SBIR and STTR Programs: Complete Guide to Research Funding for Small Businesses
Learn how to apply for SBIR and STTR grants, understand program phases, find participating agencies, and win federal research and development funding.
Quick Overview: SBIR/STTR Programs
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are competitive federal funding programs that encourage small businesses to engage in research and development with commercialization potential. These programs provide over $4 billion annually to innovative small businesses.
SBIR vs STTR: Key Differences
While similar in structure, SBIR and STTR have important differences in how work can be performed and who can participate.
SBIR Program
Primary work performed by the small business itself.
- •Small business performs primary R&D
- •Research partner optional
- •Phase I: 2/3 work by small business
- •Phase II: 1/2 work by small business
- •11 participating agencies
STTR Program
Requires formal collaboration with a research institution.
- •Partnership with research institution required
- •University, federal lab, or nonprofit research org
- •40% minimum work by small business
- •30% minimum work by research partner
- •5 participating agencies
Choosing Between SBIR and STTR
Choose STTR if your technology is based on university research or you need specialized academic expertise. Choose SBIR if you can perform the primary R&D in-house and want maximum flexibility in structuring your team.
Program Phases
Both SBIR and STTR use a phased approach that reduces risk by validating concepts before scaling investment.
Three-Phase Structure
Phase I: Feasibility
Explore technical merit and feasibility of the proposed concept.
Phase II: Development
Continue R&D efforts based on Phase I results to develop a prototype.
Phase III: Commercialization
Transition to commercial products or non-SBIR/STTR government contracts.
Direct to Phase II
Some agencies allow "Direct to Phase II" applications if you can demonstrate that Phase I-equivalent work has already been completed using non-federal funds. This accelerates the funding timeline for more mature technologies.
Eligibility Requirements
To participate in SBIR/STTR programs, your business must meet specific criteria at the time of award.
Small Business Requirements
American-Owned and Operated
At least 51% owned by U.S. citizens or permanent residents
Size Limits
500 or fewer employees (including affiliates)
For-Profit Status
Must be organized as a for-profit business
Principal Investigator Employment
PI must be primarily employed by the small business (SBIR) or allowed split (STTR)
Majority-Owned by VC/PE Note
Companies majority-owned by venture capital, private equity, or hedge funds may still participate in SBIR if they meet specific criteria and apply to agencies that allow such participation. Requirements vary by agency.
Participating Agencies
Federal agencies with R&D budgets exceeding $100 million participate in SBIR, while those exceeding $1 billion also participate in STTR.
Major SBIR Agencies
- DoD- Largest funder, defense technologies
- HHS/NIH- Biomedical and health research
- DOE- Energy and clean tech
- NASA- Aerospace and space tech
- NSF- Broad scientific research
Other Participating Agencies
- •USDA - Agriculture innovation
- •DHS - Homeland security
- •DOT - Transportation
- •EPA - Environmental tech
- •DOC/NIST - Commerce/Standards
- •ED - Education technology
Application Process
While each agency has specific requirements, the general application process follows a consistent pattern.
Steps to Apply
Register in Required Systems
Complete SAM.gov registration, obtain DUNS/UEI number, and register in agency-specific portals (SBIR.gov, Research.gov, etc.).
Find Relevant Topics
Review agency solicitations on SBIR.gov for topics matching your technology. Topics describe specific research areas of interest.
Develop Your Proposal
Write technical proposal addressing innovation, feasibility, commercialization potential, and team qualifications.
Submit by Deadline
Submit through the appropriate portal before the deadline. Deadlines vary by agency—some have multiple windows per year.
Evaluation and Award
Proposals are evaluated by technical experts. Selection decisions typically take 3-6 months depending on the agency.
Winning Proposal Tips
1. Address the Topic Directly
Demonstrate clear alignment with the solicitation topic. Reviewers look for proposals that directly address stated agency needs and priorities. Don't try to force-fit your technology into an unrelated topic.
2. Emphasize Innovation
Clearly articulate what makes your approach innovative. Explain how it advances the state of the art and why existing solutions are inadequate. Show you understand the current landscape.
3. Show Commercial Potential
Agencies want technologies that will reach the market. Include a strong commercialization plan identifying customers, market size, competitive advantages, and path to revenue.
4. Highlight Team Expertise
Reviewers assess whether your team can execute the research. Include relevant experience, publications, prior SBIR success, and expertise directly applicable to the proposed work.
5. Be Specific About Methods
Provide detailed technical approach, milestones, and success criteria. Vague proposals score poorly. Show you have a concrete plan with measurable objectives.
After Award: What to Expect
Contract Administration
- ✓Negotiate final contract terms
- ✓Submit regular progress reports
- ✓Track costs and billing
- ✓Deliver technical reports
- ✓Update commercialization data
Planning for Phase II
- •Document all Phase I results
- •Develop commercialization relationships
- •Identify Phase III customers
- •Begin Phase II proposal early
- •Explore matching fund opportunities
Phase II Success Rates
Approximately 40-50% of Phase I awardees receive Phase II funding. Strong Phase I technical results and clear commercialization progress significantly improve your Phase II chances. Start planning your Phase II proposal during Phase I.
Frequently Asked Questions
Can I apply to multiple agencies?
Yes, you can submit different proposals to multiple agencies. However, you cannot submit the same proposal to multiple agencies simultaneously. Each proposal must be tailored to the specific agency topic.
What's the success rate?
Success rates vary by agency and topic, typically ranging from 10-25% for Phase I. NIH has lower rates (around 20%), while some DoD topics may have higher rates for niche areas. Quality proposals to well-matched topics improve odds.
How do grants differ from contracts?
Some agencies (NSF, NIH) award grants while others (DoD) award contracts. Contracts have more oversight and deliverable requirements but may have advantages for commercialization. Grants offer more research freedom.
Who owns the intellectual property?
Small businesses generally retain IP rights for inventions developed under SBIR/STTR. The government receives a royalty-free license for government purposes. This is a major advantage over many other funding mechanisms.
Can I hire consultants?
Yes, but the small business must perform the required percentage of work. Consultants, subcontractors, and research partners count toward the work not performed by the small business.
Find SBIR/STTR and Contract Opportunities
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