Senate Deal to Restart SBIR/STTR Could Reopen $4B Innovation Pipeline
March 2, 2026 · 2 min read
Claire Cummings
After five months of legislative limbo that froze new funding for thousands of small businesses, a bipartisan Senate deal announced February 25 could finally restart the nation's premier small business innovation programs.
Senators Edward Markey (D-Mass.) and Joni Ernst (R-Iowa) introduced the Small Business Innovation and Economic Security Act, a compromise bill that would reauthorize both the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs through September 30, 2031. The programs lapsed on October 1, 2025, when Congress failed to extend their authorization — halting all new solicitations and leaving agencies unable to issue fresh funding opportunities.
What the Markey-Ernst Bill Changes
The deal does more than simply restart the clock. Beginning in FY2027, each agency's SBIR/STTR program director must set equal caps on the number of Phase I and Phase II proposals any single firm can submit per year. Limited waivers — capped at 5% of solicitations annually — exist for time-sensitive topics, but require written justification and 15-day approval timelines.
A new "Strategic Breakthrough" Phase II pathway authorizes awards up to $30 million over 48 months for agencies with larger SBIR portfolios. Eligibility requires prior Phase II experience and matching funds equal to at least 100% of the award, with the Department of Defense requiring an additional 20% from non-SBIR sources.
The bill also introduces mandatory foreign risk assessments covering cybersecurity, patent ownership, employee screening, and financial ties to countries of concern — a direct response to years of congressional concern over foreign exploitation of federally funded research.
What Small Businesses Should Do Now
The bill has been hot-lined in the Senate, a procedural step that signals rapid passage is expected. If it clears the House on a similar timeline, agencies could begin posting new solicitations within weeks.
Small businesses that paused proposal development during the freeze should resume immediately. Firms planning to submit multiple proposals per agency should pay close attention to the forthcoming cap rules, which will take effect in FY2027. Companies with foreign partnerships or investors should begin documenting their risk profiles now — the new screening requirements will apply to all future applications.
For teams that lost momentum during the five-month gap, tools like Granted can help rebuild proposal pipelines and identify which agencies are likely to post first once the authorization is signed.