Understanding SBIR and STTR
Understand the basics of the Small Business Programs, including:
- Comparing SBIR and STTR
- Different funding paths and phases of the program
- Budget and timelines for funding
- Eligibility criteria
- Foreign disclosure and risk management
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), collectively the Small Business Programs, are also known as America’s Seed Fund. By setting aside more than $1.4 billion from its Research & Development Funding specifically for our Small Business Programs, the NIH provides support to early-stage small businesses throughout the nation.
Many companies leverage NIH funding to attract the partners and investors needed to take an innovation to market. We focus on a variety of high-impact technologies ranging from research tools to diagnostics, digital health, drugs, medical devices, and others. The NIH SBIR and STTR programs can provide the seed funding you need to bring your scientific innovations from the bench to the bedside.
The goals of our program are to:
- Stimulate technological innovation
- Meet federal research and development needs
- Increase private sector commercialization of innovations developed through federal R&D funding
- Foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged (SDB) persons and women-owned small businesses (WOSB).
Watch this webinar recording from November 2024 to learn more about the NIH Small Business Program.
Our staff is equipped to guide you through every part of the process to maximize success. Without taking any ownership of your small business, the NIH provides funding for the research and development of innovations and supports commercialization efforts for your product. It is important to note that the NIH is generally not the final purchaser of technologies generated through the programs. View our Program Descriptions for more information.
Comparing the Small Business Programs - SBIR and STTR
Although the scope of the work is the same, there are a few critical differences between the SBIR and STTR regarding whether partnerships with a non-profit research institution are allowed (SBIR) or required (STTR). The money always goes to the small business.
Comparing the Small Business Programs | ||
|---|---|---|
| Small Business Innovation Research (SBIR) | Small Business Technology Transfer (STTR) | |
| Percent of R&D budget | 3.2% | 0.45% |
| Partnerships | Research partnerships are allowed | Partnership with a non-profit research institution is required (e.g. university) |
| Work Requirement | Small businesses may outsource:
| Minimum work requirements:
The remaining work may be done by either or outsourced |
| Principal Investigator (PI) | Primary employment (> 50%) should be with the small business | PI must be employed by either the partnering research institution or small business |
We Have Several Funding Paths Within the Small Business Program Phases at NIH
Our programs provide funding based on milestones achieved during given phases. Please note that the NIH Small Business funding phases are separate from and not aligned with clinical trial phases. Below is an overview of application types within NIH Small Business phases that fund research and provide commercialization support.
You can begin with either a Phase I, Fast Track, or Direct to Phase II. Which path you choose depends on the amount of preliminary research and technology development you have done in advance of applying to NIH. Reach out to program staff to discuss which path is right for your small business.
Small Business Program Phases | Description |
|---|---|
| Phase I | A Phase I award helps you focus on the feasibility, technical merit, and commercial potential of your research project. |
| Phase II | A Phase II award lets you continue the research and development efforts initiated in Phase I. Once you’ve reached your Phase I milestones, you can apply for a Phase II award, even before the end of the Phase I award. You may submit your application for a Phase II award up to six receipt dates after your Phase I budget period expires. |
| Fast-Track | The Fast-Track process allows you to submit both Phase I and Phase II in one application for review. The Fast-Track mechanism can minimize the funding gap between phases but requires a fully developed Phase II application/plan at the time of submission. |
| Direct to Phase II (SBIR Only) | If your project has already demonstrated feasibility, but you have not received a Phase I SBIR or STTR, you can apply for a Direct to Phase II award and bypass Phase I. |
| Phase IIB | Some NIH Institutes and Centers offer Phase IIB awards for Phase II projects that require extraordinary time and effort beyond the standard Phase II period of 2 years. Refer to our Phase IIB FAQs for more information. |
| Commercialization Readiness Pilot (CRP) Program | The Commercialization Readiness Pilot (CRP) Program provides awarded Phase II and Phase IIB small businesses technical assistance and funding for late-stage development. Read more about the CRP program. |
Budget and Timelines for Funding
The budget guidelines are the same for both programs, but individual NIH Institutes and Centers can set their own budget limits.
