From the Small Business Administration website www.sba.

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Description of the Small Business lnnovation Research Program (SBIR):

SBlR is a highly competitive program that encourages small business to explore their
technological potential and provides the incentive to profit from its 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.
Competitive Opportunity for Small Business:
SBlR targets the entrepreneurial sector because that is where most innovation and innovators
thrive. However, the risk and expense of conducting serious R&D efforts are often beyond the
means of many small businesses. By reserving a specific percentage of federal R&D funds for
small business, SBlR protects the small business and enables it to compete on the same level
as larger businesses. SBlR funds the critical startup and development stages and it encourages
the commercialization of the technology, product, or service, which, in turn, stimulates the U.S.
economy.
Since its enactment in 1982, as part of the Small Business lnnovation Development Act, SBlR
has helped thousands of small businesses to compete for federal research and development
awards. Their contributions have enhanced the nation's defense, protected our environment,
advanced health care, and improved our ability to manage information and manipulate data.
SBlR Qualifications:
Small businesses must meet certain eligibility criteria to participate in the SBlR program
American-owned and independently operated
For-profit
Principal researcher employed by business
Company size limited to 500 employees

The SBlR System:

Each year, eleven federal departments and agencies are required by SBlR to reserve a portion
of their R&D funds for award to small business.
Department of Agriculture
Department of Commerce
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 Spg- Administration

National Science Foundation

These agencies designate R&D topics and accept proposals.

Three-Phase Program:
Following submission of proposals, agencies make SBIR awards based on small business
qualification, degree of innovation, technical merit, and future market potential. Small
businesses that receive awards then begin a three-phase program.
Phase I is the startup phase. Awards of up to $100,000 for approximately 6 months
support exploration of the technical merit or feasibility of an idea or technology.
Phase II awards of up to $750,000, for as many as 2 years, expand Phase I results.
During this time, the R&D work is performed and the developer evaluates
commercialization potential. Only Phase I award winners are considered for Phase
II.
Phase Ill is the period during which Phase II innovation moves from the laboratory
into the marketplace. No SBIR funds support this phase. The small business must
find funding in the private sector or other non-SBIR federal agency funding.

SBA Role:
The US Small Business Administration plays an important role as the coordinating agency for
the SBIR program. It directs the 11 agencies' implementation of SBIR, reviews their progress,
and reports annually to Congress on its operation. SBA is also the information link to SBIR. SBA
collects solicitation information from all participating agencies and publishes it quarterly in a PreSolicitation Announcement (PSA). The PSA is a single source for the topics and anticipated
release and closing dates for each agency's solicitations.
For more information on the SBIR Program, please contact: US Small Business Administration
Office of Technology 409 Third Street, SW Washington, DC 20416 (202) 205-6450
All of SBA's programs and services are extended to the public on a nondiscriminatory basis.

Description of the Small Business Technology Transfer Program (STTR):

STTR is an important small business program that expands funding opportunities in the federal
innovation research and development arena. Central to the program is expansion of the
publiclprivate sector partnership to include the joint venture opportunities for small business and
the nation's premier nonprofit research institutions. STTR's most important role is to foster the
innovation necessary to meet the nation's scientific and technological challenges in the 21st
century.

Competitive Opportunity for SBusiness:

STTR is a highly competitive program that reserves a specific percentage of federal R&D
funding for award to small businesq and nonprofit research institution partners. Small business

has long been where innovation and innovators thrive. But the risk and expense of conducting
serious R&D efforts can be beyond the means of many small businesses.
Conversely, nonprofit research laboratories are instrumental in developing high-tech
innovations. But frequently, innovation is confined to the theoretical, not the practical. STTR
combines the strengths of both entities by introducing entrepreneurial skills to high-tech
research efforts. The technologies and products are transferred from the laboratory to the
marketplace. The small business profits from the commercialization, which, in turn, stimulates
the U.S. economy.

STTR Qualifications:
Small businesses must meet certain eligibility criteria to participate in the STTR Program.
American-owned and independently operated
For-profit
Principal researcher need not be employed by small business
Company size limited to 500 employees
(No size limit for nonprofit research institution)
The nonprofit research institution must also meet certain eligibility criteria.
Located in the US
Meet one of three definitions
0
Nonprofit college or university
0
Domestic nonprofit research organization
0
Federally funded R&D center (FFRDC)

The STTR System:

Each year, five federal departments and agencies are required by STTR to reserve a portion of
their R&D funds for award to small business/nonprofit research institution partnerships.
Department of Defense
Department of Energy
Department of Health and Human Services
National Aeronautics and Space Administration
National Science Foundation
These agencies designate R&D topics and accept proposals.

