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What is the SBIR and STTR Grant programs? Is Financing Available?

Small firms are offered two funding opportunities by the Small Business Administration (SBA) in conjunction with various government departments, especially the Department of Defense (DOD.)

They include:
SBIR (Small Business Innovation Research)
STTR (Small Business Technology Transfer)

What is the SBIR STTR Program?

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) are highly competitive programs that encourage domestic small businesses to participate in federal research or R&D that has the potential for commercialization. SBIR and STTR enable small enterprises to explore their technological potential and give the motivation to profit from its commercialization through a competitive awards-based program. The government SBIR program was established in 1982 to promote technical innovation, utilize small businesses to meet federal R&D needs, and encourage private sector commercialization of federal R&D results. The federal STTR program, which began in 1992, is based on the SBIR program and shares similar goals in that it promotes technology transfer by fostering collaboration between small businesses and non-profit research institutes.

The SBIR and STTR programs are separated into three phases, which are described below. Small enterprises can use NIH’s Technical Assistance Programs to assist them to get their technologies out and into the hands of customers.

Feasibility and Proof of Concept is the first phase: The goal is to determine the technical value, viability, and commercial potential of projected research/research and development (R/R&D) endeavors, as well as the quality of the small business awardee organization’s performance, before granting more Federal support in Phase II.

Research/Research and Development is the second phase: The goal is to continue the R/R&D work that began in Phase I. The scientific and technical value, as well as the economic potential, of the project suggested in Phase II, are used to determine funding. A Phase II prize is only available to Phase I grantees.

Commercialization is the third phase: The goal of Phase III is for the small business to pursue commercialization goals emerging from Phase I/II R/R&D efforts, if applicable.

Who is eligible to participate in the SBIR/STTR program?

The SBIR/STTR programs are only open to small firms in the United States. During the Phase I and II awards, a small business must meet the eligibility requirements outlined, “What size and eligibility standards are relevant to the SBIR and STTR programs?” which include the following criteria:

  • With a place of business in the United States and a profit motive
  • More than 50% owned and controlled by one or more citizens or permanent resident aliens of the United States, or by other small business concerns each owned and controlled by one or more citizens or permanent resident aliens of the United States, with not more than 500 employees.
  • SBIR awards under 15 U.S.C. 638(dd)(1), an awardee may be owned and controlled by more than one VC, hedge fund, or private equity company for SBIR awards from agencies, as long as no one firm holds a majority of the shares.

For advancement toward commercialization, Phase I recipients with multiple prior grants must achieve the benchmark requirements.

For the STTR program, the participating nonprofit research institution must also meet specific eligibility criteria:

  • Located in the United States
  • Meet one of the following three criteria:
    • University or college that is not for profit
    • Nonprofit research organization based in the United States
    • R&D facility supported by the federal government (FFRDC)

STTR is distinct from SBIR in three key ways:

  • The small company awardee and its partnered institution must create an intellectual property agreement that specifies the distribution of intellectual property rights as well as rights to conduct follow-on research, development, or commercialization activities.
  • STTR mandates that a small business conduct at least 40% of the research and development and a single cooperating research institution execute at least 30% of the research and development.
  • The Principal Investigator might work primarily for the partnering research institution under the STTR program.

What Is the Process for Obtaining Federal Funding?

The general procedure for receiving money for SBIR/STTR initiatives is as follows:

Look for a Solicitation: Each agency’s website contains a dedicated SBIR/STTR section with links to prior solicitations as well as current or prospective solicitations with themes of interest for which bids are being sought. Depending on the agency, fresh solicitations may be issued several times a year. Visit SBIR/STTR programs solicitations page for current open solicitations.

Submit a Proposal: The length and content of proposals differ depending on the phase and the agency’s requirements. Each open listing states requirements the agency is requesting.

Evaluation: The proposal’s open and closure dates, as well as the date of the selection announcement, will be announced by the evaluation agencies. Phase II proposals are frequently submitted within 30 days of the Phase I grant.

