SBIR and STTR are the largest source of non-dilutive, equity-free funding available to early-stage U.S. tech startups. Collectively branded America's Seed Fund, these federal programs write checks that range from tens of thousands of dollars to prove a concept up to seven figures to develop it - and the government takes no ownership in return. This page explains what the programs are, the three phases, the participating agencies, who qualifies, and how SBIR differs from STTR.
Freshness note: Statutory authority for SBIR/STTR lapsed at the end of fiscal year 2025 (September 30, 2025). Congress reauthorized the programs in 2026 - signed into law in April 2026 - through fiscal year 2031, restoring the ability to issue new solicitations and awards. Individual agencies (for example, NSF) adjusted submission timelines during the lapse. Always confirm current program status and open solicitations on SBIR.gov and the relevant agency site before you plan around a deadline.
What Are SBIR and STTR?
SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) are federal programs that, in the words of SBIR.gov, provide equity-free funding through federal agencies to American small businesses. The goal is to fund high-risk, high-impact innovation that the private market is too cautious to back at the earliest stage, and to push it toward commercialization.
Because the funding is a grant or contract rather than an investment, it is non-dilutive: you do not give up equity, and you generally do not repay the award. That makes SBIR/STTR uniquely valuable for deep-tech, biotech, hardware, and climate startups whose R&D is too early and too risky for traditional venture capital.
The Three Phases
SBIR and STTR are structured in three sequential phases. You typically must win Phase I before competing for Phase II.
| Phase | Purpose | Typical duration | Typical award range* |
|---|---|---|---|
| Phase I | Establish technical merit, feasibility, and commercial potential (proof of concept) | ~6-12 months | Roughly $50,000 - $275,000 |
| Phase II | Continue R&D from Phase I; build the prototype/technology | ~24 months | Roughly $750,000 - $1.8 million |
| Phase III | Commercialize the technology in the market | Varies | No SBIR/STTR funds awarded |
*Ranges are guidance, not fixed rules. Statutory caps are higher and adjust annually for inflation, and each agency sets its own award sizes within those limits. Always check the current solicitation for exact figures.
A key point on Phase III: there is no SBIR/STTR money in Phase III. It refers to commercializing the work - which may include non-SBIR follow-on funding such as government contracts or private capital - rather than another seed-fund check.
The 11 Participating Agencies
Eleven federal agencies (counted by department) participate in SBIR (a subset of these also runs STTR). Each funds work aligned with its own mission, so the right agency for you depends on what you're building:
- Department of Agriculture (USDA)
- Department of Commerce (via NIST and NOAA)
- Department of Defense (DoD)
- Department of Education
- Department of Energy (DOE)
- Department of Health and Human Services (HHS, which includes NIH)
- Department of Homeland Security (DHS)
- Department of Transportation (DOT)
- Environmental Protection Agency (EPA)
- National Aeronautics and Space Administration (NASA)
- National Science Foundation (NSF)
The two highest-volume entry points for many startups are NSF (broad deep-tech, via the NSF SBIR / America's Seed Fund program) and NIH (health and life sciences). DoD funds the widest range of defense-relevant technology.
SBIR vs STTR: The Difference
Both programs fund small-business R&D and both are non-dilutive. The differences:
- Research-institution partnership. STTR requires the applicant small business to formally partner with a nonprofit research institution - typically a university or federal lab - and to share the work between the two. SBIR has no such requirement.
- Who applies. In both programs, the applicant is always the small business. The research institution is a partner in STTR, not the awardee.
- Principal investigator (PI) employment. SBIR and STTR have different rules about where the PI must be primarily employed. In SBIR the PI is generally required to be primarily employed by the small business; STTR offers more flexibility, which is part of why it suits technology coming out of a university lab.
- Number of agencies. All 11 agencies run SBIR; a smaller subset runs STTR.
In short: choose STTR if your technology originates in or depends heavily on a university or federal research lab. Choose SBIR if the work lives primarily inside your company. Confirm the exact PI and work-split rules in the specific agency solicitation, since details vary.
Eligibility Basics
To win an SBIR or STTR award, your company generally must meet the following (verified at the time of award), per SBIR.gov:
- For-profit. The applicant must be a for-profit business. Nonprofits (501(c)(3)) are not eligible as the applicant, though they can be subcontractors or, in STTR, the research-institution partner.
- Size. 500 or fewer employees, counting all full-time, part-time, and leased employees, including those of affiliates.
- U.S. ownership. At least 51% owned and controlled by U.S. citizens or permanent resident aliens (or, alternatively, by another eligible small business that is itself majority U.S.-owned). Specific rules also exist for ownership by multiple VCs, hedge funds, or private equity firms at some agencies.
- U.S.-based work. The R&D must be performed in the United States.
These are the headline rules. Each agency layers on its own requirements, so always read the eligibility section of the solicitation you're targeting and the eligibility FAQ.
Why SBIR/STTR Is Worth the Effort
The applications are demanding and the timelines are long - months, not weeks. But a single Phase I award can exceed a friends-and-family round, a Phase II can rival a seed round, and you give up no equity for any of it. For R&D-driven startups, it is one of the best non-dilutive deals in existence.
Ready to apply? See our step-by-step guide to the SBIR application process, and explore the agency-specific pages for NSF SBIR and NIH SBIR.