Frequently Asked Questions - SBIR

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 (R/R&D) that has the potential for commercialization. Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. By including qualified small businesses in the nation's R&D arena, high-tech innovation is stimulated and the United States gains entrepreneurial spirit as it meets its specific research and development needs.

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The mission of the SBIR program is to support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.

The program’s goals are four-fold:

• Stimulate technological innovation
• Meet Federal research and development needs.
• Foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged persons.
• Increase private-sector commercialization of innovations derived from Federal research and development funding.

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Each year, Federal agencies with extramural research and development (R&D) budgets that exceed $100 million are required to allocate 2.5% of their R&D budget to these programs. 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 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 proposal evaluation.

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No.  The SBA has the responsibility for directing the participating agencies in the administration of the program—it does not directly administer the awards.  SBA serves as the coordinating agency for the SBIR program. It helps the eleven agencies implement SBIR, reviews their progress, and reports annually to Congress on its operation, and aggregates agency solicitation announcement information.

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The SBIR 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 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. 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.

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An SBIR funding agreement is a contract or grant entered into between an SBIR participating Federal Agency and a small business for the performance of research, experimental, or developmental work funded by the Federal Government.

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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.

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No.  Only SBIR Phase I winners are eligible for Phase II awards.  The federal Government uses the results of the Phase I effort to determine whether a larger commitment of funds, through a Phase II award, is warranted.  This two-phase structure enables the program to stimulate and support NEW innovative ideas. 

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No. The SBIR program does not fund unsolicited proposals (proposals that do not refer to and address a specific topic in a current agency SBIR solicitation). However, applicants should review the current SBIR solicitations across the participating agencies to see if any are relevant to the work the applicant would like to propose.

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To receive an SBIR award, the awardee must qualify as a “Small Business Concern” (SBC) for the purposes of the SBIR program.  The eligibility requirements for the SBIR program are unique to the program and do not correspond to those of other small business programs.

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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 at least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States, or at least 51% owned and controlled by another business concern that is itself at least 51% owned and controlled by individuals who are citizens of, or permanent resident aliens in the United States; and

(4) has, including its affiliates, not more than 500 employees.  (For explanation of affiliate see www.sba.gov/size).

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Applicants must self-certify in their applications that their company meets the definition of an SBC 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.

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Yes.  SBIR awards go only to small, for-profit, firms that meet the above definition of an SBC.

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Yes.  However, the for-profit firm must be established to receive the award, and it must be the primary place of employment for the proposed project’s principal investigator.

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No.  SBIR program is looking for NEW high-tech innovation ideas.  However, a proposal for a new application of a patented technology may be considered.

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No. There can be no more than 49 percent participation by foreign business entities in the joint venture.

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No.  A non-profit organization cannot directly receive an SBIR award, but it could be a subawardee on a project.

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Yes.  Submit your SBIR application and apply for your Employer/Taxpayer Identification Number EIN/TIN, which is required to receive the award.

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Applications for SBIR awards are submitted in response to agency solicitations.  Find links to the solicitations from the 11 agencies on www.sbir.gov.  Submit your application in response to a particular solicitation and technical topic.

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Yes.

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No.  The definition of and SBC is a firm that is at least 51 percent owned by individuals who are US citizens or lawfully admitted permanent resident aliens.  Further, an SBC must have its principal place of business in the United States.

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SBIR differs from STTR in two important aspects:

1. The principal investigator must have primary employment with the SBC (unless a waiver is granted by the agency).
2. SBIR encourages but does not require the SBC to partner with a research institution

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