Requirements for submitting an SBIR proposal

The US Small Business Innovation Research (SBIR) program provides over $2B to small businesses who are developing innovative solutions to a broad range of challenges. While these funds are available for many businesses and can be applied to many proposed efforts, there are strict requirements that must be met. These are requirements that describe the eligibility of entities who can submit and be awarded SBIR funds.

Must be a Small Business

The submitting organization must be a small business with no more than 500 employees as defined by the US Small Business Administration (SBA). The business must also operate as a for-profit entity. Non-profits are not eligible for the SBIR program. However, non-profits such as research institutions and universities can be included as subcontractors or subawardees.

Must be US-based

SBIR awardees and their collaborators must be all based in the US. This includes research partners, vendors, subcontractors, and consultants. Any equipment that is purchased with SBIR dollars must be bought here in the US unless strong justification can be made that the equipment has to be purchased overseas. Lower cost is not a strong enough reason to justify SBIR funds going overseas.

In fact, all of the work funded by the SBIR award must be performed in the US unless there is a very strong reason that non-US efforts have to be used. Exceptions to this rule are rare and require very strong reasons as to why the work cannot be performed in the US. An example of work needing to be performed outside of the US may include clinical trials for certain populations which are rare or non-existent in the US.

Must be more than 50% US-owned

SBIR companies must be majority-owned by US individuals or entities. Ownership by more than 50% can be by (1) one or more individuals who are citizens or permanent resident aliens of the US or (2) other for‐profit small businesses which are directly owned and controlled by individuals who are citizens or permanent resident aliens of the US.

Companies who are owned by venture capital (VC) operating companies, hedge funds, or private equity firms have special rules with respect to ownership. As of January 2018, only NIH, CDC, and the Department of Energy allow companies who are majority owned by VCs to receive SBIR funds. For more info on investor-related ownership of SBIR companies, please see the SBIR Program website.

The Principal Investigator

A key requirement for SBIR proposals is the employment status of the Principal Investigator (PI). The PI is typically the person who will be leading the technical efforts on the SBIR. For all SBIR applications, the PI must be majority employed by the small business upon time of award. The PI doesn’t have to be employed by the company when the proposal is submitted. However, the PI must be over 50% employed by the small business once the award is made.

For STTR applications, the small business must collaborate with a research institution. This partnership allows the PI to be majority employed either at the small business or the research institution. This flexibility in PI employment is allowed by all STTR agencies (NIH, NASA, DoE, and DOD) except for the National Science Foundation (NSF). With both NSF SBIR and STTR applications, the PI must be over 50% employed by the small business upon time of award.