The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs have been long known as “America’s Seed Fund”, funding billions of dollars annually for small businesses and startups with cutting edge technology.
That’s why the lapse in authorization at the end of fiscal year 2025 created so much uncertainty. Now, in 2026, Congress has moved forward with legislation to reauthorize both programs, but not without changes. In this blog, we’ll walk through what the SBIR and STTR programs are, what caused the recent lapse, and what’s included in the new reauthorization legislation.
What Are the SBIR and STTR Programs?
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are two of the federal government’s most notable programs for funding early-stage innovation.
The SBIR program was established in 1982 to help small businesses conduct research and development (R&D) with federal support. The idea was to give small businesses a chance to develop innovative technology with financial backing. SBIR provides non-dilutive funding, meaning businesses don’t have to give up equity to participate.
A decade later, Congress created the STTR program in 1992. Unlike SBIR, STTR requires small businesses to collaborate with a nonprofit research institution, such as a university or federal lab. This requirement is designed to ensure that technologies developed in research environments have a path to transition from the lab to the marketplace.
SBIR and STTR are administered across 11 major federal agencies, including the Department of Defense (DoD), National Institutes of Health (NIH), Department of Energy (DoE), and NASA. Together, they distribute billions of dollars annually to small businesses working on everything from defense technologies to healthcare innovations.
The SBIR/STTR Lapse in Funding
SBIR and STTR are not permanently authorized programs, Congress must periodically reauthorize them. Historically, these reauthorizations have been relatively routine, often passing with bipartisan support. However, the conversation around SBIR and STTR has become more debated.
Many industry stakeholders have raised questions about whether the programs are working as they should. In Phase III of the programs, companies are not given funding and are encouraged to acquire a government or commercial buyer. This is where many companies are left with a prototype and no tangible outcome, which can make the programs’ success hard to measure. Because of this, some have argued that certain companies have become overly reliant on funding without successfully commercializing their technologies (sometimes referred to as “SBIR mills”). Others have raised concerns about foreign ownership and whether sensitive technologies funded through these programs could be exposed to cybersecurity issues.
On September 30, 2025, authorization for SBIR and STTR expired after Congress was unable to reach agreement on a new bill. This effectively halted the programs, causing concern for small businesses looking for a path into the federal marketplace.
The 2026 SBIR and STTR Reauthorization
In March 2026, Congress moved to advance the Small Business Innovation and Economic Security Act (S. 3971). The legislation passed Congress and the House with strong support and reauthorizes the SBIR and STTR programs through September 30, 2031.
However, the bill does more than extend the programs. It introduces a series of updates aimed at addressing the concerns that delayed reauthorization in the first place. This includes commercialization outcomes, program access, and national security risks.
Key Changes to the SBIR/STTR Programs
Strategic Breakthrough Awards
One of the most notable updates in the 2026 legislation is the introduction of Strategic Breakthrough Awards. This new funding incentive allows agencies to reallocate a portion of their funding to awards focused on technology transition over R&D. Agencies can award up to $30 million to a small business for a single award, or for a series of milestone-based awards, as long as it doesn’t go over 48 months.
Increased Security Requirements
The legislation also imposes a stronger grip on national security. Agencies are now required to conduct more rigorous research on applicants, particularly when it comes to foreign ownership, investment, or influence. This address federal concerns about protecting sensitive technologies and ensuring that innovation remains safe from bad actors and cybersecurity concerns.
Proposal Limits
Another important change is limiting the number of proposal submissions. Agencies must now establish caps on how many proposals a single company can submit within a given cycle. This is intended to reduce the dominance of repeat participants and create more opportunities for new companies in the program.
Improve Program Efficiency and Program Outcomes
The new legislation additionally improves data collection on the programs, so there’s more information on how they are performing from start to finish. Agencies will be expected to track commercialization outcomes more closely, placing greater emphasis on whether funded technologies actually reach the market or are adopted by government users.
SBIR and STTR Program Eligibility
Admittance to these programs depends on many factors, but the basic entry requirements are:
- Must be a for-profit entity located in the U.S.
- Must have fewer than 500 employees (most applicants have fewer than 10).
- Must be owned and controlled by U.S. citizens or permanent residents.
The full list of eligibility guidelines can be found on the SBIR site.
Next, you need to register your company on SBIR.gov. Periodic proposals by participating agencies will become visible once the programs start back up again. It’s important to review each agency-specific solicitation to make sure you meet all the requirements before you begin applying. You can learn more on the application page of the SBIR site.
Ready to Expand Your Presence in the Federal Marketplace?
As the SBIR and STTR programs begin to open back up, now is the time to take advantage. Keep an eye out for agency announcements on SBIR/STTR programs, revisit your pipeline, and evaluate how your technology can support current agency priorities.
If you are looking to sell to the government and need help getting your foot in the door, or you already have a contract but are looking to expand on your opportunities, one of our consultants would be happy to help you.
