SBIR vs STTR: Differences, Phases and Eligibility

SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) are federal programs that fund research and development at small, for-profit U.S. businesses. The key difference: STTR requires a formal partnership with a research institution, such as a university, while SBIR does not. Both run in phases, Phase I for feasibility and Phase II for full development, and both were reauthorized in April 2026 through September 30, 2031.

This guide compares the two programs, explains each phase, and lists the eligibility rules with links to SBIR.gov, the regulations, and agency guidance. Each agency publishes its own solicitations with its own topics, amounts and deadlines, so always confirm details in the solicitation you plan to answer.

The programs at a glance

SBIR.gov describes the two programs together as "America's Seed Fund." They provide non-dilutive funding, which means the government does not take equity in your company. The U.S. Small Business Administration (SBA) coordinates the programs, and participating agencies fund the awards from their own research budgets.

According to the SBIR.gov program basics tutorial, eleven federal agencies fund SBIR and five fund STTR. Each agency picks its own research topics and runs its own review process. A company that fits one agency's topics may not fit another's, so start by reading the topics, not the program rules.

SBIR vs STTR: the core differences

Research partner

STTR was modeled on SBIR, but its goal is to move technology developed at a research institution into the market through a small business. An STTR project must include a research institution partner, such as a university or a federally funded research and development center. SBIR has no partnership requirement, although SBIR companies can still use consultants and subcontractors within limits.

In STTR, the applicant is always the small business. SBIR.gov states this directly. The university does not apply; it partners.

How the work and budget are split

The rules on how much work stays inside the small business differ. NSF's eligibility page sets out its requirements clearly:

• SBIR Phase I: at least two-thirds of the total budget must go to the small business. The rest can go to subawards, consultants or both.
• STTR, all phases: at least 40 percent of the total budget goes to the small business and at least 30 percent goes to the partner research institution.

Other agencies apply similar splits from the SBA policy directive, but check each solicitation for the exact rule and whether it is measured by budget or by work performed.

Principal investigator

The principal investigator (PI) leads the project. NSF requires the PI to be more than 50 percent employed by the small business for the duration of the project, and treats outside employment of more than 19.6 hours per week as a conflict. Primary employment is not required at the time you submit a full proposal at NSF, but it must be in place for the award. STTR rules at some agencies allow more flexibility on where the PI is employed, provided the PI has a formal commitment to the small business. Read your target agency's solicitation, because this rule varies.

The three phases

Phase I: feasibility

SBIR.gov describes Phase I as the concept phase. It typically lasts about 6 to 12 months and tests the technical merit or feasibility of an idea. Reviewers want to see a clear technical question, a credible plan to answer it, and a sense of why the answer matters commercially.

Phase II: development

Phase II lasts up to two years and expands on Phase I results. This is where most of the research and development work happens. Most agencies only accept Phase II proposals from companies that completed a Phase I award, though some agencies offer direct-to-Phase II or Fast-Track options in specific solicitations.

Phase III: commercialization

Phase III is when the innovation moves into the market. SBIR.gov is clear that no SBIR funds support this phase. The company uses private funding or other non-SBIR federal funding, such as a production contract from an agency that wants the technology.

Award sizes

SBA sets guideline amounts that agencies can award without asking SBA for a waiver. As of April 2026, SBIR.gov lists those limits as:

• Phase I: up to $323,090, including modifications.
• Phase II: up to $2,153,927, including modifications.

Awards above these amounts need a waiver, as described in section 7(i)(4) of the SBIR/STTR Policy Directive. Each agency sets its own typical award size within these limits, and many award less. The solicitation states the amount and period of performance for each topic.

Eligibility: who can apply

The size and ownership rules come from SBA regulations at 13 CFR 121.702. The main tests:

• For-profit. The applicant must be a for-profit business. NSF states it does not fund not-for-profit entities through these programs.
• Size. The regulation says an awardee, together with its affiliates, must not have more than 500 employees. Affiliates are entities that control or can control each other, so investors and related companies can count.
• Ownership and control. The business must be more than 50 percent directly owned and controlled by one or more individuals who are U.S. citizens or permanent residents, or by other eligible small businesses, Indian tribes, and certain other entities set out in the rule.
• Where the work happens. NSF requires all research and development to be performed in the United States. Other agencies have similar requirements in their solicitations.

Some agencies allow businesses that are majority-owned by multiple venture capital operating companies, hedge funds or private equity firms to apply, under special rules. NSF does not. Check the solicitation if this applies to you.

You can test your company against these rules with our SBIR/STTR Eligibility Quiz. It is a planning aid, not an eligibility determination.

The 2025 lapse and the 2026 reauthorization

SBIR and STTR need periodic authorization from Congress. Their authority expired on September 30, 2025, and the programs lapsed starting October 1, 2025. During the lapse, agencies could not issue new solicitations or awards.

Congress then passed the Small Business Innovation and Economic Security Act of 2026, S. 3971. It was signed into law on April 13, 2026, and reauthorizes both programs through September 30, 2031. Agencies have been reopening solicitations since. If you paused plans during the lapse, check current solicitations on agency pages and SBIR.gov, because topics and deadlines may have shifted.

Registrations you will need

Like other federal applicants, SBIR and STTR applicants need an active SAM.gov registration and a Unique Entity ID. Many agencies also require registration on the SBA company registry at SBIR.gov, and each agency has its own submission system. NSF, for example, requires a Research.gov account. Our guide to SAM.gov registration explains the first step, and allow several weeks for all registrations before your first deadline.

Choosing between SBIR and STTR

If both programs are open for your topic, these questions help decide:

• Where did the technology come from? If it came out of a university lab and the inventors remain there, STTR may fit naturally.
• Who will do the work? If most of the work happens inside your company, SBIR is usually simpler.
• Where does your PI work? If your lead scientist cannot meet the SBIR primary employment rule, STTR may offer more flexibility at some agencies.
• Are you ready for a partnership agreement? STTR requires an agreement with the research institution that covers intellectual property and work allocation. That takes time to negotiate.

Planning your first proposal

1. Read agency topics and pick the two or three closest to your technology.
2. Contact the program officer if the agency allows it. Many do, and their feedback on fit is valuable.
3. Start SAM.gov, SBIR.gov and agency registrations now.
4. Confirm eligibility against 13 CFR 121.702 and the solicitation.
5. Draft the technical objectives first, then the commercialization plan, then the budget.
6. Check the budget split against the solicitation's rule.

Past SBIR and STTR awards are public. Our Federal Awards Explorer lets you look up past awards by agency so you can see what has been funded before. For other federal options, see federal grants for small businesses.

Common mistakes in first SBIR and STTR proposals

• Writing a business plan instead of a research plan. Phase I reviewers want a clear technical question and a credible way to answer it. Commercial potential matters, but it does not replace the research.
• Ignoring the topic. Agencies fund proposals that answer their published topics. A strong idea that does not fit a topic is unlikely to be funded.
• Missing the budget split. Check the share of the budget that must stay with the small business, and for STTR the share for the research institution.
• A PI who does not meet the employment rule. Confirm the PI's employment arrangement before you submit.
• Late registrations. SAM.gov, the SBA company registry and agency systems all take time.
• Unclear eligibility. Check ownership and affiliate rules against 13 CFR 121.702 before you invest time in a proposal.

What reviewers usually look for

Each agency publishes its own review criteria in the solicitation, but most cover the same ground: the technical merit and innovation of the idea, the qualifications of the team, and the potential for commercial or public benefit. Read the criteria and their weights, and make sure each one has a clearly labeled answer in your proposal.