- A Phase I budget is $314,363 for a project timeline between 6 months to 2 years.
- A Phase II budget is $2,095,748 for a project timeline between 1 to 3 years.
We recognize that some biomedical innovations require additional funding to reach the marketplace. For those topics, the NIH has a waiver from the Small Business Administration (SBA) to allow larger awards. Please refer to a list of SBA approved waiver eligible topics.
Applicants are strongly encouraged to contact program officials before submitting any application in excess of the total award amounts listed above and early in the application planning process.
NOTE: The Tax Cuts and Jobs Act of 2017 included major changes to section 174 of the Internal Revenue Code that took effect in 2022. These changes require businesses to amortize R&D expenses over a five-year period instead of deducting them in the year they were incurred. Although federal income/excess profits taxes are strictly not allowable charges to NIH awards, either as direct or indirect costs. (see FAR 48 CFR 31.205-41), SBIR and STTR application budgets may include a “fee” that may be used by the small business for any purpose, including payment for a tax liability. See the NIH GPS Section 18.5.4.2 “Profit or Fee” for more information.
NIH staff cannot provide tax guidance. Small businesses that receive SBIR or STTR funding should seek guidance from the IRS or a trusted tax/accounting advisor on how this change may affect them.
View additional Frequently Asked Questions (FAQs) on SBIR and STTR budgets.
Eligibility Criteria
Learn which criteria are evaluated for your business to be eligible for the small business programs and other considerations NIH takes into account.
Support for Awardees
We also offer a variety of support and resources, including Technical and Business Assistance (TABA), at each application point. Explore our support for awardees.
Financial support from the NIH as part of their SBIR program was very much a critical component to the early start of this company [and] it continues to be a component of our success.
The NIH SBIR program has been invaluable. There'd be no other way that this would have been an option to provide to the autism community.
[The SBIRs] have allowed us to pursue new ideas and approaches to solving this long-standing problem of organ shortage.
Litron Laboratories’ rate of innovation would not be possible without the benefit of SBIR funding.
The SBIR program is significantly important for disseminating, not just information, but actual interventions, especially for underrepresented populations.
[NIH small business funding] gave us the preliminary data that allowed us to approach investors and Big Pharma to fund the amount needed to move into phase two and phase three.
The grant gave us the funding to hire curriculum writers, to pay teachers to do pilot testing of the kits, and to go to science education conferences and present the kits; it gave us money to pay stipends for teachers who wanted to hold their own workshops, and money to provide the kits for the workshop. It really allowed the company to grow much more dramatically.
[SBIR] funding was absolutely critical to getting us off the ground.
Our very first funding came from the NIH. The origins of our success came from an NIH-funded project, and since then, we have been able to build on and expand our knowledge and tackle other pollutants.
We’re staunch supporters of this program. If anyone asks me about the NIH Small Business program, I give them nothing but encouragement to apply.
We were awarded a $1.5 million Phase II Small Business Innovation Research (SBIR) grant from the National Institute of Neurological Disorders and Stroke in 2018. That grant came at a time when follow-on funding was uncertain, and it allowed us to accelerate the development process and cover critical commercialization costs for our novel, bioabsorbable surgical clip. We’ve since focused our energy and resources on bringing this technology to market sooner, which will ultimately benefit patients and improve public health.
I would love to see more Native American representation in the SBIR program. Including entrepreneurs from different backgrounds is key to solving “unsolvable” problems and is critical to forging new paths in science and healthcare.
In terms of venture capitalists for minority businesses, it is a really unfair playing field. So, the fact that SBIR funds minority businesses like ours is huge because otherwise, we would not get any investments.
This funding allowed me to achieve a scientific breakthrough and now I can talk about early detection, and I can talk about cancer, fibrosis, and changing the industry.
