The Small Business Innovation Research (SBIR) program is a very competitive program sponsored by the Small Business Administration (SBA) to encourage small businesses to explore and profit from their technological potential. SBIR targets entrepreneurs because that is where SBA believes most innovation occurs. However, the costs and risks associated with serious research and development are often more than many small businesses can bear. By reserving a specific percentage of federal R&D funds for small business, SBIR helps small businesses compete on the same level as larger businesses. SBIR funds the critical startup and development stages, and encourages commercialization of the technology, products and services developed by the entrepreneur. Since 1982 when SBIR was enacted as part of the Small Business Innovation Development Act, SBIR has helped thousands of small businesses compete for federal R&D awards.
SBIR Qualifications. In order to qualify for SBIR, small businesses must meet certain eligibility criteria including:
- Company must be American-owned and independently operated
- Company must be operated for-profit
- A principal researcher must be employed by the Company
- The Company must have no more than 500 employees
The SBIR Program. Each year, eleven federal departments and agencies are required by SBIR to reserve a portion of their R&D funds for award to small businesses. These departments are: Department of Agriculture, Department of Commerce, Department of Defense, Department of Education, Department of Energy, Department of Health and Human Services, Department of Homeland Security, Department of Transportation, Environmental Protection Agency, National Aeronautics and Space Administration and the National Science Foundation. Each of these departments designate certain R&D topics and accept proposals.
Three Phase Program. Following submission of proposals, the departments make SBIR awards based on small business qualification, degree of innovation, technical merit, and future market potential. Small businesses that receive awards then begin a three-phase program. Phase I is the startup phase. Awards of up to $100,000 for approximately 6 months support exploration of the technical merit or feasibility of a proposal. Phase II awards of up to $750,000, for as many as 2 years. During this time, the R&D work is performed and the developer evaluates commercial potential. In Phase III innovation moves from the laboratory into the marketplace. No SBIR funds are available support Phase III. Each small business must find funding in the private sector or obtain other non-SBIR funding.
The SBA’s Role. The SBA plays an important role as the coordinating agency for the SBIR program. The SBA directs the 11 SBIR-funding departments’ implementation of SBIR, reviews their progress, and reports annually to Congress on its operation. SBA is also the information link to SBIR. If you would like more information about the SBA or SBIR program, assistance with making an SBIR proposal or obtaining an SBA loan, please contact Jeff Senney, Jon Rosemeyer or one of our other business attorneys at 937-223-1130 or Jsenney@pselaw.com.
AND ONE MORE THING. The University of Dayton’s 2013-2014 Business Plan competition is offering a record $190,000 in total support to help entrepreneurs develop plans to turn an idea into a successful business. The Business Plan competition is open to all types of businesses. The Business Plan competition will hold the first information session on September 6 at 5:30pm in the O’Leary Auditorium Hall in Miriam Hall at UD. For more information on the competition, visit the competition’s website at www.udbpc.com.