Award: Phase I awards are worth up to $256,000 for a maximum of 12 months of service (depending on agency and SBIR or STTR). For a two-year endeavor, Phase II rewards might be worth up to $1.25 million or more.

Why was the SBIR STTR Program Created?

The Small Business Innovation Development Act of 1982 (P.L. 97-219) established the SBIR program intending to enhance the participation of creative small businesses in federally supported research and development (R&D).

Since its inception, Congress has extended the SBIR program several times, including in 1992 with the Small Business Research and Development Enhancement Act, 2000 with the Small Business Reauthorization Act of 2000, and 2011 with the National Defense Authorization Act for Fiscal Year 2012. Congress has since updated and extended the program several times, the most recent of which extends the SBIR program until 2022.

The Small Business Technology Transfer was launched as a similar program, designed after the Small Business Innovation Research program, by the Small Business Technology Transfer Act of 1992.Government entities with R&D budgets of $1 billion or more must set aside a part of their cash to support the STTR program. The Small Business Reauthorization Act of 1997 was passed by Congress in 2001. The 2001 Small Business Technology Transfer Program Reauthorization Act prolonged the program until September 30, 2009.After, the Congress has passed several extensions, the most recent of which extends the STTR program to the end of the year.

Several extensions have since been passed by Congress, the most recent of which extends the STTR program until 2022. The STTR program’s purpose is to enable the transfer of technology generated by a research institution to a small company concern through entrepreneurship.

Challenges of SBIR or STTR Award for start-up and small businesses?

However, as with many typical federal contracts, it could be months before your SBIR or STTR award is funded by the government. While you wait for payment, you may find yourself scurrying to get the working capital you’ll need to start the project—or continue development in Phase II or III of your SBIR or STTR award cycle.

Did you know you can get Financing from a Department of Defense Trusted Capitol Provider?

The Defense Department announced the launch of the Trusted Capital Digital Marketplace (TCDM). The initiative develops dependable funding sources for small and medium-sized producers of new defense-critical capabilities, resulting in long-term strategic benefits and the avoidance of predatory investment tactics.

Trusted Capital (TC) is a program run by the Undersecretary of Defense for Acquisitions and Sustainment (USD (A&S)) to improve the defense industrial base and reduce the threat of adversary capital to national security. Qualifying small to medium-sized technical capacity providers can access a variety of capital options through “trusted” capital sources through Trusted Capital. To qualify, capability and funding providers must go through a national security due diligence process to prevent foreign investors from gaining access to vital technology. Trusted Capital Digital Marketplace, Financial Incentives to Invest in National Security Solutions, and Military Innovation Tours with Venture Capital/Private Equity Industry are all part of the TC approach.

The defense industrial base (DIB) and the US economy rely heavily on small and medium-sized firms. Funding is critical to these businesses’ development, and freshly formed businesses are vulnerable to predatory investing. Our nation’s “adversaries deploy front firms, joint ventures, mergers and acquisitions, foreign direct investment, and personnel recruiting programs to obtain access to and exploit U.S. technology and intellectual property,” according to the current National Counterintelligence Strategy. To fight these predatory methods and boost DIB capabilities, the Trusted Capital Digital Marketplace was created.

If you need Capital for your SBIR STTR Award, contact Leonid today about our non-dilutive funding options. Leonid specializes in SBIR/STTR Award and Government Contract Financing, is the only provider in the Trusted Capital Market Place to offer non-dilutive funding and support all sectors within the US government (Intelligence, Defense, Health, Education, Agriculture, etc..) including classified projects. Contact Us today to learn about your financing options.

Conclusion

Endeavour is proud to be the first to be transacting in the SBIR STTR Program, as it is known as the “America’s Seed Fund” – These highly competitive federal initiatives increase your small business’s chances of commercializing its technology, increasing earnings, and creating new jobs in America. Small enterprises use the programs to explore their technological potential and bring their products closer to market, which benefits all of America and is the reason why Endeavour is committed donating 50% of profits to support military families and veterans.