The Small Business Innovation Research (SBIR) program is a highly competitive program that encourages domestic small businesses to engage in Federal Research/Research and Development that has the potential for commercialization. Through a competitive award process, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from commercialization. By including qualified small businesses in the nation's research and development (R&D) arena, high-tech innovation is stimulated, and the United States gains entrepreneurial spirit as it meets its specific R&D needs.
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Frequently Asked Questions
The Small Business Technology Transfer (STTR) program expands funding opportunities in the federal innovation arena. Central to the program is the expansion of the public/private sector partnership to include joint venture opportunities between small businesses and nonprofit research institutions. The unique feature of the STTR program is the requirement for the small business to formally collaborate with a research institution in Phase I and Phase II. STTR's most important role is to bridge the gap between performance of basic science and commercialization of resulting innovations.
STTR differs from SBIR in several ways, including:
- For and STTR award, the small business must perform at least 40% of the work and the single partnering research institution must perform at least 30% of the work.
- STTR requires the Small Business Concern (SBC) and its partnering institution to establish an intellectual property agreement detailing the allocation of intellectual property rights and rights to carry out follow-on research, development or commercialization activities.
The mission of the SBIR program is to stimulate technology innovation by strengthening the role of innovative SBCs in Federal Research/ R&D.The program’s goals are four-fold:
- Stimulate technological innovation.
- Use small businesses to meet Federal R&D needs.
- Foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged small businesses.
- Increase private-sector commercialization of innovations derived from Federal R&D funding.
Each year, Federal agencies with extramural R&D budgets that exceed $100 million are required to allocate a certain percentage of their R&D budget to the SBIR program. Currently, eleven Federal agencies participate in the program:
- Department of Agriculture
- Department of Commerce - National Institute of Standards and Technology
- Department of Commerce - National Oceanic and Atmospheric Administration
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services
- Department of Homeland Security
- Department of Transportation
- Environmental Protection Agency
- National Aeronautics and Space Administration
- National Science Foundation
Each of these agencies has an SBIR program office and administers the program within guidelines established by Congress in the Small Business Act and by SBA in the SBIR Policy Directive. The agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation.
No, the SBA does not directly administer the awards. The SBA has the responsibility for directing the participating agencies in the administration of the program. It helps the participating agencies implement SBIR/STTR, reviews their progress, reports annually to Congress on its operation, and aggregates agency solicitation announcement information.
Phase I. The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed Federal Research /R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II. SBIR Phase I awards normally do not exceed $150,000 and have a six-month period of performance.Phase II. The objective of Phase II is to continue the Federal Research/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Generally, only Phase I awardees are eligible for a Phase II award. SBIR Phase II awards normally do not exceed $1,000,000 and have a two-year period of performance.Phase III. The objective of Phase III, where appropriate, is for the small business to pursue commercialization objectives resulting from the Phase I and Phase II Federal Research/R&D activities. The SBIR program does not fund Phase III awards. In some Federal agencies, Phase III may involve follow-on non-SBIR funded R&D or production contracts for products, processes or services intended for use by the U.S. Government.
The STTR Program is structured in three phases: Phase I. The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed Federal Research/R&D efforts and to determine the quality of performance of the small businesses prior to providing further Federal support in Phase II. STTR Phase I awards normally do not exceed $150,000 total costs for 1 year.Phase II. The objective of Phase II is to continue the Federal Research/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the Phase II project proposed. Only Phase I awardees are eligible for a Phase II award. STTR Phase II awards normally do not exceed $1,000,000 total costs for 2 years.Phase III. The objective of Phase III, where appropriate, is for the small business to pursue commercialization objectives resulting from the Phase I/II R/R&D activities. STTR does not fund Phase III awards. In some Federal agencies, Phase III may involve follow-on non-STTR funded R&D or production contracts for products, processes or services intended for use by the U.S. Government.
