SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) are federal programs that pay US small businesses to conduct research and development without taking equity, meaning an ownership stake. According to SBIR.gov, they operate through 11 participating federal agencies coordinated by the Small Business Administration (SBA). Awards come in phases, and STTR requires a formal partnership with a research institution. As of November 2026, both programs are authorized through September 30, 2031, following a lapse that began October 1, 2025.
How the programs work
Agencies reserve part of their research budgets for small businesses and publish solicitations: funding notices explaining eligible projects, application requirements and review criteria. Some seek solutions to narrow mission needs; others accept broader proposals within research areas. Awards are grants or contracts, depending on the agency.
The company generally keeps the intellectual property it develops, subject to the government rights described in the award. Confirm patent rights and contract terms with a qualified attorney or registered patent practitioner. Start with SBIR.gov’s official program information, then verify current requirements in the agency solicitation.
Phase I, Phase II and Phase III
SBIR.gov describes the phases below. Phase II generally requires a prior Phase I award; progression is not automatic.
| Phase | Purpose | Typical length | Award guideline (as of 2026) |
|---|---|---|---|
| Phase I | Proof of concept: test whether the approach works | 6–12 months | Up to $335,937 without SBA approval |
| Phase II | Continue research and development begun in Phase I | 24 months | Up to $2,239,578, including modifications, without SBA approval |
| Phase III | Commercialization: bring the technology into use | Varies | Private or non-SBIR federal money; no SBIR/STTR funds |
SBIR.gov lists these guideline amounts as of October 16, 2026. They are adjusted for inflation and work as ceilings, not targets: many agencies set lower caps, and awards above the guidelines need an SBA waiver. Check the amount in the solicitation you answer.
SBIR or STTR: which one fits
The choice depends on where the research happens and who directs it. The principal investigator (PI) is the person responsible for leading the research.
| Question | SBIR | STTR |
|---|---|---|
| Research institution partner | Not required | Formal US nonprofit research institution partner required |
| Minimum work by the small business | Two-thirds in Phase I; half in Phase II | 40% |
| Minimum work by the research institution | No required minimum | 30% |
| Where the principal investigator works | Primarily employed by the company: more than half time, at award and during the project | Company or research institution; NSF exception applies |
| Typical fit | Company has its own lab or team | Key know-how remains in a university lab |
STTR partners can be nonprofit colleges or universities, domestic nonprofit research organizations, or federally funded research and development centers. Discuss the university partner’s rights early; how technology transfer works explains the institutional context.
Agencies measure work shares using their own rules, for example by budget. The National Science Foundation (NSF) applies the SBIR PI employment rule to both programs, so read the solicitation.
Who is eligible
SBIR.gov’s eligibility criteria require a for-profit company located in the United States, more than 50% owned and controlled by US citizens or permanent residents, with 500 or fewer employees including affiliates. Affiliates are related businesses counted under applicable eligibility rules. Additional rules cover companies majority-owned by venture capital firms; only some agencies permit that ownership structure.
Nonprofits cannot receive these awards directly. A research institution participates through the STTR partnership.
| Registration | Preparation |
|---|---|
| SAM.gov | Obtain a Unique Entity ID (UEI), the company’s federal identifier. |
| SBA registration on SBIR.gov | Complete the company registration. |
| Agency application system | Complete the agency’s required registration. |
The National Institutes of Health (NIH) advises starting early because registration can take six weeks or more. Confirm eligibility on SBIR.gov and in the agency solicitation before committing application resources.
The 2025-2026 lapse and the reauthorization
Program authority expired at the end of September 30, 2025. From October 1, 2025, agencies stopped issuing new solicitations and making new awards, and applicants waited about six months for Congress to act.
The Small Business Innovation and Economic Security Act, S. 3971, passed the Senate on March 3, 2026, and the House on March 17, 2026. Signed April 13, 2026, as Public Law 119-83, it extends both programs through September 30, 2031.
The law strengthens research-security and foreign-risk due diligence: checks on applicants and potential risks. It creates Phase II strategic breakthrough awards up to $30 million, requiring a prior Phase II award and at least 100% matching funds from new private capital or other government funding, for projects up to 48 months.
Starting in fiscal year 2027, each agency must limit how many Phase I and Phase II proposals a company may submit. The law also allows unspent fiscal 2026 program funds to carry into fiscal 2027.
NIH announced reauthorization and forthcoming funding opportunities in April 2026; NSF issued new solicitations in 2026. Agencies restarted on different schedules, so check each agency’s current solicitation and deadlines.
How to prepare a strong application
- Match the mission. Choose an agency whose research needs fit your technology. Read the entire solicitation and its review criteria.
- Check the entry process. Contact the program officer where permitted. NSF requires a short Project Pitch and invites a full Phase I proposal only when the project fits.
- Test customer assumptions. Conduct customer discovery interviews before writing. Establish who needs the technology and what would support adoption.
- Define technical objectives. Build a Phase I feasibility plan around uncertainties, experiments and evidence that would justify further work.
- Explain commercialization. Identify buyers, alternatives and the path to revenue. Use a business model and milestone plan to connect research with business decisions.
- Assemble project support. Prepare a realistic budget, relevant support letters and, for STTR, the research institution agreement. Confirm contract terms with a qualified attorney.
- Register early. Complete required registrations and check submission access before the deadline approaches.
Common mistakes
- Applying to an agency whose mission does not fit.
- Presenting strong science without a credible market.
- Naming a PI who cannot meet employment requirements.
- Leaving registrations until submission time.
- Proposing a budget that cannot support the work.
- Ignoring the published review criteria.
Compare startup funding options to understand how SBIR funding can fit alongside angels and venture capital.
Frequently Asked Questions
Do SBIR and STTR take equity?
Neither program takes an ownership stake in exchange for its funding. The award still carries requirements governing the funded work.
Can a university apply for STTR funding directly?
The award recipient must be an eligible for-profit small business. A qualifying research institution participates as the company’s formal research partner.
Can I lead an SBIR project while employed at a university?
SBIR requires primary employment with the small business at award and throughout the project. Check whether your planned employment arrangement meets the agency’s requirements before naming yourself PI.
Does completing Phase I guarantee Phase II funding?
A Phase I award does not guarantee further funding. Plan around the agency’s Phase II application requirements and the evidence your research must produce.