In 1982, Congress passed the Small Business Innovation Development Act, creating the federal Small Business Innovation Research (SBIR) Program. The purpose of the SBIR program is to increase the opportunity for small firms to participate in federal research and development. In addition to encouraging the participation of small businesses, the program is designed to stimulate the conversion of research findings into commercial application. The act pegged the SBA to run the program, govern its policy, monitor its progress, and analyze its results. The SBIR grant program has awarded over $9.5 billion since it began in 1982.

Ten federal agencies with an extramural budget for research or research and development that exceed $100 million annually presently participate in the SBIR Program:

For information on applying for an SBIR grant, agency research programs, programs, application status, and ideas for potential research projects, contact the agency most aligned with proposed research via www.sbir.gov/contact.htm.

Under the SBIR Program, the involved federal agencies request highly competitive proposals from small businesses in response to solicitations outlining their R&D requirements. After evaluating the proposals, each agency awards funding agreements for determining the technical feasibility of the research and development concepts proposed. These awards are distributed in three phases.

Phase I. Awards up to $100,000 are made for research projects to evaluate the scientific and technical merit and feasibility of an idea. Time frame: six months. Two thirds of this work must be done by the small business.

Let’s say you have an idea for a device that could, if successful, solve a problem posed by one of the SBIR agencies. There just might be $100,000 in the agency’s budget to help you prove the concept.

Phase II. The Phase I projects with the most potential are funded to further develop the proposed idea for up to two years. Phase II awards can be as high as $750,000. Time frame: two years, and this can be exceeded with justification. One half of this work must be done by the small business. In other words, if you need help from a larger partner, you can seek it.

If you are successful in realizing the first stage of your R&D effort, and the sponsoring agency thinks you are onto something, you just might qualify for Phase II funding.

State governments, anxious to build their own industrial bases, have actively supported the SBIR Program by …

Why do the states do this? They see independent inventors and small businesses as a good investment because, chances are, technologies developed in a particular state will stay in the state once commercialized. Innovation leads to hard goods, goods create jobs, jobs employ people, people pay taxes, and so forth.

Each agency listed earlier has an SBIR office. If you’d like to know about SBIR at a particular agency or be put on the mailing lists for SBIR solicitation, contact the appropriate office or go in through the agency website.: sbir.er.doe.gov/sbir/About/about_sbir.htm.

Let’s take a close look at one SBIR program. The DOE uses three evaluation criteria for SBIR grant applications:

Your grant application is considered for funding if, based on comments from expert technical reviewers, it has no reservations with respect to any of the criteria and strongly endorses the grant application with respect to at least two of the three criteria.

We are all inspired by success stories, so here are some from the SBIR program. These are just the tip of the iceberg. SBIR is a very popular and effective federal program.

Joan Gordon had worked as a medical technologist in a clinical lab in Maine Medical Center, Maine’s largest hospital, for more than 30 years when her boss, Clark Rundell, proposed in 2000 that they co-found a company involved in the emerging field of molecular diagnostics and genetic testing. Neither Joan nor Clark had a business background, so SBA’s Maine Small Business Development Center stepped in to assist the company with building a business infrastructure, developing marketing strategies, refining products, and determining how to parcel out tasks and responsibilities. While working with the Maine SBDC, Maine Molecular Quality Controls, Inc., accomplished its greatest achievement—its quality-control cystic fibrosis testing was the first in the country ever approved by the Federal Drug Administration. The company has received at least five SBIR Phase I and Phase II grants, totaling more than $2.4 million.

With an impressive resumé as a business and entertainment entrepreneur in the music, film, and multimedia areas, Marcus Morton founded Network Foundation Technologies, a high-tech software company focused on video streaming and broadcasting live high-quality video online with Dr. Mike O’Neal in 2000. Pronounced NiFTy, the company broadcasts large live events to worldwide audiences. NFT’s patented technology used in its NiFTy Online Television product is the most efficient and successful method for enabling distributed video broadcasting over the Internet. The company has attracted more than $5 million in private equity from regional and national investors and was the recipient of SBIR Phase I and Phase IB grant awards from the National Science Foundation. In 2007, Marcus Morton was named the Entrepreneur of the Year by the Louisiana Business Incubation Association.

Founded in 2002, Language Weaver discovered its niche for language translation after the tragedy of September 11, 2001. After receiving an SBIR grant, Language Weaver started receiving government interest. Language Weaver provides translation of documents, newscasts, and other source materials for defense and commercial purposes. Application languages include Arabic, Farsi, Somali, Hindi, Chinese, French, and Spanish. Language Weaver has received $150,000 in SBIR Phase I grants and $1.5 million in SBIR Phase II grants. It has received SBIR grants from the National Science Foundation and the U.S. Army.

Dr. James Daughton, co-inventor of “Magnetoresistive” Random Assess Memory (MRAM), founded Nonvolatile Electronics, Inc. (NVE), to further develop his invention. MRAM is a revolutionary technology that fabricates memory with nanotechnology and uses electron spin. MRAM computer chips could prevent unintentional losses of information, extend battery life, and replace all RAM technology in use today. Research funding from the SBIR programs allowed the NVE to base itself in an industrial park in Minnesota where it employs a staff of 70, rather than in the founder’s home. NVE has received 121 SBIR grants, contributing to 35 percent of its revenue. Founders credit these grants with preventing the company from failing and improving its ability to attract capital from other sources. The company received half of its funding from SBIRs and BAAs. The 121 grants from SBIR and STTR have totaled $34.3 million in R&D funding.

In fiscal year 2007, SBIR provided about 5,500 federal R&D grants, totaling $2 billion.

If you’d like to see more of the award winners, or to have a better idea of whether you would qualify, go to www.sba.gov/sbir/library.html and click on SBIR/STTR Annual Awards. For specific information on SBIR programs, call 1-800-827-5722. This number will connect you with the SBA’s Small Business Answer Desk.