SBIR and STTR Grant Funding

Description of the Small Business Innovation Research Program (SBIR)

SBIR targets the entrepreneurial sector because that is where most innovation and innovators thrive. However, the risk and expense of conducting serious R&D efforts are often beyond the means of many small businesses. By reserving a specific percentage of federal R&D funds for small business, SBIR protects the small business and enables it to compete on the same level as larger businesses. SBIR funds the critical startup and development stages and it encourages the commercialization of the technology, product, or service, which, in turn, stimulates the U.S. economy.

SBIR Qualifications

Small businesses must meet certain eligibility criteria to participate in the SBIR program:

• American-owned and independently operated
• For-profit
• Principal researcher employed by business
• Company size limited to 500 employees

The SBIR System

Each year, ten federal departments and agencies are required by SBIR to reserve a portion of their R&D funds for award to small business.

NIH: http://grants.nih.gov/grants/funding/sbir.htm#sbir
Air Force: http://www.afrl.af.mil/sbir/index.htm
Army: http://www.aro.army.mil/arowash/rt/
BMDO: http://www.winbmdo.com
DARPA: http://www.darpa.mil/sbir
DOC-NOAA: http://www.rdc.noaa.gov/~amd/sbir.htm
DOC-NIST: http://patapsco.nist.gov/ts_sbir
DOD-OSD: http://www.acq.osd.mil/sadbu/sbir
DOE: http://sbir.er.doe.gov/sbir
EPA: http://es.epa.gov/ncerqa/sbir
NASA: http://sbir.nasa.gov
NAVY: http://www.navysbir.com
NSF: http://www.eng.nsf.gov/sbir

These agencies designate R&D topics and accept proposals.

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 awards of up to $750,000, for as many as 2 years, expand Phase I results. During this time, the R&D work is performed and the developer evaluates commercialization potential. Only Phase I award winners are 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 other non-SBIR federal agency funding.

Description of the Small Business Technology Transfer Program (STTR)

STTR is an important new small business program that expands funding opportunities in the federal innovation research and development arena. Central to the program is expansion of the public/private sector partnership to include the joint venture opportunities for small business and the nation's premier nonprofit research institutions. STTR's most important role is to foster the innovation necessary to meet the nation's scientific and technological challenges in the 21st century.

Competitive Opportunity for Small Business

STTR is a highly competitive program that reserves a specific percentage of federal R&D funding for award to small business and nonprofit research institution partners. Small business has long been where innovation and innovators thrive. But the risk and expense of conducting serious R&D efforts can be beyond the means of many small businesses.

Conversely, nonprofit research laboratories are instrumental in developing high-tech innovations. But frequently, innovation is confined to the theoretical, not the practical. STTR combines the strengths of both entities by introducing entrepreneurial skills to high-tech research efforts. The technologies and products are transferred from the laboratory to the marketplace. The small business profits from the commercialization, which, in turn, stimulates the U.S. economy.

STTR Qualifications

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

• American-owned and independently operated
• For-profit
• Principal researcher need not be employed by small business
• Company size limited to 500 employees

(No size limit for nonprofit research institution)

The nonprofit research institution must also meet certain eligibility criteria.

• Located in the US
• Meet one of three definitions
• Nonprofit college or university
• Domestic nonprofit research organization
• Federally funded R&D center (FFRDC)

The STTR System

Each year, five federal departments and agencies are required by STTR to reserve a portion of their R&D funds for award to small business/nonprofit research institution partnerships.

• Department of Defense
• Department of Energy
• Department of Health and Human Services
• National Aeronautics and Space Administration
• National Science Foundation

These agencies designate R&D topics and accept proposals.

Three-Phase Program

Following submission of proposals, agencies make STTR awards based on small business/nonprofit research institution qualification, degree of innovation, 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 one year fund the exploration of the scientific, technical, and commercial feasibility of an idea or technology.
• Phase II awards of up to $500,000, for as long as two years, expand Phase I results. During this period, the R&D work is performed and the developer begins to consider commercial potential. Only Phase I award winners are considered for Phase II.
• Phase III is the period during which Phase II innovation moves from the laboratory into the marketplace. No STTR funds support this phase. The small business must find funding in the private sector or other non-STTR federal agency funding.