SBIR & STTR Grants for Startups: Your First Application in 2026

Why SBIR and STTR Grants Are the Best Non-Dilutive Funding for Startups

If you are building a technology startup and want to fund your R&D without giving up equity, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs should be at the top of your list. These federal programs collectively distribute over $4 billion annually to small businesses, making them the largest source of early-stage, non-dilutive funding in the United States.

Unlike venture capital, SBIR and STTR grants do not require you to hand over a percentage of your company. Unlike loans, you never pay the money back. The government is essentially buying a stake in your research -- betting that your innovation will benefit the public and strengthen the national economy. For first-time founders, bootstrapped teams, and deep-tech companies that are too early for traditional investors, this funding can be transformative.

The catch? These programs are competitive, the proposals are technical, and the process has a learning curve. This guide breaks down everything you need to know to submit your first SBIR or STTR application in 2026.

If you are exploring other non-dilutive options alongside SBIR, our small business grants page covers a broader range of funding sources available to startups.

SBIR vs. STTR: Key Differences and Which to Choose

SBIR and STTR are sibling programs with the same goal -- funding small business innovation -- but they differ in one critical way: the role of a research institution.

SBIR (Small Business Innovation Research) requires that the small business perform at least 67% of the Phase I research and 50% of the Phase II research in-house. You can subcontract to a university or research lab, but your company must lead the work.

STTR (Small Business Technology Transfer) is designed for startups that need to partner closely with a university or federally funded research institution. Under STTR, the small business must perform at least 40% of the work and the research institution must perform at least 30%. This makes STTR ideal if your technology originated in a university lab and you need continued access to that lab's expertise, equipment, or IP.

Which Should You Choose?

• If your team can execute the R&D independently, apply to SBIR. You retain more control and flexibility.
• If your core technology depends on a university partnership, STTR is the better fit. It also forces a formal collaboration agreement, which can strengthen your proposal.
• If both options are available for the same topic, consider which structure honestly reflects how the work will get done. Reviewers can tell when a partnership is forced.

For a deeper comparison of program phases and what each stage demands, see our breakdown of SBIR Phase 1 vs Phase 2.

Participating Federal Agencies

Eleven federal agencies participate in the SBIR program, and five participate in STTR. Each agency has its own priorities, review process, and funding levels. Understanding which agency aligns with your technology is one of the most important decisions you will make.

Major SBIR/STTR Agencies

Department of Defense (DOD) -- The largest SBIR funder by dollar volume. DOD topics are highly specific and tied to military needs. If your technology has defense applications, this is where the money is. Read our DOD SBIR proposal guide for agency-specific strategies.

National Institutes of Health (NIH) -- The second-largest funder. NIH SBIR/STTR is omnibus, meaning you can propose your own topic as long as it falls within the mission of one of the 27 NIH institutes. This is ideal for biotech, medtech, and digital health startups. Explore current opportunities on our NIH grants page.

National Science Foundation (NSF) -- NSF runs a unique program called America's Seed Fund. It is technology-agnostic, and reviewers evaluate commercial potential alongside technical merit. NSF is often the best first SBIR for software and platform companies. See our NSF grants page for more.

Department of Energy (DOE) -- Focused on energy, climate, and advanced manufacturing technologies. DOE topics tend to be well-defined and technically demanding.

NASA -- Funds technologies relevant to space exploration, aeronautics, and Earth science. NASA topics are specific and published in annual solicitations.

USDA -- Smaller program focused on agriculture, food safety, and rural development technologies.

EPA -- Funds environmental and sustainability innovations. Smaller budget but less competition.

Other agencies -- The Department of Education, Department of Homeland Security, Department of Commerce (NIST), and Department of Transportation also participate, each with niche focus areas.

For defense and intelligence-adjacent technologies, also consider opportunities listed on our DARPA grants page, which sometimes intersect with SBIR topics.

Eligibility Requirements

Before you invest time writing a proposal, confirm that your company meets the eligibility requirements. These are non-negotiable.

Company Requirements

• Size: Your business must have 500 or fewer employees. Most SBIR applicants have fewer than 25.
• Ownership: The company must be at least 51% owned and controlled by U.S. citizens or permanent resident aliens. Venture-backed companies with majority foreign ownership are not eligible.
• For-profit status: Your company must be a for-profit entity organized in the United States. Nonprofits are not eligible (though they can be STTR research partners).
• Principal Investigator: The PI must be primarily employed by your small business at the time of award. For STTR, the PI can be primarily employed by either the small business or the research institution.

Ownership and VC Considerations

A significant rule change in recent years concerns venture capital ownership. If your company is majority-owned by venture capital firms, hedge funds, or private equity firms, you may face additional scrutiny or disqualification depending on the agency. DOD has been particularly strict about this. Check the specific solicitation for current rules.