An SBIR/STTR funding agreement is a contract, grant, or cooperative agreement entered into between an SBIR/STTR participating Federal Agency and a small business for the performance of research, experimental, or developmental work funded by the Federal Government.
To receive an SBIR or STTR award, the awardee must qualify as a Small Business Concern (SBC) as defined by SBA regulations at 13 C.F.R. §§ 701-705. The eligibility requirements for the SBIR/STTR programs are unique and do not correspond to those of other small business programs.
A Small Business Concern (SBC) must satisfy the following conditions on the date of award for both Phase I and Phase II funding agreements:(1) is organized for profit, with a place of business located in the United States, which operates primarily within the United States or which makes a significant contribution to the United States economy through payment of taxes or use of American products, materials or labor;(2) is in the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative, except that if the concern is a joint venture, each entity to the venture must meet the requirements set forth in paragraph (3) below;(3) is more than 50 percent directly owned and controlled by one or more individuals (who are citizens or permanent resident aliens of the United States), other small business concerns (each of which is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States), or any combination of these; and(4) has, including its affiliates, not more than 500 employees. (For explanation of affiliate see www.sba.gov/size).For SBIR program only: Some of the 11 federal agencies administering SBIR awards may choose to issue a portion of their awards to firms that are majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms. You can see which agency is currently using this authority here.
Applicants must self-certify at the time of award that their company meets the definition of an SBC for the program and is otherwise eligible. Applicants should be certain of their compliance with the eligibility requirements before formally certifying as an SBC. Information on SBA size determination and protest procedures can be found at www.sba.gov/size.
SBIR awards go only to small, for-profit, firms that meet the above definition of an SBC. This includes sole proprietorships.
You do not have to certify eligibility until the time of award, and most agencies allow you to submit an application prior to establishing the business that will receive the award. However, to avoid potential complications, you should discuss this with the procuring agency’s contracts or grants officer before applying.
Applications for SBIR/STTR awards are submitted in response to agency solicitations. You may find links to the solicitations from the agencies here. Submit your application in response to a particular solicitation and technical topic.
Yes, however you will be required to certify at the time of award that your firm is an eligible SBC, and that it is the primary place of employment for the proposed project’s principal investigator. If a university or large business is assisting you with the proposal or a subcontractor or subgrantee, you may be found affiliated with the university or large business. (See SBA’s SBIR/STTR affiliations rules regarding affiliation based on identity of interest, newly organized concern rule, ostensible subcontractor rule, and the totality of circumstances).
No. In order to receive an SBIR/STTR award, the joint venture must be a small business and all parties to the joint venture must meet the program’s eligibility requirements. If one party to the joint venture is a non-profit, the non-profit would not meet the SBA’s definition of “business concern,” which requires the business to be for-profit. With respect to the foreign firm, it would not likely meet SBA’s ownership and control requirements.
No. A non-profit organization cannot directly receive an SBIR or STTR award. Non-profits may be a minority investor or subcontractor or sub-grantee on a project. In addition, an STTR awardee must subcontract a portion of the award to a research institution – a scientific or educational nonprofit institution, or a Federally Funded R&D Centers (FFRDC).
The research institution mustbe owned and operated exclusively for scientific or educational purposes, non-profit, and located in the US. Research institutions eligible to participate in the STTR Program include:
- Nonprofit college or university
- Domestic nonprofit scientific/research organization
- Federally Funded R&D Centers (FFRDC)
You must have an EIN/TIN to receive an award.
The agency issuing the Program Solicitation resolves contracts and grant disputes. SBA directs program policy for all participating agencies, reports to Congress and provides program oversight.
Yes, the firm may be given a sole source contract for further work or production that derives from, extends, or completes earlier SBIR/STTR work. Such follow-on work must be given Phase III status by the agency.
SBCs must perform at least 40% and research institutions must perform at least 30% of the work.
No, a proposal must respond to a solicitation published by one or more of the participating agencies.
The small business concern is the prime contractor or grantee.
