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Participating Federal Agencies

Each year, federal agencies with extramural research and development (R&D) budgets that exceed $100 million are required to allocate 2.5 percent of their extramural R&D budget to these programs. Each agency administers its own individual program within guidelines established by Congress. These 11 agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards from these participating federal agencies are made on a competitive basis after proposal evaluation.

In addition, five federal agencies with extramural research and development (R&D) budgets that exceed $1 billion are required to reserve 0.3% of the extramural research budget for STTR awards to small businesses. These agencies designate R&D topics and accept proposals: Department of Defense, Department of Energy, Department of Health and Human Services, National Aeronautics and Space Administration, and National Science Foundation. Each agency administers its own individual program within guidelines established by Congress. These agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation.

Department of Agriculture logo  Department of Agriculture

Read more: Participating Federal Agencies

Getting Started

Getting Started in the SBIR/STTR Program

  1. Take the time to think through your idea. Identify the problem and clearly articulate your solution.
  2. Why is your idea the best solution? Gain knowledge on the state-of-the-art technologies and do a thorough current literature review.
  3. Develop a one-page executive summary of your idea, market opportunity, approach, IP status, company, and team.
  4. Learn about the federal program; see topics under Federal SBIR/STTR Program overview.
  5. Determine your company's fit in the program and confirm eligibility.
  6. Identify the best federal agency match for your idea. Visit the individual agency websites to familiarize yourself with the individual agency's goals and topic areas. Browse through the agency solicitations (open and closed) for the topics most closely associated with your idea.
  7. Confirm that the agency is interested in your idea and contact the agency's Program Manager.
  8. Assemble your research team. Identify knowledge and technical gaps. Talk to other researchers.
  9. Identify the Phase I technical objectives.
  10. Begin required agency-specific registrations.

 

Need help? Contact Us at This email address is being protected from spambots. You need JavaScript enabled to view it. to Learn About Resources Available Including:

  • Help on matching your idea with agency and topic
  • One-on-one consultation with the Kentucky SBIR/STTR Resource Center team
  • One-on-one consultation with your local Kentucky Innovation Network office
  • Attending Kentucky SBIR/STTR conferences and grant writing workshops
  • Applying for a Kentucky Phase Zero and/or Phase Double Zero grant
  • Attending Kentucky SBIR/STTR networking events
  • Identifying a technical expert for your idea.

Read more: Getting Started

The Three Phase Process

The Small Business Administration (SBA) sets some overall guidelines for the entire SBIR program. However, each agency establishes additional individual funding priorities, award limits, proposal deadlines, and review processes. Funding through the SBIR program is a three-phase process. On average, approximately one out of ten Phase I proposals are funded, and one out of three Phase II project proposals receive an award.

The SBIR-STTR Program is a Three-Phase Process:

  • Phase I is the startup phase, with awards of up to $150,000 for approximately six months, to support the exploration of the technical merit or feasibility of an idea or technology.
  • Phase II expands the Phase I results, with awards of up to $1,000,000 for as long as two years. During this time, the R&D work is performed to demonstrate efficacy. Only Phase I award winners are considered for Phase II.
  • Phase III is the period during which Phase II innovation moves 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.

Phase I - Following the submission of proposals, agencies make SBIR Phase I awards based on a merit review process including: small business qualification, degree of innovation, technical merit, and future market potential.

Phase II - Businesses successfully completing Phase I awards are eligible to apply for Phase II funding. Phase II awards further the results of Phase I with additional R&D and prototype work (moving towards the implementation of a commercialization plan in Phase III). In the Phase II proposal process, businesses are required to show evidence of a contingent Phase II private funding commitment. Whenever possible, including this funding possibility in the proposal will strengthen the application, even if only an outline for this aspect of the project exists.

Phase III is the period during which Phase II innovation moves into the marketplace. No SBIR funds are available for Phase III. The small business must find funding in the private sector (or other non-SBIR federal agency) such as: corporate contracts, strategic alliances, manufacturing contracts, venture funding, marketing channels, and joint venture or distribution partnerships. This is a challenging time for small companies, since the ‘technology readiness level’ of their technology usually does not support market entry and significant technical and market validation risks remain. This period has been called the ‘valley of death’.

Some agencies are introducing Direct Phase II and Fast Track.