R&D Activity

You do not need an existing product or revenue to apply. You do need a clearly defined research question and a feasible plan to answer it. The SBIR program funds research, not product development in the commercial sense. Your proposal should frame the work as an investigation with measurable technical objectives.

Phase I vs. Phase II vs. Phase III

The SBIR/STTR programs are structured in three phases, each with a distinct purpose and funding level.

Phase I: Feasibility

Phase I is a proof-of-concept stage. You are answering a fundamental question: can this technology work?

• Typical award: $150,000 to $275,000 (varies by agency; NSF awards up to $275,000, DOD typically $250,000, NIH up to $292,000)
• Duration: 6 to 12 months
• What reviewers want: A clear technical hypothesis, a sound research plan, a qualified team, and evidence that the problem matters

Phase I is where most first-time applicants start. It is lower risk for both you and the agency.

Phase II: Full R&D

Phase II funds the full development of your technology based on Phase I results. You must demonstrate that Phase I was successful before applying.

• Typical award: $750,000 to $1,750,000 (NIH goes up to $2 million, DOD varies by component)
• Duration: 2 years
• What reviewers want: Strong Phase I results, a detailed development plan, and a credible path to commercialization

Some agencies allow Direct-to-Phase-II applications if you can demonstrate equivalent feasibility work done with other funding.

Phase III: Commercialization

Phase III is not a grant. It is the commercialization stage where you transition your technology into the market. Federal agencies may award Phase III contracts (especially DOD), and having SBIR/STTR heritage can give you a competitive advantage in procurement.

For detailed guidance on planning across phases, see our SBIR grant guide for 2026.

How to Find the Right SBIR Topic

Choosing the right topic is half the battle. A brilliant proposal submitted to the wrong topic will not get funded.

Agency-Specific vs. Open Topics

DOD, NASA, and DOE publish specific topics -- sometimes hundreds per solicitation. You must match your technology to a listed topic. Read the topic description carefully and contact the Topic Author (a government scientist or program manager) before writing. They can tell you whether your idea fits.

NIH and NSF are more open-ended. NIH lets you propose any topic within an institute's mission. NSF accepts proposals across broad technology areas. This flexibility is powerful but demands that you clearly articulate the significance of the problem.

Using a Grant Finder

Rather than manually scanning dozens of agency websites, use a grant finder to search across all SBIR/STTR solicitations at once. Filter by agency, keyword, technology area, and deadline to surface the opportunities most relevant to your startup.

Talking to Program Managers

This step is optional but strongly recommended. Program managers can tell you whether your idea fits their portfolio, whether similar work has already been funded, and what they consider high priority. A 15-minute conversation can save you weeks of wasted effort.

Anatomy of a Winning SBIR Proposal

Every agency has its own format requirements, but most SBIR/STTR proposals share a common structure.

Technical Proposal (Core Document)

• Specific Aims / Technical Objectives: What exactly will you accomplish in this phase? State 2-4 measurable objectives.
• Significance and Background: Why does this problem matter? What is the current state of the art, and why is it insufficient?
• Innovation: What is novel about your approach? How does it differ from existing solutions?
• Research Plan / Technical Approach: How will you execute the work? Describe your methods, experiments, milestones, and decision points.
• Key Personnel: Who is on the team, and why are they qualified? Include relevant experience, publications, and prior SBIR work.
• Facilities and Equipment: What resources do you have access to? This is especially important for hardware and biotech companies.

Commercialization Plan

This is not an afterthought. Agencies increasingly weigh commercialization potential, and NSF in particular treats it as a primary evaluation criterion. More on this below.

Budget and Budget Justification

Every line item must be justified. Reviewers flag budgets that are inflated, vague, or inconsistent with the proposed work. We cover this in detail in our SBIR budget template guide.

Commercialization Plan Essentials

The commercialization plan is where you convince reviewers that your technology will leave the lab and enter the market. A strong plan covers the following.

Target market and customers: Who will buy this? Be specific. Name market segments, customer types, and use cases. Include market size estimates backed by credible sources.

Competition and differentiation: What alternatives exist? Why is your approach better? Do not claim you have no competitors -- that signals you have not done your homework.

Business model: How will you make money? Licensing, direct sales, SaaS subscriptions, government contracts? Describe your pricing logic.

Go-to-market strategy: How will you reach customers? Partnerships, direct sales teams, distribution channels, regulatory pathways?

IP strategy: What patents have you filed or plan to file? How will you protect your competitive advantage?

Traction and evidence: Any letters of intent, pilot customers, partnerships, or revenue? Even early signals matter.

For real examples of what strong commercialization plans look like, see our SBIR commercialization plan examples.

Budget Strategies

Phase I Budget ($150K-$275K)

Phase I budgets are tight. Allocate strategically.

