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A Small Business Guide to SBIR Grants: Should You Apply?

SBIR grants are major awards for small businesses doing innovative work in their fields. Find out whether you qualify and how to apply.

A Small Business Guide to SBIR Grants

By Elizabeth Gonzalez, The Blueprint

Small businesses with big ideas often struggle to turn them into profits. The hurdles can be high, the market is always tough, and they have fewer resources to bring to every problem and challenge they face.

One equalizer is the Small Business Innovation Research (SBIR) grant program administered by the U.S. Small Business Administration (SBA). The program gives small businesses a chance to compete on even footing for massive federal research and development (R&D) funds.

If you're developing cutting-edge solutions to challenges in your field, SBIR grant opportunities could help you develop them into profitable commercial ventures.

Keep in mind that science doesn't just mean rockets and robots. It also includes social, behavioral, and economic (SBE) sciences. For example, the Department of Defense has solicited proposals for research in statistical modeling and software development for planning operations including humanitarian aid and disaster relief.

If there's a strong research component in your work, there's probably an SBIR grant worth exploring. Find out whether you qualify and how to compete for SBIR funds.


Overview: What is an SBIR grant?

An SBIR grant is a federal research and development grant designed to help small businesses explore innovative technological and scientific ideas and take them to market. The SBIR program sits alongside a Small Business Technology Transfer (STTR) program designed for businesses that partner with nonprofit research institutions, such as universities.

Federal agencies participating in the SBIR program currently include:
  • Department of Agriculture
  • Department of Commerce -- National Institute of Standards and Technology
  • Department of Commerce -- National Oceanographic and Atmospheric Administration
  • Department of Defense (DOD)
  • Department of Education (ED)
  • Department of Energy (DOE)
  • Department of Health and Human Services (HHS)
  • Department of Homeland Security (DHS)
  • Department of Transportation (DOT)
  • Environmental Protection Agency (EPA)
  • National Aeronautics and Space Administration (NASA)
  • National Science Foundation (NSF)

Five agencies participate in STTR: DOD, ED, HHS, NASA, and NSF.

Each year, these federal agencies allocate more than $100 million apiece to cutting-edge research. And 3.2% of those funds are set aside for small business grants and contracts.

How much does that amount to? A minimum of $3.2 billion is set aside for SBIR and $453 million for STTR each year.

© Provided by The Blueprint Chart of federal agency SBIR grant awards.

Receiving federal funding through SBIR/STTR provides the kind of working capital that can transform your business. Grant awards range from $50,000 to $250,000 for Phase I research completed over six months under SBIR or one year under STTR. Grants for later phases are usually $750,000 for two years, although they may run into the millions.

In addition to driving technological advancements across the U.S., the SBIR/STTR program seeks to level the playing field for women and historically disadvantaged groups. If you run a woman-owned or minority-owned technology business, you're a prime candidate for the program.

The SBIR doesn't accept unsolicited proposals for research. You must apply in response to a solicitation. Solicitations may be called requests for proposals, funding opportunity announcements, or broad agency announcements.


Who is eligible for an SBIR grant?

U.S. small businesses are eligible for SBIR/STTR grants. This includes businesses that:
  • Have no more than 500 employees, including affiliates
  • Are for-profit businesses
  • Are more than 50% owned and controlled by U.S. citizens or permanent resident aliens
  • Have a place of business in the U.S.

You may have business partners and you may contract out a minor share of the work, but the bulk of ownership and work will reside with the small business grant recipient.

Some agencies may accept proposals from businesses that are owned by multiple venture capital operating companies, private equity firms, or hedge funds.

The main difference between SBIR and STTR grants is that STTR grants require a nonprofit research partner. Each program has specific ownership requirements beyond the basic small business qualifications. You can find further details on the difference between the programs in this program overview from SBA.

Read the full eligibility requirements for both grant programs to see if you qualify.


What to consider before applying for SBIR grants

SBIR proposals are arduous. Just imagine a mashup of government paperwork, peer-reviewed scientific paper, business proposal, and grant application. So before you dig into a specific grant opportunity, you'll want to complete these preliminary steps.

1. Confirm eligibility

Read the SBIR/STTR eligibility criteria carefully. If you have any questions, call your SBA district office representative to confirm that you meet the basic requirements to participate in SBIR or STTR.

2. Check relevant topics

Once you've researched the basic program parameters and requirements and you know you're eligible, you can go search SBIR funding opportunities. You can search open, future, and closed topics to see calls for proposals. You can also filter by keyword to search topics that might apply to your business.

For example, a search of current topics yields 240 open grants. Entering the keywords "remote sensing" yields 36 solicitations.

© Provided by The Blueprint The SBIR's Topic Search web page.

Your searches should help you determine whether your work aligns with any existing SBIR grant solicitations.

If you don't see a perfect fit, maybe you'll find one or two agencies that are close. If so, keep an eye on future solicitations for government grants. Some agencies put out more than one call per year, while others release solicitations annually.