Three-Phase Program:
Following submission of proposals, agencies make STTR awards based on small
business/nonprofit research institution qualification, degree of innovation, and future market
potential. Small businesses that receive awards then begin a three-phase program.

Phase I is the startup phase. Awards of up to $100,000 for approximately one year
fund the exploration of the scientific, technical, and commercial feasibility of an idea
or technology.
Phase II awards of up to $750,000, for as long as two years, expand Phase I
results. During this period, the R&D work is performed and the developer begins to
consider commercial potential. Only Phase I award winners are considered for
Phase II.
Phase Ill is the period during which Phase II innovation moves from the laboratory
into the marketplace. No STTR funds support this phase. The small business must
find funding in the private sector or other non-STTR federal agency funding.
SBA Role:
The US Small Business Administration plays an important role as the coordinating agency for
the STTR program. It helps the five agencies implement STTR, reviews their progress, and
reports annually to Congress on its operation.
SBA is also the information link to STTR. SBA collects solicitation information from all the
participating agencies and publishes it electronically in a Pre-Solicitation Announcement (PSA).
The PSA is a single source for the topics and anticipated release and closing dates for each
agency's solicitation(s).
For more information on the STTR Program, please contact:
US Small Business Administration
Office of Technology
409 Third Street, SW
Washington, DC 20416
(202) 205-6450
All of SBA's programs and services are extended to the public on a nondiscriminatory basis.

Frequently Asked Questions -- Small Business Innovation Research (SBIR) Program -- Pr ... Page 1 of 4

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Small Business Innovation Research (SBIR) Program

FAQS
What is the SBIR Program?
The Small Business Innovation Research (SBIR) Program is a highly competitive three-phase
award system which provides qualified small business concerns with opportunities to propose
innovative ideas that meet the specific research and research and development needs of the
federal Government.
What are the three phases of the SBIR Program?
Phase Iis a feasibility study t o evaluate the scientific and technical merit of an idea.
Department of Education (ED) awards are for periods of up to six (6) months in amounts up
to $100,000.
Phase I1 is to expand on the results of and further pursue the development of Phase I.ED
awards are for periods of up to two (2) years in amounts up to $500,000.
Phase I11 is for the commercialization of the results of Phase I 1 and requires the use of
private sector or non-SBIR federal funding.
Do you have to be a Phase Iawardee in order to be considered for Phase I 1 of a project?
Yes.

What is the small business size standard for purposes of the SBIR Program?
A small business concern for purposes of award of any funding agreement under the SBIR
Program is one which, including its affiliates, has a number of employees not exceeding 500.
How does the Small Business Administration define "small business concern" for
purposes of the SBIR Program?
I t is defined as a concern that, on the date of award for both Phase Iand Phase I 1 funding
agreements:

a. 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;
o. is in the legal form of an individual proprietorship, partnership, limited liability company,
corporation, joint venture, association, trust or cooperative, except that where the form is a

Frequently Asked Questions -- Small Business Innovation Research (SBIR) Program -- Pr... Page 2 o f 4

joint venture there can be no more than 49 percent participation by foreign business entities
in the joint venture;
c. is at least 5 1 percent owned and controlled by one or more individuals who are citizens of, or
permanent resident aliens in, the United States; and,
d. has, including its affiliates, not more than 500 employees.
How can a small business concern obtain funding under SBIR?
A small business can obtain funding under SBIR by being the recipient of a competitively
awarded SBIR funding agreement.

What is an SBIR funding agreement?