• Personnel: Typically 60-70% of the budget. Include the PI and key technical staff. Justify each person's role and time commitment.
• Subcontracts: If you are using a university or consultant, keep this under the agency's threshold (usually 33% for SBIR, higher for STTR).
• Equipment: Only include equipment essential to the research. Agencies scrutinize large equipment purchases in Phase I.
• Travel: Include travel for technical meetings, conferences, or customer discovery. Keep it modest -- $2,000 to $5,000 is typical.
• Indirect costs: If you have a negotiated indirect cost rate with the federal government, use it. If not, most agencies allow a de minimis rate or will negotiate one.
• Materials and supplies: Lab consumables, cloud computing costs, prototype materials. Be specific.

Phase II Budget ($750K-$1.75M)

Phase II budgets allow for a larger team, more equipment, and subcontracts. The key difference is scale and the expectation of progress toward a commercial product.

• Expand your team to include business development and regulatory expertise where relevant
• Budget for customer discovery activities and market validation
• Include costs for IP filing and protection
• Consider equipment purchases that will carry into Phase III

Our SBIR budget template provides a line-by-line walkthrough for both phases.

Common Reasons SBIR Proposals Get Rejected

Understanding why proposals fail is as valuable as knowing what makes them succeed.

Weak technical objectives: Vague or unmeasurable goals signal that the applicant has not thought through the research carefully.

Poor topic fit: Submitting a proposal that does not clearly address the solicitation topic or agency mission. This is especially common with DOD topics.

Insufficient innovation: Incremental improvements over existing technology are hard to fund. Reviewers want to see a meaningful technical leap.

Inadequate team qualifications: If the PI or key personnel lack relevant experience, reviewers question whether the work can be executed.

Missing or superficial commercialization plan: Especially for NSF and NIH, a weak commercialization narrative can sink an otherwise strong technical proposal.

Budget inconsistencies: Line items that do not match the proposed work, excessive subcontracting, or unexplained costs raise red flags.

Ignoring the review criteria: Every solicitation lists its evaluation criteria and their relative weights. Proposals that do not directly address each criterion leave points on the table.

No preliminary data: While not always required, proposals with some preliminary results or proof of concept consistently score higher, especially for NIH.

Timeline from Submission to Award

The SBIR/STTR timeline varies by agency, but here is a general picture.

Pre-Submission (2-4 months)

• Identify the right solicitation and topic
• Contact the program manager or topic author
• Draft and revise the proposal
• Prepare the budget and all required forms
• Submit through the agency's portal (DSIP for DOD, Research.gov for NSF, eRA Commons for NIH)

Review Period (3-6 months)

• Agency conducts peer review (NIH uses study sections, NSF uses panel review, DOD uses internal evaluation)
• Some agencies notify you of reviewer questions or request clarifications

Award Decision (6-12 months after submission)

• NIH: Expect 9-12 months from submission to award start
• NSF: Typically 6-9 months
• DOD: Varies widely by component, usually 6-12 months
• Other agencies: 4-9 months on average

Post-Award

• Negotiate final budget and terms
• Begin the period of performance
• Submit progress reports as required
• Apply for Phase II before Phase I ends (timeline varies by agency)

Plan accordingly. If you need funding in 6 months, start writing your proposal today.

Resources for First-Time SBIR Applicants

Getting started with SBIR can feel overwhelming. These resources will help you build momentum.

SBIR.gov: The official portal for all SBIR/STTR solicitations, award data, and program information. Start here to search open topics and study past awards in your technology area.

Agency SBIR offices: Each participating agency has a dedicated SBIR/STTR office with staff who answer questions, host webinars, and publish guidance documents. Take advantage of these -- they want you to submit a strong proposal.

SBA SBIR Road Tour: The Small Business Administration hosts regional events and webinars for first-time applicants. These are free and provide direct access to program managers.

FAST (Federal and State Technology) Partnership Program: State-level organizations that provide SBIR mentoring, proposal review, and workshops. Check whether your state has a FAST program.

Your state's SBIR support network: Many states offer matching funds, mentoring programs, or proposal development assistance for SBIR applicants. A quick search for your state plus "SBIR assistance" will surface local resources.

Granted's SBIR resources: Our SBIR grant guide for 2026 provides a comprehensive overview of the program landscape. Use our grant finder to search current SBIR/STTR solicitations filtered to your technology area. And if you are exploring other funding alongside SBIR, browse our small business grants page for additional opportunities.

Final Advice for Your First SBIR Application

Start with Phase I. Pick one agency and one topic. Write the proposal well before the deadline -- not the week of. Get feedback from someone who has won an SBIR before. And do not be discouraged if your first proposal is not funded. The average SBIR success rate is around 20-25%, and many successful companies were funded on their second or third attempt.

The SBIR and STTR programs exist because the federal government recognizes that small businesses drive innovation. Your job is to convince reviewers that your specific innovation is worth betting on. A clear problem statement, a sound technical approach, a credible team, and a realistic path to market -- that is the formula. Everything else is execution.