Federal programs help inventive entrepreneurs
Could yours be the perfect invention to aid U.S. combat soldiers? Have you created a vaccine that could possibly rid the world of a deadly disease? Do you think you could be the next Bill Gates?
Perhaps your ideas or inventions aren’t as grand as these, but you need a little assistance with funding your idea and making your dream a reality. If the answer is yes, then the federal government could help you.
For small business owners seeking to advance their technological inventions in the commercial marketplace, the U.S. Small Business Administration administers the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.
The SBIR is a highly competitive, three-phase award program that encourages small businesses to explore their technological potential and profit from their inventions.
The SBIR program has helped thousands of small businesses compete for federal research and development awards. Their contributions have enhanced defense, protected the environment, advanced health care and improved the abilities to manage information and manipulate data.
By reserving a percentage of federal research and development funds for small businesses, the SBIR program protects small businesses and enables them to compete on the same level as larger companies. Every federal department or agency with an external research and development budget greater than $100 million participates in the SBIR program, including the departments of agriculture, commerce, defense, education, energy, health and human services, homeland security and transportation as well as the Environmental Protection Agency, National Aeronautics and Space Administration and National Science Foundation. Each agency is required to set aside no less than 2.5 percent of its overall external research and development budget to use either as an SBIR grant or contract.
These government agencies issue requests for proposals for specific R&D projects they want accomplished and accept unsolicited proposals for other projects. The SBA collects solicitation information from participating agencies and publishes it quarterly in a presolicitation announcement.
Following submission of proposals, agencies make SBIR awards based on small business qualifications, degree of innovation, technical merit and future market potential.
Small businesses that receive awards or grants then begin a three-phase program:
Phase I is the startup phase. Awards of up to $100,000 for about six months support exploration of the technical merit or feasibility of an idea or technology.
Phase II awards up to $750,000 for as many as two years to expand Phase I results. During this time, the R&D work is performed and the developer evaluates commercial potential. Only Phase I award winners are considered for Phase II.
Phase III is the period during which Phase II innovation moves from the laboratory into the marketplace. No SBIR funds support this phase. Small businesses must find funding in the private sector or other non-SBIR federal agency funding.
A related program, STTR is coordinated by the SBA with other federal agencies spending $1 billion or more in extramural research and development, including the departments of defense, energy and health and human services as well as NASA and the NSF.
Like the SBIR program, the STTR program is also a technologically based, three-phase award program. The STTR program encourages cooperative research and development projects conducted jointly by a small business STTR awardee and research institution that’s either a non-profit institution or federally funded research and development center.
To learn more about the SBIR and STTR programs, visit the SBA Web site at www.sba.gov.
Daniel Hannaher, the U.S. Small Business Administration Region VIII administrator, works out of Denver. Reach him at (303) 844-0505 or Daniel.Hannaher@sba.gov.