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Small Business Program Structure

​Both Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs seek to stimulate technological innovation and increase private-sector commercialization of technologies developed through federal R&D funding and other support initiatives.

The major difference between the two programs is that STTR requires small businesses to formally collaborate with research institutions during the first two Phases of the program, with the goal of fostering cooperation and technology transfer between small businesses and research organizations. SBIR does not have this requirement, though it does allow it.

Some other differences appear in the rules governing the role of the principal investigator and subcontractors. See the Eligibility Criteria for more details.

Both programs are structured in three Phases. Note that the stated Phase I and Phase II award levels and project periods are statutory guidelines, not ceilings. The budgets of SBIR and STTR applications will be evaluated to assess the appropriateness of the budget to the timeliness of the research goals and may be reduced on a case-by-case basis as recommended by NIAID reviewers.

Phase I

Establishes the technical merit, feasibility, and commercial potential of the proposed R&D efforts and determines the quality of performance of the small business awardee before providing further support in Phase II.

SBIR Phase I awards normally do not exceed $150,000 in total costs and cover a time period of six months. STTR Phase I awards normally do not exceed $150,000 in total costs and cover one year.

Phase II

Continues the R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Only Phase I awardees are eligible for a Phase II award.

SBIR Phase II awards normally do not exceed $1 million in total costs for two years. STTR Phase II awards normally do not exceed $1 million in total costs for two years.

According to statutory guidelines, total funding support (direct costs, indirect costs, fee) normally may not exceed $150,000 for Phase I awards and $1 million for Phase II awards. With appropriate justification from the applicant, Congress will allow awards to exceed these amounts by up to 50 percent ($225,000 for Phase I and $1.5 million for Phase II).

NIH has received a waiver from the Small Business Administration, as authorized by the statute, to exceed the hard cap for specific topics. Find the list of approved topics in Appendix A at the end of PHS 2015-2 SBIR/STTR Program Descriptions and Research Topics for NIH, CDC, FDA, and ACF (see page 168). Also refer to the appropriate Institute’s or Center’s topic section to determine whether they will consider applications above these amounts. Applicants are strongly encouraged to contact NIH program officials before submitting any application in excess of the guidelines. In all cases, applicants should propose a budget that is reasonable and appropriate for completing the research project.

Phase III

Supports small businesses pursuing commercialization opportunities resulting from the Phase I/II R&D activities.

There is no funding for this Phase of the program. Phase III may involve R&D or production contracts for products, processes, or services intended for use by the U.S. government. The NIH Commercialization Assistance Program or the Regulatory Affairs Support Program in the Division of Microbiology and Infectious Diseases may be helpful for small businesses that reach Phase III.

Additional Funding Opportunities

Direct to Phase II

Small businesses that have already accumulated R&D data, established a core concept, and addressed the commercial potential of an innovation similar to what would be expected from the end of a Phase I award, may apply for the Pilot Direct Phase II Award to save time. This option is limited to the SBIR program only and is designed specifically for small businesses that have completed Phase I-type milestones without any federal support or funds.

Fast-Track

Using “Fast-Track,” small businesses can reduce time by submitting an application to Phase I and Phase II concurrently. With this option, both the Phase I and Phase II applications are reviewed together and receive one summary rating for the entire application. Fast-Track is available for both the SBIR and STTR programs, and is a useful mechanism for reducing or eliminating the funding gap between phases.

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Last Updated February 19, 2015

Last Reviewed February 19, 2015