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SBIR Program: Stimulating Small Businesses, the Entrepreneurial Spirit, and the U.S Economy

About the SBIR Program

The Small Business Innovation Research (SBIR) program is a highly competitive program that encourages domestic small businesses, with the potential for commercialization, to engage in Federal Research/Research and Development (R/R&D). Through a competitive awards-based program that is backed by the Small Business Administration (SBA), SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization.

SBIR Program Stimulates and Targets Entrepreneurs

The entrepreneurial sector of thriving innovations and innovators helps to diversify the nation’s R&D efforts, stimulate high-tech innovation, and propel the entrepreneurial spirit of the U.S. The SBIR program targets this entrepreneurial sector because of the high occurrence of innovation, and because the risk and expense of conducting serious R&D efforts are often beyond the means of these small businesses. By reserving a specific percentage of federal R&D funds for small businesses, SBIR protects the small business, enables the small business to compete on the same level as larger businesses, and allows the U.S to meet specific research and development needs.

SBIR funding helps support the critical startup and development stages of these small businesses and entrepreneurs, which then encourages the commercialization of the business’ technology, product, or service, which, in turn, stimulates the U.S. economy. Click here to see the number of awards awarded by year, state, women-owned, minority-owned, and HUBZone-owned small businesses.

SBIR Program Goals

Since its enactment in 1982, the SBIR program has helped thousands of small businesses compete for federal R&D awards. Their contributions have enhanced the nation’s defense, protected our environment, advanced health care, and improved our ability to manage information and manipulate data. Through the investment of federal research funds in critical American priorities, the mission of the SBIR program is to support scientific excellence and technological innovation, and thereby, build a strong national economy. The program’s goals specifically include, stimulating technological innovation, meeting federal research and development needs, fostering and encouraging participation in innovation and entrepreneurship by socially and economically disadvantaged persons, and increasing private-sector commercialization of innovations derived from federal research and development funding.

Federal Agency Participation

Each year, federal agencies with extramural R&D budgets that exceed $100 million are required to allocate 2.8% of their R&D budget to these SBIR programs. Currently, eleven federal agencies participate in the program, and each agency administers its own individual program within guidelines established by Congress. These agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposals are evaluated.

The Three Phases of SBIR Program

Phase I. The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed R/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 total costs for 6 months.

Phase II. The objective of Phase II is to continue the R/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. Only Phase I awardees are eligible for a Phase II award. SBIR 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. The SBIR program does not fund Phase III. For 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.

Is Your Small Business SBIR Eligible?

Only United States small businesses are eligible to participate in the SBIR program. An SBIR awardee must meet the following criteria at the time of Phase I and II awards:

  • Organized for profit, with a place of business located in the United States
  • More than 50 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States, or by another for-profit business concern that is more than 50% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States
  • No more than 500 employees, including affiliates
  • For awards from agencies using the authority under 15 U.S.C. 638(dd)(1), an awardee may be owned and controlled by more than one VC, hedge fund, or private equity firm so long as no one such firm owns a majority of the stock.
  • Phase I awardees with multiple prior awards must meet the benchmark requirements for progress toward commercialization.
  • For more information, see the Eligibility Guide

What’s Next?

If your small business is ready to take the next step into commercialization, but is lacking the funds to pursue necessary research and development, we can help! At Strategic Consulting Solutions, we help small businesses prepare and compete for SBIR awards with a team of knowledgeable SBIR and government contracting experts. Take advantage of these great opportunities to propel your business’ research and development with consulting from Strategic Consulting Solutions and aid from the SBIR program!

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