Question 1

What are the basic eligibility requirements for SBIR?

Accepted Answer

Per 15 USC 638 and the SBA SBIR/STTR Policy Directive (effective 2019, as amended): (1) Must be a for-profit U.S. small business. (2) Must have fewer than 500 employees (including affiliates under SBA affiliation rules). (3) Must be at least 51% owned and controlled by U.S. citizens or permanent resident aliens. (4) Principal Investigator (PI) must be primarily employed by the small business at the time of award and during the conduct of the project (for SBIR; STTR has different PI rules). (5) The research must be performed primarily in the U.S.

Question 2

How does STTR differ from SBIR?

Accepted Answer

STTR (Small Business Technology Transfer) requires formal collaboration with a U.S. research institution (university, federally funded R&D center, or nonprofit research institution). Key differences: (1) PI can be primarily employed by the research institution (not required to be employed by the small business as in SBIR). (2) At least 40% of the project must be performed by the small business; at least 30% by the research institution. (3) Fewer agencies participate in STTR (DOD, NIH, NASA, NSF, DOE) vs SBIR (11 agencies). For companies spinning out of university research, STTR is often the better fit.

Question 3

What is the SBA affiliation rule and why does it matter?

Accepted Answer

The SBA's affiliation rules (13 CFR Part 121) determine whether other companies' employees count toward your 500-employee size limit. Affiliation exists when one entity controls or has the power to control another — through equity ownership (typically 50%+), common management, or contractual control. This catches venture capital-backed companies: if a VC firm's portfolio companies are deemed affiliates of each other, the combined employee count can exceed 500 and disqualify all of them. In 2022, Congress and SBA created a special exemption for VC-backed companies under certain conditions — the eligibility checker walks through this.

Question 4

What are Phase I, Phase II, and Phase III funding amounts?

Accepted Answer

Standard SBIR/STTR award thresholds (agencies may exceed with justification): Phase I (feasibility study): up to $275,000 for approximately 6 months. Phase II (full R&D): up to $1,850,000 for approximately 2 years. Phase III (commercialization): no SBIR/STTR dollars — company must secure private investment or non-SBIR federal contracts. Some agencies (NIH, DOD) routinely exceed these amounts with waivers. The DoD SBIR program has funded Phase II awards exceeding $3M for priority topics.

Question 5

Which federal agencies have SBIR programs?

Accepted Answer

11 agencies are required by law to participate in SBIR: Department of Defense (largest — ~$2.5B/year), NIH/HHS, NASA, NSF, DOE, EPA, USDA, DOT, DHS, DOC (NIST/NOAA), and ED (Department of Education). Each agency publishes its own solicitation topics — you apply to specific topics, not generically. SBIR.gov aggregates all open solicitations. The eligibility requirements are uniform across agencies; the scientific/technical topics and commercialization requirements vary.

Question 6

Can my company apply for SBIR while also having venture capital investment?

Accepted Answer

Prior to 2022, VC-backed companies were often ineligible due to affiliation rules if the VC fund owned 50%+ of the company. The SBIR/STTR Extension Act of 2022 (Pub. L. 117-183) created a new pathway: VC-backed companies can participate if they meet certain conditions, including that the small business is majority-owned by individuals (not institutional investors) or by multiple small business concerns. The eligibility analysis is complex — this checker walks through the current rules as of the 2022 amendment.

Question 7

What is the SBIR Phase I to Phase II conversion rate and what does it mean for my application?

Accepted Answer

Average Phase I to Phase II conversion rates vary significantly by agency: NIH ~40%, NSF ~35%, DoD varies by service and program (~30-50%). A higher conversion rate means the agency advances a larger share of Phase I awardees to Phase II. This matters for your commercialization strategy: if you're applying to a lower-conversion-rate agency, your Phase II proposal must be exceptionally strong and address all agency-specific commercialization criteria. SBIR.gov publishes conversion rate data by agency.

SBIR / STTR Eligibility Checker

Inputs coming in next batch

Frequently asked questions