SBIR Phase 1 Proposal Guide

What Is the SBIR Program?

The Small Business Innovation Research (SBIR) program is a competitive federal initiative that provides early-stage funding to small businesses developing innovative technologies. Eleven federal agencies participate, including the Department of Defense (DoD), the National Institutes of Health (NIH), the National Science Foundation (NSF), and the Department of Energy (DoE). Each agency funds SBIR proposals aligned with its own mission and priorities.

Phase 1 awards are proof-of-concept grants, typically ranging from $50,000 to $275,000, depending on the agency. The goal is to establish the technical merit and feasibility of your proposed innovation. A successful Phase 1 positions you to compete for a much larger Phase 2 award focused on full development.

Eligibility Basics

Your company must be a for-profit U.S. small business with fewer than 500 employees. The principal investigator (PI) must be primarily employed by the small business at the time of award. The PI does not need to own the company, but their primary employment must be with the applicant firm.

Some agencies allow subcontracting to universities or research institutions, but the small business must perform a minimum percentage of the work — typically at least two-thirds for Phase 1. Verify these thresholds in the specific solicitation, as they vary by agency.

Understanding the Solicitation

Each agency releases its own SBIR solicitation with specific topics and subtopics. Read the solicitation carefully before writing a single word. Focus on three things: the technical topic description, any specific requirements for proposal format and length, and the evaluation criteria with their relative weights.

For agencies like the DoD, topics are highly specific and defined by program managers with particular technical needs. For NSF, the topics are broader and emphasize commercial potential. Tailoring your proposal to the specific topic and agency is essential.

Proposal Structure

While formats vary by agency, most Phase 1 proposals share a common structure.

Technical Approach

This is the core of your proposal. Describe the innovation you are developing, the technical problem it solves, and your approach to demonstrating feasibility in Phase 1. Be specific about your research plan, milestones, and deliverables. Reviewers want to see a clear path from the start of Phase 1 to a feasibility determination.

Explain what makes your approach novel compared to existing solutions. If your technology is based on published research or prior work, describe how you will advance it beyond the current state. Include preliminary data or proof-of-concept results if you have them.

Commercial Potential

Every SBIR agency cares about commercialization, but the emphasis varies. NSF and NIH place heavy weight on the commercial plan, while DoD focuses more on the technical approach and its relevance to military needs.

Your commercialization section should describe the target market, the size of the opportunity, your competitive advantage, and your path to revenue. Identify potential customers, strategic partners, or licensing opportunities. If you have letters of interest from potential customers, include them as supplementary documents.

Team Qualifications

Demonstrate that your team has the technical expertise to execute the proposed work. Provide brief biosketches for key personnel highlighting relevant experience, publications, patents, and prior SBIR awards. If you are subcontracting specialized work, explain why the subcontractor is necessary and what they will contribute.

Budget

Phase 1 budgets should be realistic and well-justified. Every line item should connect to a specific task in your research plan. Agencies scrutinize budgets for reasonableness. Avoid inflating costs or including expenses that do not directly support the proposed work.

Agency-Specific Tips

NIH: Uses the standard NIH review process with study sections. Strong emphasis on the unmet medical need and the significance of the health problem being addressed. Proposals are scored on significance, investigator qualifications, innovation, approach, and environment.

NSF: Requires a strong commercialization plan and evidence of market demand. NSF SBIR uses a two-phase review: first a technical panel, then a commercialization review. The Project Pitch system allows you to submit a brief concept before writing a full proposal.

DoD: Topics are defined by specific military needs. Proposals must clearly address the stated topic requirements. Direct communication with the topic author is encouraged before the solicitation closes.

Common Mistakes

• Submitting a proposal that reads like an academic paper rather than a business development plan
• Failing to articulate a clear commercial application for the technology
• Proposing a Phase 1 that is too ambitious — remember, this is about demonstrating feasibility, not completing development
• Ignoring the specific evaluation criteria and their weights
• Not contacting the program manager or topic author before submitting

After Submission

Review timelines vary by agency. DoD typically announces awards within four to six months, while NIH follows its standard review cycle. Use the waiting period to advance your technology, build customer relationships, and prepare your Phase 2 strategy.

A well-executed Phase 1 not only demonstrates technical feasibility but also builds the foundation for a compelling Phase 2 proposal and, ultimately, a commercially viable product.