What are the SBIR and STTR Programs?
Known as "America's Seed Fund," these programs provide over $4 billion annually in non-dilutive funding to small businesses for R&D and technology commercialization.
2026 SBIR/STTR Reauthorization Updates
The SBIR and STTR programs have historically required periodic congressional reauthorization. The previous extension (the SBIR and STTR Extension Act of 2022) expired in September of 2025, but a 2026 Reauthorization Bill is currently pending final signature to extend these vital programs.
What's Changing?
Agencies are required to implement even more rigorous due diligence processes to prevent adversarial foreign influence and ensure funded companies are not backed by countries of concern.
Heavier emphasis is being placed on transitioning research into actual commercial products. Companies that have received multiple Phase I or Phase II awards face stricter transition rate requirements to remain eligible for future funding, curbing so-called "SBIR Mills."
The bill formally extends the life of the programs, ensuring continued agency allocations while pushing for faster award timelines and improved coordination across the DoD and civilian agencies.
Small Business Innovation Research (SBIR)
The SBIR program is a highly competitive program that encourages domestic small businesses to engage in Federal Research/Research and Development (R/R&D) with the potential for 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.
Key Requirement
The Principal Investigator (PI) must be primarily employed by the small business (more than 50% of their time).
Small Business Technology Transfer (STTR)
STTR is another program that expands funding opportunities in the federal innovation research and development arena. Central to the program is expansion of the public/private sector partnership to include the joint venture opportunities for small businesses and nonprofit research institutions.
The unique feature of the STTR program is the requirement for the small business to formally collaborate with a research institution in Phase I and Phase II.
Key Requirement
Requires a formal partnership with a non-profit research institution (like a university or FFRDC). The research institution must perform at least 30% of the work.
Key Differences
| Feature | SBIR | STTR |
|---|---|---|
| Partner Requirement | Optional | Mandatory (Research Institution) |
| Principal Investigator | Must be employed by Small Business | Can be employed by Small Business or Research Inst. |
| Work Outsourcing | Max 33% (Phase I) Max 50% (Phase II) | Min 30% by Research Inst. Min 40% by Small Business |
The Three Phases
Phase I: Concept Development
Feasibility study to establish the technical merit, feasibility, and commercial potential.
- Duration: 6-12 months
- Funding: $50,000 - $250,000+
Phase II: Prototype Development
Continue R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I.
- Duration: 12-24 months
- Funding: $750,000 - $1,800,000+
Phase III: Commercialization
Pursue commercialization objectives resulting from Phase I/II R&D activities.
- No direct SBIR/STTR funding
- Funded by non-SBIR federal sources or private sector
- No contract ceiling specified by law - Phase III contracts are typically $5M-$30M
Why Apply?
- Non-Dilutive CapitalYou don't give up any equity or ownership in your company.
- Intellectual Property RightsSmall businesses retain data rights for at least 20 years.
- Sole Source AwardsPhase III awards can be granted without further competition.
Official Resources
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