SBIR Grants

SBIR - the Small Business Innovation Research programme - is the largest source of early-stage technology funding for small US businesses, and one of the best-designed innovation grant programmes in the world. Created by Congress in 1982, it now distributes over $4 billion annually through eleven federal agencies. For small businesses developing technology with commercial potential and federal relevance, it's the first programme to understand - and, for many, the most important source of non-dilutive capital they'll ever access.

How SBIR works: Phase I, II, and III

Phase I is a feasibility study - typically $150,000 to $275,000 for six months to one year. It tests whether the core concept is technically feasible and scientifically sound. Roughly 15–25% of Phase I proposals are funded depending on the agency and solicitation. Phase II is full R&D - typically $750,000 to $1.75 million for two years. Only Phase I awardees can apply for Phase II. Most agencies fund 40–60% of Phase I awardees who apply for Phase II. Phase III involves no SBIR funding - it's commercialisation, using private investment or non-SBIR federal contracts. Agencies actively help Phase III companies find procurement opportunities, which is a significant and underappreciated benefit of the programme.

Which agencies run SBIR?

Eleven federal agencies are required by law to set aside a percentage of their extramural R&D budget for SBIR. The largest programmes are: DOD (Army, Navy, Air Force, DARPA, and others - combined the largest SBIR funder), NIH (the primary route for biomedical and health technology), NSF (deep tech, AI, semiconductors, cybersecurity, clean energy), DOE (energy technology, advanced manufacturing), and NASA. Each agency publishes its own solicitations with specific technology topics - finding a topic that matches your technology is the first and most important step.

Eligibility requirements

The eligibility rules are specific. Your business must be: a for-profit company organised and operating in the US; majority-owned (over 50%) by US citizens or permanent resident aliens, or by another small business that itself meets these criteria; under 500 employees (including affiliates). The principal investigator (PI) - the person leading the technical work - must be primarily employed by the company at the time of award. This last requirement catches out some applicants: a PI who holds a full-time faculty position elsewhere doesn't qualify unless they reduce that commitment.

Writing a competitive proposal

SBIR proposals are evaluated on three criteria: Intellectual Merit (how good is the science?), Broader Impacts (what's the potential significance?), and - especially for Phase II - Commercialisation Potential (is there a viable path to market?). The proposal must respond specifically to the agency's topic or solicitation. Generic technology descriptions that could have been submitted to any topic score poorly. Reviewers are experts in the field - they know their domain, and they can tell when a proposal is really aimed at a different topic. Specificity and alignment matter more than length.