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Financing a small business is a tall order, but if your company is involved in scientific research and development, you may be one of the lucky few firms that can receive grant funding from the federal government. Through an initiative called the Small Business Innovation Research (SBIR) Program, the U.S. Small Business Administration provides working capital to companies filling specific research needs. This program has been around since 1982 with the purpose of “enhanc[ing] the nation’s defense, protect[ing] our environment, advanc[ing] healthcare, and improve[ing] our ability to manage information and manipulate data. Here’s what you need to know:

Eligible Industries
There are eleven federal departments that provide funding for small research and development firms each year. If your business goals are aligned with one of the following you may be eligible. You will work specifically with that agency on its R&D topics or present a proposal of your own for research.

  • Department of Agriculture
  • Department of Commerce
  • Department of Defense
  • Department of Education
  • Department of Energy
  • Department of Health and Human Services
  • Department of Homeland Security
  • Department of Transportation
  • Environmental Protection Agency
  • National Aeronautics and Space Administration
  • National Science Foundation

Qualifications
In order to participate, small businesses must be owned by American citizens and independently operated. They may not have more than 500 employees and must have a for-profit status. Lastly the principal researcher in the company must actually be employed by the small business, not just consulting or contracting with it.

Participation
If your firm is accepted by one of the federal departments, you will then start the three phase process. Phase I provides up to $100,000 for 6 months to explore the feasibility of your idea or technology. If Phase I is successful, you may be enrolled in Phase II. This stage awards up to $750,000 for as long 2 years to perform the R&D and analyze the commercial potential. Phase III is the final stage where the R&D is turned into a viable marketplace service or product, but no SBIR funds are involved.

The SBIR programs are very competitive but if you can manage to qualify, the benefits can propel your small business to success.


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