All businesses submitting proposals must include a commercialization report. This report must have a specific strategy for commercialization with clear and measurable milestones. Quantitative results from any prior Phase II projects (if prior awards have been received) should be included.

Read more: The Three Phase Process

SBIR or STTR, and Eligibility Requirements

Similarities of SBIR and STTR

    • Most federal agencies offer both SBIR and STTR managed by the same personnel
    • Both programs are structured in three phases: Phase I, Phase II, and Phase III
    • The level of funding for each grant (not for the program itself) is similar: $150K for Phase I and $1M over two years for Phase II
    • Both require participation of a small business

Differences Between SBIR versus STTR

    • STTR is only 0.45% of the participating agency's extramural research budget (if over $1 billion) vs. 3.2% for SBIR
    • Only five agencies participate: DoD, DoE, PHS, NASA, and NSF

STTR Requires Small Businesses to Team with an Outside, Not-for-Profit Research Institution (RI)

    • College/university
    • Federally funded R&D center (FFRDC)
    • Government-Owned, Contractor-Operated lab (GOCO) Research Institution must agree to license intellectual property to the small business
    • Small for-profit business must be the prime contractor and the commercializing entity

ADVANTAGES of STTR

    • Longer Phase I -- one year for STTR versus six months for SBIR
    • RI can perform 30% to 60 % of the research work -- whereas in SBIR small business must do at least 66.67%
    • PI can be from RI at most agencies (not DoE and co-PIs required @ NSF) -- whereas in SBIR the PI must be at least 51% employed by prime contractor

Eligibility Requirements for SBIR and STTR

Examples of federal agency eligibility requirements for submission of the Phase I SBIR/STTR include but are not limited to the following. Make sure to check for additional eligibility requirements of the individual program or federal agency to which you are planning to apply.

SBIR Eligibility 

Applicant business must be American-owned (with place of business in the US) to meet federal agency ownership/eligibility requirements.

    • The total number of employees of the parent company and its subsidiaries cannot exceed 500.
    • The applicant business must have already identified the project team from its current employees and consultants or will have hired qualified team members before starting the grant work.
    • The principal investigator (PI) on the proposal must be employed by the applicant small business for more than 50% of his/her time at the time of the federal Phase I award.
    • Partnership with an academic/non-profit organization is allowed but not required. The majority of the proposed work is to be conducted by the applicant and not more than 33% (for Phase I) of the dollar amount of the proposed work can be subcontracted.

STTR Eligibiulity

The eligibility requirements for the STTR are similar to those for the SBIR grant, with a few additions:

    • The principal investigator (PI) on a STTR grant proposal must be either a university faculty member or an employee of the small business as per the eligibility requirement of the federal agency and stated in the solicitation.
    • The STTR application must be submitted by the small business in partnership with a research institution, such as a university or federal laboratory.
    • The small business must undertake a minimum of 40% of the work and the academic/non-profit partners must be responsible for a minimum of 30% of the work. Up to 30% of the work may be performed by a subcontractor.
    • The small business MUST have a collaborative/partnership agreement with a non-profit institution as requested by the federal agency, including agreement on sharing the intellectual property.

Federal SBIR/STTR Program Overview

The Federal government offers two programs, exclusively available to small companies:

  • Small Business Innovation Research (SBIR)
    • The SBIR program is a competitive grant program to encourage small business in their path to technology development and commercialization.
    • The SBIR program is intended to promote innovation by stimulating entrepreneurial research activities to meet the Nation's future scientific and high-tech needs.
  • Small Business Technology Transfer (STTR)
    • The STTR program expands funding opportunities in the federal innovation research and development arena by promoting public/private sector partnership.
    • STTR awards provide a platform for the establishment of joint venture between small business and nonprofit research institutions.

Federal SBIR funding is intended to encourage a working relationship between small business and federal government agencies. This is accomplished by providing seed money to conduct research and development initiatives, encouraging the development of new and innovative technology or the use of an existing technology to a new application. SBIR funding is intended to facilitate the commercialization of innovative technologies and is best suited for companies with a committed R&D program/strategy and long term focus. The SBIR program is highly competitive. It targets the small business entrepreneurial sector because that is where most innovation and job growth occur, but there is inherent financial risk for small businesses to develop new technology. SBIR funding helps manage such risks and allows small businesses to compete with large businesses and encourages the commercialization of the technology, product or service, which in turn, stimulates the economy.

Read more: Federal SBIR/STTR Program Overview

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