SBIR stands for Small Business Innovation Research and is a federal program that gives awards to small businesses through three phases. The first phase tests the market feasibility of an idea or technology; the second focuses on development and demonstration; and the third is for transitioning successful innovations from prototypes to fully commercialized products. These awards are made by eleven federal agencies.
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.
How Does The SBIR Program Work?
The SBIR Program is designed to promote technological innovation and new products from U.S.-based small businesses, such as universities and non-profit research institutions that engage in the R&D process. It gives small high-tech businesses an opportunity to contribute and maintain a strong role in today’s technology-based economy while expanding the role of women and minorities as innovators.
Small firms apply to a federal agency for a specific research or R&D project that falls within the scope of one of the government’s R&D areas. The firm then completes the project using its own resources.
SBIR 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 businesses, SBIR protects the small business and enables it to compete on the same level as larger businesses.
Since its enactment in 1982, as part of the Small Business Innovation Development Act, SBIR 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.
What Are The Eligibility Requirements For SBIR?
Small businesses must meet certain eligibility criteria to participate in the SBIR Program.
- American-owned and independently operated
- Principal researcher employed by business
- Company size limited to 500 employees
Who Funds SBIR Awards?
The SBIR program has been around since 1982, and over the years it has awarded more than $30 billion to small businesses. This money has helped to create new jobs and technologies, and it has led to the commercialization of products like energy-efficient windows and cancer therapies.
Each agency has its own guidelines, and award amounts vary from agency to agency.
- 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 Space Administration
- National Science Foundation
These agencies designate R&D topics and accept proposals.
What Are The Three SBIR Phases?
The agencies above make SBIR awards based on small business qualification, degree of innovation, technical merit, and future market potential. Small businesses that receive awards or grants then begin a three-phase program.
- Phase I: The objective of the market research and feasibility phase is to establish the technical merit, feasibility, and business potential of the proposed innovation. Awards up to $225,000 for approximately six months support for exploration of the technical merit or feasibility of an idea or technology.
- Phase II: The second phase is the development and demonstration phase in which a company develops a product or service that has been proven to be feasible during Phase I. The objective of this 24–36 month development and demonstration phase is to bring the innovation to a point where it can be manufactured and sold in the commercial market. Phase II awards are up to $1,000,000 for as many as two years to expand Phase I results and only Phase I award winners are considered for Phase II.
- Phase III: The objective of this 6–12 month transition phase is to help small businesses move successful Phase II innovations from the laboratory or prototype stage to fully commercialized products. The small business must find funding in the private sector or other non-SBIR federal agency funding.
For more information, visit the SBIR website.