SBIR and STTR
Definition
SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) are federal programs that fund US small businesses to do research and development with commercial potential. STTR also requires a formal partnership with a research institution such as a university.
How it works
SBIR and STTR work by setting aside a share of large federal agencies' extramural research budgets for small businesses, awarded in phases:
- Phase I. Tests technical feasibility, typically over 6 to 12 months.
- Phase II. Funds full research and development, typically up to two years, for companies that completed Phase I.
- Phase III. Commercialization, funded by private capital or non-SBIR government money rather than SBIR or STTR funds.
Eleven agencies with more than $100 million in extramural R&D run SBIR programs, with a 3.2% set-aside. Five agencies with more than $1 billion (DOD, DOE, HHS including NIH, NASA, and NSF) also run STTR, with a 0.45% set-aside.
Program status in 2026
The programs' authority expired on September 30, 2025, starting a lapse of about six months. Congress reauthorized both programs in April 2026, extending them through September 30, 2031. The new law adds research security reviews of applicants and lets agencies cap how many proposals one company may submit, starting in fiscal year 2027. Check each agency's current solicitations for updated rules.
SBIR vs STTR
The key difference is the research institution partner. In SBIR, the small business must do at least two-thirds of the work in Phase I and at least half in Phase II, and the PI must be primarily employed by the company. In STTR, the small business must do at least 40% of the work and a single partnering research institution, such as a university or federal lab, at least 30%, and the PI may be primarily employed by either the company or the research institution (though some agencies, such as NSF, require the PI to be at the company).
Why it matters for universities
SBIR and STTR matter to universities because they are a main federal route for moving faculty discoveries into startups. Faculty often found or advise companies that apply, and STTR makes the university a formal partner, usually through a subaward from the company. That raises conflict of interest, intellectual property, and effort questions that the office of sponsored programs and technology transfer office need to manage.
Common mistakes
- A faculty member serving as SBIR PI without being primarily employed by the company.
- Starting SAM.gov registration for a new company too close to a deadline.
- Not managing conflict of interest when a faculty founder's company subcontracts to their own lab.
- Writing a research proposal with no commercialization plan.
Frequently asked questions
Both fund small business R&D. STTR also requires a formal partnership with a research institution that does at least 30% of the work, while SBIR lets the company do most or all of the work itself.
Yes. After the programs' authority lapsed on September 30, 2025, Congress reauthorized SBIR and STTR in April 2026, extending them through September 30, 2031.
Only if they are primarily employed (more than half time) by the small business during the award. Under STTR, the PI may instead be primarily employed by the partnering research institution at most agencies.