprofit research institution partner, or, in some cases, by another small-business concern.

STTR Small Business Qualifications

Small businesses must meet certain eligibility criteria to participate in the STTR Program.

• American-owned and independently operated
• For-profit
• Small business must partner with a nonprofit research institution. 
• Principal researcher employed by small business or non-profit research institution. 
• 500 employees or less (No size limit for nonprofit research institution)

Eligibility criteria for the nonprofit research institution

• Located in the United States
• And meet one of three definitions
  • Nonprofit college or university
  • Domestic nonprofit research organization
  • Federally funded R&D center (like the Idaho National Laboratory) 
    .