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What are the Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) programs?

The SBIR and STTR programs were created by Congress to strengthen the role of small, innovative companies in federally supported research and development. These highly competitive awards-based programs support scientific excellence and technological innovation across 11 federal agencies.

Federal agencies with extramural research budgets greater than $100 million are required to set aside a certain percentage of their budget to SBIR; those with research budgets greater than $1 billion are also required to set aside a certain portion for STTR.

The SBIR/STTR Reauthorization Act of 2011 includes guidelines that increased the SBIR and STTR set-aside amounts for fiscal years 2012 through 2017. For fiscal year 2017, the SBIR set-aside is 3.2% and the STTR set-aside is 0.45%.

About the SBIR Program

The goals of the SBIR program are to:

  • Stimulate technological innovation
  • Increase private-sector commercialization of innovations derived from federal research and development funding
  • Foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged persons
  • Meet federal research and development needs

The SBIR program allows and encourages research partnerships, within these parameters:

  • Phase I: The small business typically performs a minimum of 67% of the work supported by the award.
  • Phase II: The small business typically performs a minimum of 50% of the work supported by the award.

For the SBIR program, the Program Director (PD)/Principal Investigator (PI) must be primarily employed (greater than half time) with the small business at the time of award and for the duration of the project period.

About the STTR Program

Though similar in overall objectives and structure to SBIR, the STTR program aims to facilitate cooperative research and development (R&D) between small business concerns and U.S. non-profit research institutions. To do so, the STTR program requires the small business applicants to formally collaborate with a research institution.

The STTR program also allows and encourages research partnerships, within these parameters:

  • The small business must perform at least 40% of the work.
  • The research institution must perform at least 30% of the work.
  • The remaining 30% may be done by the small business concern, the non-profit research institution partner, or an additional third party.

For the STTR program, the PD/PI may be primarily employed either by the small business concern or the collaborating non-profit research institution.

How are the SBIR/STTR programs structured?

Both the SBIR and STTR programs include three phases.

Phase I: Feasibility and Proof of Concept

The objective of Phase I (R41 or R43) is to establish the technical merit, feasibility, and commercial potential of the proposed R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further federal support in Phase II.

  • Phase I awards typically do not exceed $225,000 total costs for 6 months (SBIR) or 1 year (STTR).
  • During Phase I, the small business typically performs a minimum of 67% of the work supported by the award.

Phase II: Research and Development 

The objective of Phase II (R42 or R44) is to continue the R&D efforts initiated in Phase I to develop the project's commercial viability. 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.

  • Phase II awards typically do not exceed $1,500,000 total costs for 2 years.
  • During Phase II, the small business typically performs a minimum of 50% of the work supported by the award.
  • The NICHD also accepts Phase IIB Competing Renewal applications to continue the process of developing products that require approval of a Federal regulatory agency. Learn more about Phase IIB Competing Renewals.

Phase III: Commercialization 

The objective of Phase III, where appropriate, is for the small business to pursue commercialization objectives resulting from the Phase I/II R/R&D activities. The NIH SBIR/STTR programs do not fund Phase III.

The NIH has a fast-track application option that allows small businesses to submit one application for Phase I and Phase II. It also offers a pilot Direct-to-Phase-II SBIR solicitation that permits small businesses to receive a Phase II award even if they have not previously received a Phase I award for the research/research and development of their technology.

Who is eligible for the programs?

Only U.S. small business concerns (SBCs) are eligible to participate in these programs. The NIH SBIR/STTR website provides detailed information on the SBC eligibility criteria for these programs. Additional information about eligibility requirements is available in the current funding opportunity announcement.

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