SBIR Anxiety: Should You Be Worried?
- OK Catalyst
- Apr 22
- 4 min read
As federal funding priorities evolve in 2025, we’ve heard from many of you seeking clarity on the future of the SBIR/STTR programs. In response, we’re taking a moment to break down recent developments and share why we remain confident in the continued strength and impact of America’s Seed Fund!
Are the SBIR/STTR Programs in Jeopardy?
Not exactly, but there are some important shifts happening. The SBIR/STTR programs themselves aren’t going away anytime soon. They’ve been around for over 40 years because they’re one of the most effective ways the federal government invests in small business innovation.
That said, there’s definitely been more scrutiny lately. New Executive Orders (EOs) and proposed changes to the Small Business Act are prompting discussions about how these programs operate, things like oversight, national security concerns, and how we measure impact. These conversations are healthy, and in many cases, overdue.
For small businesses and researchers, it means the program may continue to evolve, but the core mission remains the same: funding cutting-edge R&D, supporting tech commercialization, and fueling economic growth through innovation. We’re keeping a close eye on the changes, but we’re still optimistic and we’ll be here to help guide you through it.
What Should I Know About Reauthorization?
The SBIR/STTR programs are currently authorized through September 30, 2025. To continue beyond that date, Congress must pass legislation to reauthorize them. Reauthorization is a standard part of the legislative process for programs like these. It provides an opportunity for lawmakers to review the programs' performance, make necessary adjustments, and ensure they align with current national priorities.
In March, Senator Joni Ernst introduced the INNOVATE Act, a bill aimed at reauthorizing and reforming the SBIR/STTR programs.
This proposed legislation includes several notable changes:
Program Extension: The bill seeks to extend the SBIR/STTR programs for an additional three years, through September 30, 2028.
Funding Adjustments: It proposes increasing the SBIR funding allocation to 3.45% of an agency's extramural R&D budget starting in fiscal year 2026.
STTR Modifications: The STTR program would see its funding allocation reduced from 0.45% to 0.20%. Additionally, the required work share for small businesses would increase to 50%, while the minimum participation from research institutions would decrease to 20%.
New Phase IA Awards: A new Phase IA program is proposed to encourage participation from first-time applicants. These awards would offer up to $40,000 with a simplified application process, aiming to lower barriers for new entrants.
National Security Measures: The bill includes provisions to strengthen due diligence and reporting requirements, particularly concerning foreign affiliations, to safeguard against potential national security risks.
While the reauthorization process introduces changes, it's important to note that the SBIR/STTR programs have a long history of bipartisan support. These programs play a crucial role in fostering innovation and supporting small businesses across the country.
What Should I Know About New EOs?
Recent EOs issued in early 2025 have introduced changes that could impact the SBIR/STTR programs, particularly concerning compliance and administrative procedures.
Here's a breakdown of how these EOs might affect applicants and awardees:
Enhanced Compliance Requirements: Agencies are now required to ensure that all activities funded by federal grants, including SBIR/STTR awards, comply with the new EOs. This means that applicants and current awardees should review their projects to ensure alignment with the updated federal guidelines. Non-compliance could lead to delays or modifications in funding.
Increased Transparency and Accountability: An EO issued on February 26, 2025, mandates the creation of centralized systems within agencies to record and justify payments, review existing contracts and grants, and scrutinize expenditures. For SBIR/STTR participants, this could result in more rigorous reporting requirements and audits.
Temporary Funding Pauses: A memo from the Office of Management and Budget (OMB) initially called for a pause on all federal spending to assess the impact of the new EOs. Although this memo was later rescinded, the directive for agencies to ensure compliance with the EOs remains. Applicants should be prepared for potential delays in funding decisions as agencies adjust to these changes.
Focus on National Security: There is an ongoing emphasis on national security within the SBIR/STTR programs. Applicants may be required to disclose foreign affiliations or relationships to foreign countries, ensuring that funded research does not pose security risks.
What This Means for You:
Stay Informed: Regularly check for updates from the agencies you're applying to, as they may have specific guidance related to these EOs.
Review Compliance: Ensure that your project aligns with the new federal guidelines to avoid potential funding issues.
Prepare for Increased Scrutiny: Be ready for more detailed reporting and justification of expenditures.
If you're navigating these changes and need assistance, our organization is here to help guide you through the updated requirements and ensure your application remains competitive.
Should I Still Apply for SBIR/STTR Funding?
Yes! Despite some of the noise around reauthorization and potential changes, the SBIR/STTR programs are still active and fully funded. Agencies are continuing to release new solicitations, review proposals, and make awards as usual.
In fact, applying now could actually work in your favor:
There’s still strong agency demand for innovative solutions, especially in areas like defense, energy, healthcare, AI, and climate tech.
Your application timeline is long-term, by the time you apply, receive an award, and start your Phase I work, reauthorization decisions will likely be resolved.
Many proposed reforms are focused on improvement, not elimination, such as expanding opportunities for first-time applicants, increasing transparency, and adding national security guardrails.
So yes, while it's smart to stay informed, there's no reason to hit pause. If you’ve got a compelling innovation and you're ready to pursue R&D funding, this is still one of the best programs in the country to do that!
And, if you're a small business or entrepreneur in Oklahoma, we're here to help you navigate these changes and continue to leverage the opportunities the SBIR/STTR programs offer.
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