3. Zero in on the opportunity

If you find a match, congratulations! You're ready to move on to explore the application or proposal phase. Once again, you'll want to do preliminary research to see if you're a viable candidate because each agency publishes its own eligibility criteria.

Make sure to thoroughly review the solicitation, including:
Amendments
Notices
Specific requirements
Points of contact
Submissions timeline

You can find detailed information by going to the relevant agency SBIR portal. You can also try contacting the agency directly for more information. Most participating agencies welcome emails and calls regarding submissions.


How to apply for an SBIR grant

Once you've confirmed that a solicitation is a good match, you're ready to dig into the application process. Preparing an application requires extensive financial projections and technical documentation. The paperwork can take as much as 200 hours of work spread over six to eight weeks, so you'll want to start early and carve out time for each phase of the application process.

Here's an overview of the major steps you'll need to complete.

1. Name a principal investigator

Every SBIR or STTR project must have a lead researcher, called the principal investigator (PI). The PI is responsible for the scientific and technical direction of the project. The PI must:
Be primarily employed with the small business
Have the skills, knowledge, and resources to conduct the proposed research
Be available to perform the research throughout the project period
Legally reside in the U.S.

At a minimum, "primarily employed" means the PI cannot be employed full-time in another business at any time during the award period. Some agencies provide further stipulations, so be sure to review your agency's specific requirements.

2. Register your company

All applicants must complete three registrations to participate in the SBIR/STTR programs:

You'll need a federal employer identification number (EIN) for these registrations. The registrations should be completed in this order since you need a DUNS number for the other registrations.

It's best to tackle registrations right away, as it may take a few weeks for some of them (SAMS in particular) to be verified.

Each agency has further systems you will have to register with as part of the application process. Some agencies may require you to certify that your company meets size and ownership requirements for the SBIR program. You may also need to affirm that the research will be performed in the U.S. unless your solicitation states otherwise.

3. Complete prerequisites

Some agencies have pre-application processes to complete. For example, in 2019, the NSF began piloting a process requiring potential applicants to submit a three-page pitch before proceeding to a full proposal. The agency reviews the pitch and, if approved, invites the business to submit a full proposal. The pitch outlines the project's objectives, technical innovation, and technical risks.

The goal of the pitch approach is to vet projects and provide feedback before businesses invest time in a full proposal.

Check your agency's instructions to see if you have any preliminary steps before moving on to the proposal.

4. Submit a Phase I proposal

Once you're registered and all prerequisites are complete, it's time to draft your proposal. Read the grant solicitation carefully, since every project has specific instructions and criteria.

Generally, proposals include standard grant application elements such as:
  • Business plan
  • Executive summary
  • Cost proposal including detailed operating expenses
  • Technical proposal

SBIR and STTR grants also focus on:
  • Innovation: How does your proposal stand out from the state of the art in your field?
  • Experience, qualifications, and facilities: What qualifies your team to carry out this project?
  • Commercialization (Phase II): What is the pain point or market opportunity your project addresses?

A good way to ensure that your proposal ticks all the boxes is to chart all the criteria and provide evidence showing how you meet each one.

© Provided by The Blueprint Sample chart of criteria, evidence, and how the business stacks up.

5. Get feedback

If it's your first SBIR or STTR application, you should get some expert feedback before submitting your proposal. Ask your contacts at SBA or the participating agency to recommend mentors who can work with you to ensure your proposal is ready for submission.

6. Evaluate the results

If your proposal is rejected, the agency will give you feedback detailing why it was not selected. It is common for applicants to be rejected several times before succeeding, so don't be discouraged. Consider this a long play and use the feedback to hone your approach. With each application, your work will be lighter and your application will be stronger.


No need to fly solo

The SBA understands that this is a challenging process and is eager to help you create a successful proposal. The agency provides extensive resources including online tutorials, training through partner organizations, and live and online SBIR boot camps.

© Provided by The Blueprint Calendar of January 2021 SBIR events.

Take advantage of these resources at each phase in the application process to lessen your workload and increase the odds of success.

If you aren't a fit for an SBIR grant, you might also find alternative government funding through SBA such as rural small business loans, microloans, and other SBA grants including business grants for women.


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SBIR grants are big awards set aside expressly for small businesses, and they're funding much more than rocket science. If you're doing innovative technical work, whether it's a statistical model for identifying at-risk youth or a novel encryption technique, you should explore SBIR opportunities.

You can learn a lot just by reading the proposals. And if you find the right opportunity, it could take your business to heights you never dreamed possible.

See more at The Blueprint

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Finance Magazine: A Small Business Guide to SBIR Grants: Should You Apply?
A Small Business Guide to SBIR Grants: Should You Apply?
SBIR grants are major awards for small businesses doing innovative work in their fields. Find out whether you qualify and how to apply.
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