No. The state the company is in does not affect eligibility, rather we focus on which country the company is located in (i.e., the awardee must have a place of business located in the United States (U.S.), and operate primarily within the U.S. or make a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor). In addition, the SBIR and STTR work must be performed in the U.S.
On December 27, 2012, SBA amended its regulations governing size and eligibility requirements for the SBIR and STTR programs. The rule implemented provisions of the National Defense Authorization Act for Fiscal Year 2012 by revising elements of 13 CFR part 121 that address ownership, control, and affiliation for participants in the SBIR/STTR programs. The rule includes a new provision regarding an agency option to allow participation by firms that are majority-owned by multiple venture capital operating companies, private equity firms or hedge funds.
The final rule was published in the Federal Register on December 27, 2012 and took effect January 28, 2013.
The size rule is found at the following links: Size Regulations PDF. In addition, SBA has posted at a Guide to SBIR/STTR Program Eligibility that summarizes and explains the size rule and its changes to program eligibility requirements.
All firms receiving an SBIR or STTR program award for solicitations posted after January 28, 2013 must comply with the new program eligibility requirements which are established with the size rule.
Applicants that do not meet the eligibility requirements at the time of award will not be eligible to receive an award.
That process will be spelled out in the agency solicitation.
Size of a firm is determined by the average number of employees (including employees of all domestic and foreign affiliates) based upon the number of employees for each of the pay periods for the preceding completed 12 calendar months. SBA counts all individuals as employees, including part-time and temporary employees.
If you have size/eligibility questions, you may submit them here after consulting the eligibility guide.
The Company Registry is a new element of the SBIR/STTR data system and application process. Once you have registered, your company will be given an SBIR/STTR ID number that you will use when applying to any SBIR/STTR agency solicitation. SBA expects this to facilitate the application process and reduce the need for multiple data entry.
All applicants to the SBIR or STTR programs must register on the SBIR/STTR Company Registry.
Yes, company registration is required in addition to registration on SAM. We will not be rolling out a company registry that integrates with SAM at this time.
Please register beginning 1/28/2013 and prior to your application submission. If the solicitation was issued before 1/28/2013, you do not need to register. You must register prior to submitting an application because you will be providing a copy of your registration to the agency, with your application.
If you change your corporate structure, EIN, or DUNS, you would add a new record to the already existing company for data and recordkeeping purposes.
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The Phase I to Phase II transition rate is the ratio of Phase II awards to Phase I awards received over a specified period. Each agency has selected the period of time to be used for assessing transition rates and the required benchmark rate they will use. Agency time periods and benchmark rates are posted here. If an agency uses a 5 year period, it counts an applicant’s total number of Phase I awards over the last 5 fiscal years, excluding the most recently completed fiscal year; and the total number of Phase II awards over the last 5 fiscal years, including the most recently completed year.
If you believe your company’s transition rate was calculated incorrectly, you may notify SBA, provide the necessary award information, and request a revision of the rate. Please send us an inquiry here.
You can read more about the benchmarks here or see the Policy Directive.
No. Venture capital operating companies, hedge funds and private equity firms are allowed to hold minority shares of SBIR/STTR awardee so long as they do not have control of the awardee company and so long as their affiliation with the awardee, if any, does not put the awardee firm over the size limit. The exception to this is if the VC is itself more than 50% directly owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States. In such a case, that VC is allowed to have majority ownership and control of the awardee. In that case, the VC and the awardee, and all other affiliates, must have a total of 500 employees or less. For SBIR awards only, some agencies may make a portion of their awards to companies that are majority-owned by venture capital operating companies, hedge funds, or private equity firms. This is allowed only if no one venture capital operating company, hedge fund, or private equity firm holds more than 50% for the stock.
A list of agencies can be viewed here.
If a VC owns a minority share of an awardee firm, and is found to be affiliated with the awardee firm, then the awardee is only affiliated with those portfolio firms that are majority owned by that VC or if that VC holds a majority of seats on the board of the portfolio firm.
