After more than 5 months, Congress has reauthorized the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) program for the next 5 years. The SBIR/STTR program lapsed Oct. 1, 2025 and arguments in Congress regarding “SBIR mills” has prevented reauthorization until this time. Reauthorization signifies a major “win” for small businesses!
Federal agencies with research budgets >$100 million dollars are required to set aside a portion of these funds for qualified small businesses. The current bill requires set asides of 3.2% and 0.45% of research budgets for SBIR and STTR programs, respectively. The lapse in funding led to several technology start-ups closing and presented a significant risk to many others.
The current bill introduces several reforms to the previous program.
- Reducing foreign risk through increased vetting of foreign connections – The compromise bill increases the due diligence that agencies must perform on SBIR/STTR awardees with regards to foreign ownership, affiliations, investments, or other connections which could impart a national security risk.
- Limits on the number of applications per business entity per funding year – Previous language aimed at capping the number of applications for all funding opportunities and research topics. This proscriptive approach was rejected and in its place agencies are directed to apply limits on multiple applications starting for fiscal year 2027.
- Introduction of Strategic Breakthrough awards – This new type of award is available to eligible businesses which have been awarded at least one prior Phase II SBIR/STTR award. These awards are up to $30 million with a focus on “the most promising technologies” and require 100% matching funds from non-SBIR/STTR funds. The goal is to bridge the “Valley of Death” between demonstration of a technology and commercialization. Only agencies with required SBIR/STTR expenditures per year of more than $100 million (equating to a total R&D budget of just over $3 billion) will provide Strategic Breakthrough awards – this includes the Department of Defense, the National Institutes of Health, the Department of Energy, and the National Science Foundation.
The SBIR/STTR program is a vital mechanism to develop new technology for the marketplace and to translate research findings from academic and private research institutions to the commercial space. It provides an arena in which the best ideas and plans for execution is awarded, allowing even the smallest and most humble start-ups a chance to develop their technologies.
The reauthorization of the program for the next 5 years provides some breathing room for small businesses, but it is imperative that Congress pursue permanent authorization of the SBIR/STTR program. Anything less will leave start-ups and small businesses agonizing over every future reauthorization of the program and wondering if they will be able to survive another lapse in funding.