SBIR and STTR in 2026: A Small Business Guide to Federal R&D Funding

SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) are federal programs that pay small businesses to do research and development, in phases, through grants and contracts that don't have to be repaid. In 2026 the programs are open again: a reauthorization signed into law on April 13, 2026 extends them through September 30, 2031, after a lapse that began October 1, 2025. Eleven agencies run SBIR, led by the Department of Defense and the National Institutes of Health, and they publish their research needs as "topics" you can propose against.

What are the SBIR and STTR programs?

Federal agencies with large research budgets must spend a share of it with small businesses. By law, an agency with more than $100 million a year in outside (extramural) R&D spending puts at least 3.2% into SBIR. An agency with more than $1 billion also puts at least 0.45% into STTR. The 2026 reauthorization kept both percentages.

Eleven agencies run SBIR: Defense, Health and Human Services (mainly NIH), Energy, NASA, the National Science Foundation (NSF), Agriculture, Commerce, Homeland Security, Transportation, Education and the Environmental Protection Agency (EPA). Six of them run STTR too: Defense, HHS, Energy, NASA, NSF and Agriculture.

The two programs work the same way, with one big difference:

"Primarily employed" means the principal investigator (PI), who leads the project, spends more than half of their working time employed by your company.

The money comes as a grant or a contract, depending on the agency. Defense awards are mostly contracts, and NIH awards are mostly grants. Either way, it isn't a loan, and you don't pay it back.

SBIR and STTR in 2026: the lapse and the restart

The programs' legal authority ran out at the end of September 30, 2025. During the lapse, agencies issued no new solicitations and suspended the selection and funding of new awards, according to the Congressional Research Service. Existing awards kept going, but NIH, for example, held off on continuation funding for existing projects.

On April 13, 2026, the Small Business Innovation and Economic Security Act (S. 3971, Public Law 119-83) became law. Here's what it did:

• Extended both programs to September 30, 2031.
• Tightened security reviews. Agencies must check every applicant for security risk, including foreign ownership (equity, debt and surety ties) and links to entities on eight federal restricted lists.
• Created Strategic Breakthrough Phase II awards of up to $30 million over up to 48 months for companies that already hold a Phase II award and can match the money dollar for dollar.
• Capped proposals per company. Starting in fiscal year 2027 (FY2027), each agency sets a maximum number of proposals one company can submit. HHS already limits each company to nine new Phase I, Fast-Track and Direct to Phase II applications per fiscal year.
• Raised technical and business assistance to up to $6,500 per Phase I project and $50,000 per Phase II project.
• Extended Direct to Phase II through 2031 and opened it to the Department of Energy, NASA and STTR.

Agencies have restarted on their own schedules:

Dates change, so confirm each one on the agency's own SBIR site before you plan around it.

How the three phases work

Phase I: prove it can work

Phase I pays for a feasibility study, usually over six months to a year. As of April 2026, agencies can make a Phase I award of up to $323,090 without asking SBA for a waiver. Agencies set their own amounts below that: NSF's current solicitation offers up to $305,000, for example. Across all agencies, the median Phase I award from 2023 to 2025 was $181,496, in FedReady's analysis of SBIR.gov data.

Phase II: build it

Phase II funds the full R&D effort, typically over two years. Agencies can award up to $2,153,927 without a waiver. The median from 2023 to 2025 was $1,249,950. Most Phase II awards go to Phase I winners. Some agencies offer Direct to Phase II for companies that already proved feasibility another way, and NIH and NSF offer Fast-Track options that combine the two.

Phase III: sell it

Phase III is commercialization, paid for with money outside SBIR: a government contract, private sales or investment. There's no dollar limit on Phase III. A federal agency can award a Phase III contract that builds on your SBIR work without a new competition, and the 2026 law requires training for contracting officers on these sole-source awards.

Who is eligible for SBIR and STTR?

SBA's rules (13 CFR 121.702) set the basics. Your business must:

• Be a for-profit business located in the United States. A nonprofit can't receive an award directly.
• Be more than 50% owned and controlled by U.S. citizens or permanent residents (or by certain other small businesses or tribal entities). For SBIR only, some agencies also accept businesses majority-owned by multiple venture capital, hedge fund or private equity firms.
• Have 500 or fewer employees, counting affiliates.

This is a different size rule from the one for regular contracts. Regular set-asides use the SBA size standard for each NAICS code. SBIR and STTR use the single 500-employee limit. See who can get government contracts for how affiliates are counted.

How to find SBIR topics

Each agency publishes its own topics, on its own site:

• Defense: the DoD SBIR/STTR Innovation Portal (DSIP) at dodsbirsttr.mil, for the Air Force, Army, Navy, DARPA and every other component.
• NIH and other HHS agencies: funding opportunities on Grants.gov, with details on NIH's SEED site (seed.nih.gov).
• NSF: America's Seed Fund at seedfund.nsf.gov. NSF takes ideas in almost any technology area and starts with a short Project Pitch.
• Everyone else: each agency's SBIR page. SBIR.gov lists open topics from every agency in one place, though it notes its copies may lag the official versions.

Some solicitations and broad agency announcements (BAAs) also show up on SAM.gov, including Defense's yearly program announcement and NASA's and EPA's solicitations. FedReady's SBIR and STTR pages show each agency's award history, its top recipients and the open R&D notices on SAM.gov, such as the DoD, NIH and DARPA pages.

How to apply

1. Register on SAM.gov. You need a Unique Entity ID (UEI) to receive an award, and registration is free. Follow how to register on SAM.gov, and start early so it's active before you submit.
2. Register your company on SBIR.gov. SBA's company registry gives you an SBC Control ID that agencies ask for. It's required even if you're already on SAM.gov.
3. Set up the agency's submission system. Defense proposals go through DSIP. NIH applications go through Grants.gov and are tracked in eRA Commons. Each solicitation lists its own requirements.
4. Read the topic and the solicitation instructions closely. Proposals that ignore page limits or required sections can be rejected without review.
5. Talk to the program office early. Many topics list a technical point of contact and a window for questions before the topic opens. Use it.
6. Submit before the deadline. NIH, for example, doesn't accept late SBIR or STTR applications.

What the award data shows

FedReady loaded every SBIR and STTR award since 2016 from SBIR.gov's public award file. A few patterns matter for a first-time applicant:

• New winners are common. In 2024, 1,186 of the 3,776 businesses that won an award (31%) had no SBIR or STTR award going back to 2016.
• Phase I often leads to Phase II. Of the businesses that won a Phase I award in 2022, 61% won at least one Phase II award (for any project) by the end of 2025.
• Award sizes vary by agency. The median HHS Phase I award (mostly NIH) was about $312,500 from 2023 to 2025, while Defense's was $140,000.
• Defense is the biggest funder. It made about 13,000 of the roughly 25,000 awards from 2022 through mid-2026.

Agencies report awards to SBIR.gov months late, so 2025 and 2026 totals are still filling in.

Next steps

• Browse SBIR and STTR awards by agency to see who funds work like yours, and who wins it.
• Get registered: how to register on SAM.gov.
• Learn the rest of the federal market: how to find government contracts.

This guide is general information, not legal or financial advice. Rules and thresholds change, so confirm details on SAM.gov and the official agency sites linked above before you act. FedReady is an independent company and is not affiliated with any government agency.