What Are SBIR Phase I, Phase II and Phase III?
Phase I tests whether an idea is feasible, Phase II funds the full R&D, and Phase III is commercialization paid for with non-SBIR money.
SBIR and STTR phases (Phase I, II and III) in plain English
Phase I is a feasibility study, usually six months to a year. As of April 2026, an agency can make a Phase I award of up to $323,090 without asking SBA for a waiver. Agencies set their own amounts below that.
Phase II funds the full R&D effort, typically over two years, for up to $2,153,927 without a waiver. Most Phase II awards go to Phase I winners. Some agencies also offer Direct to Phase II for companies that proved feasibility another way.
Phase III is selling the result, and SBIR doesn't pay for it. The money comes from a government contract, private sales or investment. A federal agency can award a Phase III contract that builds on your SBIR work without a new competition.
Related terms
- SBIR (Small Business Innovation Research): SBIR (Small Business Innovation Research) is a federal program that pays small businesses to do research and development. The awards aren't loans.
- STTR (Small Business Technology Transfer): STTR (Small Business Technology Transfer) works like SBIR, but you must team up with a research institution, such as a university.
- Sole-source contract: A sole-source contract is awarded to one company without competition, which is allowed only in specific cases.
- Prime contractor: A prime contractor is the business that holds a contract directly with the government. It's responsible for all the work, including any it subcontracts.
Put it to work
- How the three phases work, with median award sizes
- SBIR and STTR awards by agency
- SBIR.gov: current Phase I and Phase II award guidelines
Looking for another term? Browse the full glossary or the government contracting glossary guide.