An SBIR funding agreement is a contract, grant, or cooperative agreement entered into between
an SBIR participating federal agency and a small business concern for the performance of
experimental, developmental, or research work, including products or services funded in whole
or in part by the federal Government.
Does the Small Business Administration make any awards under the SBIR Program?
No. The SBA has authority and responsibility for monitoring and coordinating the Governmentwide activities of the SBIR Program and reporting its results to Congress. The federal agencies
participating in SBIR have the responsibility for: selecting SBIR topics releasing SBIR
solicitations evaluating SBIR proposals awarding SBIR funding agreements on a competitive
basis.
Can a firm go directly to a Phase I 1 award without having to compete for Phase I?
No. The SBIR Program was created for NEW innovations to meet existing federal R&D needs.
The results of a Phase Iare a determining factor in deciding whether there will be a Phase I 1
award to continue the effort. Does SBA designate any of the topics cited in SBIR solicitations or
make any awards under SBIR? No. The legislation governing the SBIR Program gives unilateral
authority and responsibility for these functions t o each of the federal agencies participating in
the program. Since SBIR is a program to assist small business innovators, can the federal
participating agencies provide direct funding for a project which a firm has initiated on its own?
No. Such an endeavor would be considered an unsolicited proposal, which is outside the scope
of the SBIR Program.
Too
Will innovations that have been patented or have patents pending be considered under
SBIR?
No. SBIR is a program for NEW high tech innovations.
Are foreign-based firms eligible for SBIR awards?
No. To be eligible for award of SBIR funding agreements, a small business concern has to meet
the following qualifications: be independently owned and operated: principal place of business is
located in the United States; at least 5 1 percent owned or in the case of a publicly owned

Frequently Asked Questions -- Small Business Innovation Research (SBIR) Program -- Pr... Page 3 o f 4

business, at least 5 1 percent of its voting stock is owned by United States citizens or lawfully
admitted permanent resident aliens.
Are non-profit concerns eligible for SBIR awards?
No.

May a portion of an SBIR award be subcontracted?

Yes. For Phase I,a minimum of two thirds of the research and/or analytical effort must be
performed by the proposing firm, and For Phase 11, a minimum of one-half of the research
and/or analytical effort must be performed by the proposing firm.
Can a federal agency other than the one originating the Phase Iaward make the Phase
I1award under the same SBIR topic?
Yes. The SBIR Policy Directive (September, 2002) states that: "An SBIR Phase I 1 award may be
issued by a federal agency other than the one that made the Phase I award. The Phase Iand
Phase I 1 agencies should document their files appropriately, providing clear rationale for the
transfer of the Phase I 1 proposal to, and award by, the funding federal agency."
What is the difference between SBIR solicitations and the SBIR Pre-Solicitation
Announcement?
SBIR solicitations are specific Requests for Proposals released by the federal agencies
participating in the program which may result in the award of Phase ISBIR funding agreements.
SBIR Pre-Solicitation Announcements, released by SBA, contain pertinent data on SBIR
solicitations that are about to be released by the participating federal agencies.

Can participating federal agencies provide funds for SBIR commercialization?

No. Private sources of capital should be used. However, the agencies can provide support for
technical assistance. SBIR awardees are encouraged to seek information on all of the services
made available to the small business community.
What is the "Fast-Track" mechanism and how does it work?
The "Fast-Track" mechanism (presently available in solicitations at IES) expedites the decision
and award of SBIR Phase I 1 funding for scientifically meritorious proposals that have a high
potential for commercialization. Fast-Track incorporates a submission and review process in
which both Phase Iand Phase I 1 proposals are submitted and reviewed together. The Phase I
portion of a Fast-Track must specify clear, measurable goals (milestones) that should be
achieved prior to initiating Phase I 1 work. I n addition, as is required for all Phase I 1 proposals,
the Phase I 1 portion of the Fast-Track proposal must present a commercialization plan that
addresses specific points. For more information on the Fast-Track mechanism, please contact

E_dwa~dM&.

.
.
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What is SBIRfSTTR?

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What is SBIR/SlTR?

Participating Federal Agencies

The federal Small Business Innovation Research (SBIR) and Small

Business Technology Transfer (STTR) programs provide more than $2
billion annually in R&D grants and contracts to qualified small businesses
(U.S. owned, independently operated, for-profit entities of fewer than 500
employees).
Eleven federal agencies are required by law to provide these funds by
setting aside 2.5% of their annual extra-mural R&D budgets for use
exclusively by U.S. small businesses for new product R&D. Hence, these
programs provide a unique source of start-up and seed capital for small
businesses to develop new innovative product concepts. Then? are few
strings attached t o these funds; there is no repayment requirement, no
equity sacrifice, and most intellectual property rights remain with the
small business.
These two programs are comprised of three phases. Phase I,the
feasibility phase, and Phase 11, the prototype phase provide up to
$100,000 and $750,000 respectively. Phase 111, the commercialization
phase is not funded by the federal agencies - other sources of capital are
expected to carry the prototyped innovation into the marketplace.
However, some agencies have augmented Phase I 1 programs such as NSF
Phase IIB, DOD Phase I 1 Plus/Enhancement, and NIH Type 2 Competing
Continuation Phase 11. Go to each agencies proposal solicitation for
complete details.
The eleven agencies have differing requirements for program participation
and it is very important to understand and comply with these individual
requirements. Each agency publishes a proposal solicitation at least
annually - these solicitations can be viewed on their individual websites
accessible through this link, Participatinq Federal Aaencles. Wading
through the information found on these websites can be a formidable task
- but well worth it for those who are determined to succeed. And the
mission of the WSSI is t o assist you in this task.

