Small business owners are often on the lookout for opportunities to fund their businesses, whether it’s for equipment acquisitions or startup capital assistance. Normally, small businesses have not enough financial resources or expertise to fund or research potential business projects. They often seek help from the federal government, the great provider of many business growth opportunities such as research and development grants, small business grants for women, startup grants for small business owners, etc. And this is where the Small Business Innovative Research Program (SBIR) comes in.
SBIR is an extremely competitive program that pushes small business to boost their technological know-how and offers incentives to profit from commercialization. By incorporating eligible small businesses to take on high-tech innovation in the research and development sector, the country gains its entrepreneurial spirit back as it meets research and other development needs.
Opportunities for small businesses
SBIR focuses on the entrepreneurial market where innovators and changemakers thrive. However, the risk and cost of performing stern research and development efforts are typically more than many of small businesses can afford.
Through reservation of a certain percentage of federal research and development funds for small business owners, SBIR safeguards them and allows for competition on the same playing field as large corporations.
SBIR provides financial assistance to fund startup and development stages and goads the commercialization of products, services or technology, which are regarded to fuel the country’s economy.
Since 1982, as part of the ratification of the Small Business Innovation Development Act, SBIR has helped many small businesses to compete for federal research and development grants. SBIR’s contributions compensate for the protection of the environment, increase of the nation’s defense, advancing of healthcare, and improvement of managing and manipulating data and information.
In order to qualify as a participant in the SBIR program, small businesses should meet certain criteria.
Small businesses should be/have:
- Owned by a U.S. citizen and independently operated
- Company size that’s limited to 500 employees
- Principal researcher
Every year, SBIR requires 11 federal agencies and departments to set aside a portion of their research and development funds to award small businesses. These agencies and departments that assign research and development topics and seek proposals include:
- 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
SBIR’s Three-Phase Program
Federal agencies grant SBIR awards to qualified small businesses following proposal selection. Those that are granted awards commence a three-phase program.
- Phase I: The startup phase. Up to $100,000 in funds are awarded for 6 months to small businesses. It supports the exploration of technical merit or feasibility of a specific technology or idea.
- Phase II: Up to $750,000 in funds are awarded for as many as 2 years. It helps to expand Phase I development outcomes. During this phase, research and development work is performed. Only Phase I award recipients are considered for the Phase II funds.
- Phase III: This is where Phase II innovation moves from the research and development stage into the marketplace. No SBIR funds are granted during this phase. Small businesses, to obtain funding, must find resources in other places, such as the private sector or a non-SBIR federal agency.
What is SBA’s role in the SBIR program?
The U.S. Small Business Administration (SBA) acts as the coordinating agency and information link of the SBIR program, directing all the participating agencies’ implementation of SBIR, evaluates progress and reports to Congress on its operations every year.
SBA also gathers information from the 11 agencies and issues it out in a Pre-Solicitation Announcement (PSA) quarterly.