What Is an SBIR Grant?

The Small Business Innovation Research (SBIR) program provides government research and development funding to small businesses with 500 or fewer employees. With more than $1 billion in annual funding available, SBIR grants are a fantastic asset for innovative small business owners looking to explore technological innovation. So, what is an SBIR grant? We’ll cover the basics below.

SBIR Grant Basics

Like we mentioned above, SBIR grants are reserved for small businesses with fewer than 500 employees. Qualifying businesses must also meet several other eligibility standards. First, awardees must be considered a Small Business Concern (SBC) by the Small Business Administration (SBA). The SBA defines a “business concern” as a small business with the following characteristics:

• Independently operated and organized specifically for profit
• Generally not considered dominant in its field of operations
• Legally operating as an individual proprietorship, partnership, limited liability company (LLC), corporation, association, trust, cooperative, or joint venture

Businesses must be majority-owned by United States citizens. Additionally, all work must be completed within the United States, although a limited number of small consultants or subcontractors may be allowed. Finally, some companies owned by venture capital (VC), hedge funds, or private equity may qualify for the program. Per the SBIR website, the National Institutes of Health (NIH), Centers for Disease Control (CDC), and American Rescue Plan (ARPA) all allow bids from majority-owned VC, hedge fund, or private equity firms. Outside of those agencies, companies with minority VC, hedge fund, or private equity owners are invited to participate.

If your business is focused on technological innovation and meets the above criteria, you may be a good candidate for an SBIR grant.

Creating Your Grant Proposal

Once you’ve determined your business’s eligibility, you’re ready to begin the application process. The SBIR grant program is highly competitive, so you’ll need to make your application stand out.

First, find an opportunity (sometimes called a solicitation) on SBIR.Gov. To apply for an SBIR grant, business owners must then complete a proposal that contains the following:

• Registration: Each SBIR grant applicant must register with the SBA’s Company Registry Database and submit Proof of Registration.
• Commercialization: Each proposal should contain what SBIR calls a “succinct commercialization plan.” That includes everything from customer and competition information, market research, financing, and a plan for future assistance, growth, and mentoring.
• Location: Proposals should specify where the research, development, and manufacturing work will be completed. As mentioned above, the majority of this work should occur within the United States.

Finally, after submitting a proposal, every application must go through a peer review process. This helps government agencies determine which proposals have the potential to move forward as sustainable projects with commercial appeal.

Receiving SBIR Grants

After SBIR contracts are awarded, the grants are typically structured in three phases:

• Phase I: Small businesses generally receive between $50,000-$250,000 for feasibility studies and early research, often geared toward proof of concept.
• Phase II: Eligible small businesses receive up to $750,000 for two years, which supports more advanced research and development efforts.
• Phase III: At this point, small businesses are allowed to pursue commercialization objectives; however, Phase III funding does not come from SBIR grants.

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If your business is focused on technological innovation, an SBIR grant is a great resource. Federal funds issued via SBIR grants can be a smart and lucrative way for small businesses to develop groundbreaking new technologies. If you have more questions about how to find and win federal contracts, GovCon can help.

For over 20 years, GovCon has helped hundreds of clients navigate the complex world of DCAA compliance, streamline their operations, pass audits, and win federal contracts. We use our real-world experience to simplify your process, reduce the cost of compliance, and improve accuracy. We’d love to show you how GovCon can streamline the government contracting process for you. Contact us any time.