For awards from agencies that have elected to allow small businesses that are majority owned by multiple VCs to receive awards, the VCs that own a majority of the awardee must have a place of business located in the United States and be created or organized in the United States, or under the law of the United States or of any State.
The SBC awardee owns, and has full right and title to, the data it develops under an SBIR award. For an STTR award, the SBC and research institution must, prior to award, sign an intellectual property agreement identifying the sharing of rights to data.
SBIR/STTR Data are protected from disclosure by the participating agencies for a period of not less than 20 years with the protection period beginning at the time of the Phase I, II, or III award.
The Government has rights to certain limited use of the data, primarily for evaluation of the results of the award. While some agencies use the data only for evaluation and review purposes, others have interest in accessing the data to explore applications of the research or technology. These rights are stipulated in the SBIR Policy Directive and the STTR Policy Directive
If an awardee feels its SBIR/STTR data is being, or in danger of being, inappropriately revealed or disclosed, the awardee should bring this to the attention of the SBIR/STTR officials of the agency involved and may contact the SBA.
Awardee firms may negotiate with Federal agencies to give the Government additional rights to the SBIR/STTR Data; however, such negotiation must take place only after the award is made. An agency may not make any negotiation of SBIR/STTR data rights a condition for an award.
Yes. For Phase I, the proposing firm must perform a minimum of two-thirds of the research and/or analytical effort. One third may be subcontracted to another firm or research organization/facility. For Phase II, the proposing firm must perform a minimum of one-half of the research and/or analytical effort.
Yes. Both the small business and the research institution may subcontract or they may jointly fund a subcontractor, but no more than 30% of the total work can be subcontracted to a third party. The STTR program requires that the small business performs at least 40% of the R&D and the single partnering research institution to perform at least 30% of the R&D.
No. The SBIR/STTR program does not fund unsolicited proposals (proposals that do not refer to and address a specific topic in a current agency SBIR/STTR solicitation). However, applicants should review the current SBIR/STTR solicitations across the participating agencies to see if any are relevant to the work the applicant would like to propose.
This is allowed, however there is no specific guidance on this at the SBIR/STTR-wide level of the Policy Directive. You will have to check with each agency on their guidance on this.
Yes, but they may not perform the same or essentially equivalent work under more than one contract or grant. Collecting funds more than once for the same work is fraud.
You can find past data, state by state awards and other information here.
You can view all our resources including our past webinar slides here.
To receive information on other SBA programs, please contact your local SBA office or call the SBA answer Desk: 1-800-8-ASK-SBA. You may also visit the SBA website at www.sba.gov.
Each year, Federal Agencies with extramural R&D budgets that exceed $1 billion are required to reserve a certain percentage of the extramural research budget for STTR awards to small businesses. These agencies designate R&D topics and accept proposals. Currently, five agencies participate in the STTR program.
- Department of Defense
- Department of Energy
- Department of Health and Human Services
- National Aeronautics and Space Administration
- National Science Foundation
Each agency administers its own program within guidelines established by Congress in the Small Business Act and by SBA in the STTR Policy Directive. These agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation.
On June 1st of each year, you award data is reviewed. If your firm has received more that 20 Phase I awards over the past 5 years (excluding the most recent year), it must meet the Transition Rate benchmark. If an agency uses a transition rate benchmark of 25%, that means that you must have received at least one Phase II award for every 4 Phase I awards over the applicable time period. If your transition rate does not meet or exceed the benchmark rate, then you will not be eligible to submit an application for a Phase I (or Direct-to-Phase II) for one year from the June 1st assessment. You will still be allowed to complete any previous and ongoing awards, and may (and are encouraged to) apply for new Phase II or Phase III awards.
Step 1. Go to www.sbir.gov >> log into your SBIR.GOV user account.
Step 2. Click on Dashboard.
Step 3. Click 'Download SBC Registration (Proof of Registration/Certification)' from MY DOCUMENT BOX
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