Small Business Innovation Research Program (SBIR): How it Works and How to Qualify

Originally posted on the SBA.gov Blog

Small businesses are the key to advancing America’s economy by bringing cutting-edge, high-impact technologies to the marketplace that improve health care, strengthen our military and protect the environment. However, small businesses often have difficulty competing with larger technology companies due to lack of capital for research and development (R&D) work that is critical for moving products from the planning to deployment stages. 

To help entrepreneurs successfully commercialize their products and services, the federal government established the Small Business Innovation Research/Small Business Technology Transfer program, commonly known as SBIR. Eleven federal agencies including the departments of Health and Human Services, Defense and Energy participate in SBIR, which provide small businesses competitive funding for projects that meet government research needs and boost technological innovation in the public and private sectors. The Small Business Administration doesn’t directly administer the SBIR funding awards, but it oversees and manages the SBIR program by coordinating with other agencies, reviewing progress and reporting to Congress.

Much like the product development process, SBIR is structured in phases:

• Phase 1 establishes the technical merit, feasibility and commercial potential of products or services and lasts for six months.

• Phase 2 supports continued R&D efforts and extends up to two years. Funding levels are based on the success of Phase 1 work.

• Phase 3 enables the small businesses to commercialize products or services. Although SBIR does not fund Phase 3, some federal agencies may provide additional financial assistance for products and services that help achieve government research goals.

To be eligible for SBIR assistance, businesses must:

• Be organized for profit and be located in the United States.

• Be at least 50% owned and controlled by U.S. citizens or permanent residents.  

• Have no more than 500 employees.

• Not be controlled by a venture capital firm, hedge fund or private equity firm that owns a majority of the stock.

Learn more about eligibility requirements and explore open and future solicitations from agencies throughout the federal government to find SBIR funding opportunities for your small business. Also, go to SBIR.gov for more information about the program including small business success stories and free upcoming events and webinars.