Entrepreneurship. R&D Funding Available from the Federal Small Business Administration


The Small Business Administration (SBA), a unit of the U.S. Department of Commerce, offers two programs to assist entrepreneurs with research & development (R&D) costs.

Small Business Administration Innovation Research Program (SBIR)

SBIR funding is 2.5% of the total extramural research budgets of all federal agencies with extramural research budgets of more than of $100 million. These funds are reserved for research contracts or grants to small businesses. In 2010, that represented over $1 billion in research funds. Over half the awards were to firms with less than 25 people. One-third of the funds went to very small companies indeed, one with fewer than 10 employees. One-fifth of the funds went to minority- or women-owned businesses. One-quarter of the companies in fiscal year 20100 were first-time winners.

Information can be obtained from:
Small Business Innovation Research Program
United States Small Business Administration
Office of Technology
409 Third Street SW
Washington, DC 20416
202-205-6450
www.sba.gov/sbir or sba.gov/index.html
Small Business Technology Transfer Program (STTR)

STTR uses a similar approach to promote partnerships between small businesses and nonprofit U.S. research institutions. Funding currently totals 0.3% of the relevant agencies’ extramural research budgets. In the 2010 fiscal year, this amounted to over $100 Million.

The federal agencies involved are:

Each year, five federal departments and agencies are required by STTR to reserve a portion of their R&D funds for award to small business/nonprofit research institution partnerships.

• Department of Defense
• Department of Energy
• Department of Health and Human Services
• National Aeronautics and Space Administration
• National Science Foundation

Small businesses eligible for STTR must be American-owned and independently operated. The principal researcher need not be employed by small business. (Thus principal researchers can be academic researchers starting a company aimed at commercializing the results of their research). Company size limited to 500 employees

Upon reviewing the proposals, agencies make STTR awards based on small business/nonprofit research institution qualification, degree of innovation, 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 one year fund the exploration of the scientific, technical, and commercial feasibility of an idea or technology.
• Phase II awards of up to $750,000, for as long as two years, expand Phase I results. During this period, the R&D work is performed and the developer begins to consider commercial potential. Only Phase I award winners are considered for Phase II.
• Phase III is the period during which Phase II innovation moves from the laboratory into the marketplace. No STTR funds support this phase. The small business must find funding in the private sector or other non-STTR federal agency funding.

To help small businesses deal with the complexities of working with the federal government, the SBA operates the Small Business Administration Answer Desk at 202-205-6600, extensions 296 and 287.

Other federal programs

Other units of the federal government also have programs to assist small businesses. For example, the Environmental Protection Agency (EPA) Small Business Ombudsman helps small businesses gain access to EPA funds. Ombudsmen may be reached through the EPA at www.epa.gov or by telephone (703-305-7777).

The Minority Business Development Agency is a unit of the U.S. Department of Commerce and collects and disseminates information about starting and operating minority-owned businesses. It may be reached online through www.doc.gov or by telephone at 202-482-4547.

The Office of Small and Disadvantaged Business is another Department of Commerce unit helping small businesses. It may be reached on-line at www.osec.doc.gov/osdbu or by telephone at 202- 482-1472.

The U.S. Department of Energy operates a similar program, the Minority Energy Information Clearinghouse focused on small energy-related businesses owned by members of minority groups. This program may be reached through www.hr.doe.gov/ed or by telephone at 202-586-5876.

The U.S. Department of Defense operates the Office of Small and Disadvantaged Business Utilization for DoD. Information is available online at www.acq.osd.mil/sadbu or by telephone at 703- 545-6700.

The Department of Energy also provides information to small businesses through the Office of Small and Disadvantaged Business Utilization for DoE. Its website address is www.doe.gov. The office can also be reached by telephone at 202- 586-7377.

NASA operates the Office of Small and Disadvantaged Business Utilization for NASA. Information may be obtained online at www.hq.nasa.gov/office/codek and by telephone at 202-358-2088.
The Small Business Administration Development Center Program provides technical assistance and information on management techniques to small businesses at www.sba.gov or by telephone at 202- 205-6600, extensions 275 and 277.

John Borchardt is a chemist and freelance writer who has been an ACS career consultant for 15 years. He is the author of the ACS/Oxford University Press Book “Career Management for Scientists and Engineers.” He has had more than 1200 articles published in a variety of magazines, newspapers and encyclopedias. As an industrial chemist, he holds 30 U.S. and more than 125 international patents and is the author of more than 130 peer-reviewed papers.

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