Federal Innovation Grants for Small Businesses Renewed Through 2031

Two federal grant programs that channel billions of dollars annually toward small business research and development have been reauthorized following a gap in their authority that lasted roughly five months.

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which operate jointly under the Small Business Administration and are sometimes referred to collectively as America’s Seed Fund, expired at the close of federal fiscal year 2025 on September 30, 2025. President Trump recently signed legislation restoring and extending both programs through September 30, 2031.

What these programs do

SBIR and STTR are structured to direct a portion of federal research and development spending toward small businesses. Each participating federal agency (such as the Dept. of Defense, the National Institutes of Health, NASA, the Dept. of Energy, and the National Science Foundation, among others) is required to set aside a specific percentage of its R&D budget for the programs, which together have delivered more than $81 billion in funding to over 34,000 small businesses since SBIR’s establishment.

The programs operate in three phases tied to how far along a technology or concept is in development – from early feasibility work through commercialization. While both programs share the same general structure and goals, there is one notable distinction: STTR requires the small business to formally partner with a nonprofit research institution, which must perform a portion of the research work. 

Who is eligible

Small businesses with fewer than 500 employees are generally eligible to apply, provided the business is for-profit, majority-owned by U.S. citizens or permanent residents, and the principal researcher on the project is primarily employed by the business. Applications are evaluated against each agency’s specific research priorities, so eligibility in practice depends on whether your work aligns with what a given agency is actively seeking to fund.

The programs are not limited to technology startups or manufacturers. Funded projects have spanned a wide range of fields, including medical devices and therapeutics, agricultural technology, cybersecurity, advanced materials, energy systems, environmental science, and defense applications, among others. If your business is engaged in any kind of applied research or development, particularly work that could eventually result in a product, process, or service with broader commercial or public benefit, these programs may be worth a closer look.

What changed in the reauthorization

The legislation is not a straight renewal. Several meaningful changes were included:

• Higher funding ceilings. Investment limits were increased across certain phases, giving businesses the potential to access more federal dollars at various stages of their projects.
• Expanded agency participation. More federal agencies will now be able to participate in the programs.
• New security screening requirements. Applications from businesses found to have connections to foreign governments, foreign militaries, or other entities deemed adversarial will be denied. This represents a new, mandatory step in the evaluation process.
• Strategic breakthrough allocation. Agencies whose SBIR set-aside reaches $100 million or more annually will be authorized to award up to $30 million to a single small business over a period of up to 48 months. Businesses seeking this larger allocation must demonstrate market-validated technology and secure matching private investment.
• Additional reporting requirements. Agencies will be subject to new annual reporting obligations on their awards, along with periodic reporting to Congress.

Where to start

The central hub for both programs is sbir.gov, the official SBA-managed portal where businesses can explore funding opportunities, review participating agencies, and access application resources. There are currently 11 federal agencies that fund innovations through the SBIR and STTR programs. These include the Dept. of Defense, the National Institutes of Health, NASA, the Dept. of Energy, the National Science Foundation, the Dept. of Agriculture, the Dept. of Homeland Security, the Dept. of Transportation, the Environmental Protection Agency, the Dept. of Commerce (through NOAA and NIST), and the Dept. of Education – each with its own research priorities and solicitation schedule. 

Proposals must respond to a solicitation published by one of the participating agencies – businesses cannot simply submit an application at any time. Agencies post funding opportunities on a periodic basis throughout the year, with some releasing multiple solicitations annually. 

The sbir.gov portal maintains a searchable database of open topics at sbir.gov/topics, which allows you to browse current opportunities across all agencies and identify those most aligned with your work. From there, applications are submitted directly through each agency’s own submission process. You will also need a Unique Entity ID (UEI) from SAM.gov to receive an award, so obtaining that registration in advance is a practical first step. For businesses that are new to the process, SBIR also maintains a directory of local assistance organizations at sbir.gov/apply, including proposal assistance, commercialization support, and industry networking that can help you navigate the application from start to finish. 

Considerations for business owners

If you operate a qualifying small business in fields such as defense, energy, agriculture, biotechnology, or technology development, these programs can represent a meaningful non-dilutive funding source. Unlike a loan or outside investment, SBIR and STTR awards are grants that do not require repayment or an equity stake in your business. 

If your business has any international ownership, partnership, or funding relationships, you should review the new security-screening provisions carefully before applying, as connections to foreign governments or militaries will now result in a denial. 

The reauthorization also creates a longer runway for planning. With program authority now extended through fiscal year 2031, you can incorporate these funding opportunities into longer-term research and growth strategies rather than treating them as a year-to-year variable. 

If you are interested in exploring SBIR or STTR funding, we encourage you to consult with both legal counsel and your CPA before applying. Award structures, matching requirements, and the interaction of grant income with your federal tax obligations are all factors worth reviewing in advance.