Small Business Program Eligibility

Eligibility for the SBIR and STTR programs depends on the phase for which the small business is applying. The funding limits available for small business applicants within each phase vary.

Phase I demonstrates the technical merit, feasibility and potential for commercialization efforts. Small businesses in Phase II are continuing the research and development efforts initiated during Phase I.

Small businesses can apply for a Direct Phase II SBIR award even if they have not received a Phase I award. Small businesses applying for Fast Track consideration submit one application for Phase I and Phase II that receives combined reviews.

Primary eligibility criteria for NCATS' SBIR and STTR programs are listed below. Visit the NIH SBIR & STTR website for a more comprehensive list of eligibility criteria.

SBIR

Only U.S. small business concerns (SBCs) are eligible to participate in the NIH SBIR program. The small business must meet all of the criteria described in the funding opportunity announcement at the time of Phase I and II awards, including:

• SBC is an organized for-profit with a place of business located and operating primarily in the United States, or which makes a significant contribution to the United States economy through payment of taxes or use of American products, materials or labor.
• SBC is in the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative. When the SBC is a joint venture, foreign business entities must have less than 50 percent participation in the joint venture, as further explained:
  • SBC is more than 50 percent directly owned and controlled by one or more individuals who are citizens of or permanent resident aliens in the United States, other business concerns (each of which is more than 50 percent directly owned and controlled by individuals who are citizens of or permanent resident aliens in the United States), or any combination of these.

OR

• • SBC is more than 50 percent owned by multiple venture capital operating companies, hedge funds, private equity firms or any combination of these. No single venture capital operating company, hedge fund or private equity firm may own more than 50 percent of the SBC.

OR

• • SBC is a joint venture in which each entity to the joint venture meets the requirements above.

Definitions:

• Hedge fund has the meaning given that term in section 13(h)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1851(h)(2)). The hedge fund must have a place of business located in the United States and be created or organized in the United States, or under the law of the United States or of any state.
• Portfolio company means any company that is owned in whole or in part by a venture capital operating company, hedge fund or private equity firm.
• Private equity firm has the meaning given the term “private equity fund” in section 13(h)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1851(h)(2)). The private equity firm must have a place of business located in the United States and be created or organized in the United States, or under the law of the United States or of any state.
• Venture capital operating company means an entity described in ยง 121.103(b)(5)(i), (v) or (vi). The venture capital operating company must have a place of business located in the United States and be created or organized in the United States, or under the law of the United States or of any state.

STTR

The STTR program is similar in structure to SBIR but funds cooperative research and development projects involving an SBC and a research institution (i.e., nonprofit college or university, federally funded research and development center, or domestic nonprofit research organization). The SBC must meet all the criteria specified in the funding opportunity announcement at the time of Phase I and II awards, including:

• SBC is an organized for-profit, with a place of business located in the United States and with no more than 500 employees. No size limit pertains to the research institution, but it also must be located in the United States.
• SBC is more than 50 percent U.S.-owned and independently operated.

In addition, the SBC must be engaged in a formal cooperative research and development effort with the research institution.

• The effort must be managed by the SBC, with at least 40 percent SBC effort and at least 30 percent effort by the research institution.
• The research institution must be a U.S. nonprofit college or university, domestic nonprofit research organization, or federally funded research and development center.
• The principal investigator may be principally employed at either the small business or the research institution.