Cowy Dyess
Case Supercharged Induction, Le
USDA Wase I Award Winner
MatB>
-

.-

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ww,.IMERCIAUZATION SER w ,,a

SBIR -What is SBIR?

m e federal Small Bus~nessInnovalionResearch (SBIR) program and its parallel Small
Business Technology Transfer (SVR) program provide mare than $2 billion a year to small
companies the1are developing leadmng-edge technologies of Interest to federal agencies
Ewse programs provide wmpanles with seed capital of up to W5O.W to develop
technologes than can lead to wmmerclal pmduds

Departmentof Defense
NaUonal lnsh~~tes
of Health
Nabonal Aeronautics and
Space Admin~stmUon
National Science Foundation
Departmentof Energy

Department of Homeland Secur~ty

Departmentof Agriculture
Department of Education
Department of Commerce
Environmental Pmtecbon Agenq

m e l i c s . Eneb!hg cmg
DISOOvery and olmasn
I~@MMOS
Through T~ny
MdeoAar~na

m e SBlWSTrR Program has three phases of fund~ng,wiuch vary by agency ln recaivlng

this funding, the company rnaxs no debt, gives up no equity, and retalns intellectual
property rights Tha company may then mmmercialue the technology and even seU the
resulhng produdto the federal government

~ m r g i ~anplnieo
a
~ecsive

S B ~ R I Awards
S ~

SBlR Program Phases

~ w G r o w ( h
CeorOia

Tech Helps Smell AmrnuniUon

Maker G a on Track lo
Mllilsry srqlplier

Itst topics that are of interest to those agenaes Some agendes llst very spadRc problems
that they want solved Others list general areas of interest that allow a vanety of different
proposals A company may submit a proposal for up to $100.000, enaM~ngthem to condud
a suc m o m feaslWlIty study If selecled. the company conducts the study and provides a
conRdenbal raporl detailing the work The company may then submlt a Phase IIproposal

Phase IIbuilds on Ma work of Phase Iwllh Me goal belng a workhg prototype that
demonslrates Mat the technology can s ~ s f u l l meet
y
the stated need. Phase II
developmentwork oflen elim~natesor greatly reduces the technology risk In new pmduct
development and 11strongly encouragesbusiness planning to reduos Me market risk of a
new tedlnology Fundlng for Phase II is up to $750.000 over a two year penod

CommerdablionPlan
~ssistanmLeads to $744,000

Current News

Phase 111 is fhe final cornmedal devdopment of the new pmdud Phase 111does n d remive
any SBIR fundmng, buf occasionally federal, non-SBIR funding can be obla~nedHowever, of
the technology shows promise of meeting a market need, usually olher third party ffnanang
IS available lo Me company

STTR Small Bucllness Technology Transfer Program

m e Small Bustness Tecnnology Transfer (SVR) program promotes technology spin-offs
from non-profit research ~nshtulionsIt Is almost den tical to h e SBIR program wlth several
urnportant dtfterences
Whtle the SBlR allows subcontracts, the STTR requlres the proposing company to
wllaborate mlh a non-profitresearch lnshtubon such as a university
The SlTR has a smaller budget than the SBlR program, with only flve of Ule eleven
agencies partidpatlng
SlTR allows the projwl's pnndpal lnvesbgator to be employed by elther the
research Instnubon or the company, while SBIR requlres employment by the

'

SlTR allows twalve months for completion of Phase Iwhile SBlR allows only SIX

Since 1983,203 Georgia aompanms have received S I R awards totallng more than Sf45
millronl

MWNEr LMYM

020Ur

T.ch UIwrpnuInnwaIWAuW 8H.D&on byIheFoundnApncy

CONTACT US WEB SITE E E o s n C K 1 LEGAL 6 PNVACY INFORMATON DNN