Small Business Research Programs Extended for Six Years


Two small business research programs have been reauthorized Senate and House small business committees,—which is good news for businesses that depend on federal research grants.

The Small Business Innovation Research Program (SBIR) and the Small Business Technology Transfer Program (STTR), which provide federal technology research funds to small businesses, were up for expiration Friday and will now be funded for an additional six years.

These two initiatives, which mandate federal agencies devote a percentage of their research budgets to U.S. companies, will be included as an Amendment to the National Defense Authorization Act (NDAA).

The reauthorization also expands what companies are eligible to apply for the grants—now majority venture capital-backed firms can also compete for funding from these two programs, whereas in the past they had been ineligible.   

In the past, government agencies with annual research budgets of more than $100 million had to give 2.5% to small businesses, however that allocation has been bumped up to 3.2%. Those with annual research budgets of more than $1 billion now must allocate .045% of funds to small businesses, up from 03%.

Through this reauthorization, the application process will be streamlined and simplified for small businesses attempting to access capital for their projects through new standards across federal agencies. It will also require most agencies to complete their review process for applicants within 90 days, or 180 days with a granted extension from the Small Business Administration.

Those small businesses that are awarded grants will also be receiving more money under this amendment. Award levels will be increased to $150,000 from $100,000  for Phase I, and to $1 million from $750,000  for Phase II grants. These grants had not previously been increased since 1982.

Daniel Faraci, director of Government Affairs at the Alliance for Affordable Services, said he was struck by the "rare act of bipartisanship" on Capitol Hill to reauthorize the program. The alliance represents many technology small businesses that work with funds from the SBIR program, and Faraci said he was uneasy about the reauthorization going through. Previously, the programs were operating under a temporary resolution, with no guaranteed future.

"There was a definite nervousness about the reauthorization," he said. "We have a vast array of businesses that access this capital from medical technology [small businesses] to IT companies that are using it to develop software, even down to pipeline security products via a Department of Defense grant."

Faraci said he was especially pleased to see that some of the application process would be streamlined across agencies, as well as the fast track option for moving from Phase I to Phase II of the grant process.

"Now someone who went through Phase I can go right through to Phase II to develop funding," he said. "They will also have a little more realistic seed money going up to $150,000 in Phase I."

In a time of great uncertainty, this move to reauthorize these programs has given small business owners some new confidence in government, he said.

"They enhanced something that needed to be enhanced. This gives them a bit of certainty in uncertain times."