Frequently Asked Questions

STTR differs from SBIR in several ways, including:

1. For and STTR award, the small business must perform at least 40% of the work and the single partnering research institution must perform at least 30% of the work.
2. STTR requires the Small Business Concern (SBC) and its partnering institution to establish an intellectual property agreement detailing the allocation of intellectual property rights and rights to carry out follow-on research, development or commercialization activities.

Each year, Federal agencies with extramural R&D budgets that exceed $100 million are required to allocate a certain percentage of their R&D budget to the SBIR program. 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 of these agencies has an SBIR program office and administers the program within guidelines established by Congress in the Small Business Act and by SBA in the SBIR Policy Directive.  The agencies designate R&D topics in their solicitations and accept proposals from small businesses.  Awards are made on a competitive basis after proposal evaluation.

Phase I. The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed Federal Research /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 and have a six-month period of performance.Phase II. The objective of Phase II is to continue the Federal Research/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.  Generally, only Phase I awardees are eligible for a Phase II award. SBIR Phase II awards normally do not exceed $1,000,000 and have a two-year period of performance.Phase III. The objective of Phase III, where appropriate, is for the small business to pursue commercialization objectives resulting from the Phase I and Phase II Federal Research/R&D activities. The SBIR program does not fund Phase III awards.  In 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.

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

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 more than 50 percent directly owned and controlled by one or more individuals (who are citizens or permanent resident aliens of the United States), other small business concerns (each of which is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States), or any combination of these; and(4) has, including its affiliates, not more than 500 employees.  (For explanation of affiliate see www.sba.gov/size).For SBIR program only:  Some of the 11 federal agencies administering SBIR awards may choose to issue a portion of their awards to firms that are majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms.  You can see which agency is currently using this authority here.

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

Applications for SBIR/STTR awards are submitted in response to agency solicitations.  You may find links to the solicitations from the agencies here. Submit your application in response to a particular solicitation and technical topic.

No.  In order to receive an SBIR/STTR award, the joint venture must be a small business and all parties to the joint venture must meet the program’s eligibility requirements.  If one party to the joint venture is a non-profit, the non-profit would not meet the SBA’s definition of “business concern,” which requires the business to be for-profit.  With respect to the foreign firm, it would not likely meet SBA’s ownership and control requirements.  

The research institution mustbe owned and operated exclusively for scientific or educational purposes, non-profit, and located in the US.  Research institutions eligible to participate in the STTR Program include:

• Nonprofit college or university
• Domestic nonprofit scientific/research organization
• Federally Funded R&D Centers (FFRDC)

Yes.

Yes, the firm may be given a sole source contract for further work or production that derives from, extends, or completes earlier SBIR/STTR work.  Such follow-on work must be given Phase III status by the agency.

No, a proposal must respond to a solicitation published by one or more of the participating agencies.

No.  The state the company is in does not affect eligibility, rather we focus on which country the company is located in (i.e., the awardee must have a place of business located in the United States (U.S.), and operate primarily within the U.S. or make a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor).  In addition, the SBIR and STTR work must be performed in the U.S.

The final rule was published in the Federal Register on December 27, 2012 and took effect January 28, 2013.

All firms receiving an SBIR or STTR program award for solicitations posted after January 28, 2013 must comply with the new program eligibility requirements which are established with the size rule.

That process will be spelled out in the agency solicitation.

If you have size/eligibility questions, you may submit them here after consulting the eligibility guide.

All applicants to the SBIR or STTR programs must register on the SBIR/STTR Company Registry.

Please register beginning 1/28/2013 and prior to your application submission. If the solicitation was issued before 1/28/2013, you do not need to register. You must register prior to submitting an application because you will be providing a copy of your registration to the agency, with your application.

Please send any questions you may have to our web form, and someone from our team will respond.

If your company information is listed incorrectly on the website, please send us an inquiry here and state specifically what the discrepancy is.

If you believe your company’s transition rate was calculated incorrectly, you may notify SBA, provide the necessary award information, and request a revision of the rate.  Please send us an inquiry here.

No.  Venture capital operating companies, hedge funds and private equity firms are allowed to hold minority shares of SBIR/STTR awardee so long as they do not have control of the awardee company and so long as their affiliation with the awardee, if any, does not put the awardee firm over the size limit.  The exception to this is if the VC is itself more than 50% directly owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States.  In such a case, that VC is allowed to have majority ownership and control of the awardee.  In that case, the VC and the awardee, and all other affiliates, must have a total of 500 employees or less. For SBIR awards only, some agencies may make a portion of their awards to companies that are majority-owned by venture capital operating companies, hedge funds, or private equity firms.  This is allowed only if no one venture capital operating company, hedge fund, or private equity firm holds more than 50% for the stock. 

If a VC owns a minority share of an awardee firm, and is found to be affiliated with the awardee firm, then the awardee is only affiliated with those portfolio firms that are  majority owned by that VC or if that VC holds a majority of seats on the board of the portfolio firm.

The SBC awardee owns, and has full right and title to, the data it develops under an SBIR award.  For an STTR award, the SBC and research institution must, prior to award, sign an intellectual property agreement identifying the sharing of rights to data.

The Government has rights to certain limited use of the data, primarily for evaluation of the results of the award.  While some agencies use the data only for evaluation and review purposes, others have interest in accessing the data to explore applications of the research or technology.  These rights are stipulated in the SBIR Policy Directive and the STTR Policy Directive

Awardee firms may negotiate with Federal agencies to give the Government additional rights to the SBIR/STTR Data; however, such negotiation must take place only after the award is made.  An agency may not make any negotiation of SBIR/STTR data rights a condition for an award.

Yes.  Both the small business and the research institution may subcontract or they may jointly fund a subcontractor, but no more than 30% of the total work can be subcontracted to a third party. The STTR program requires that the small business performs at least 40% of the R&D and the single partnering research institution to perform at least 30% of the R&D.

This is allowed, however there is no specific guidance on this at the SBIR/STTR-wide level of the Policy Directive. You will have to check with each agency on their guidance on this.

You can find past data, state by state awards and other information here.

To receive information on other SBA programs, please contact your local SBA office or call the SBA answer Desk: 1-800-8-ASK-SBA. You may also visit the SBA website at www.sba.gov.

On June 1st of each year, you award data is reviewed.  If your firm has received more that 20 Phase I awards over the past 5 years (excluding the most recent year), it must meet the Transition Rate benchmark.  If an agency uses a transition rate benchmark of 25%, that means that you must have received at least one Phase II award for every 4 Phase I awards over the applicable time period.  If your transition rate does not meet or exceed the benchmark rate, then you will not be eligible to submit an application for a Phase I (or Direct-to-Phase II) for one year from the June 1st assessment.  You will still be allowed to complete any previous and ongoing awards, and may (and are encouraged to) apply for new Phase II or Phase III awards.

Our partners at BusinessUSA have built a tool, the Access Financing [https://www.usa.gov/funding-options] wizard, to help small businesses find ways to fund their business a the Federal, state, and/or local levels.