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Federal R&D Grants to Small Business Near Reauthorization

Posted by: Nick Leiber on December 13, 2011

A deal to reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which were set to expire this Friday, is close to being approved, according to the House Small Business Committee. The two popular programs each set aside government research and development money for small businesses to create and commercialize technology innovations that benefit federal agencies.

The agreement would gradually increase the annual set asides for the programs and extend them through Sept. 2017. Congress could approve it this week and tack it onto the fiscal 2012 defense budget bill.

Some of the highlights of the deal, from the Committee’s press release:

• Allows for greater participation among small businesses with significant private capital support, increasing venture capital participation to 25% for the National Institutes of Health, the Department of Energy, and the National Science Foundation and 15% for the other participating federal agencies;

• Increases both Phase I and Phase II award levels, which have not been raised since 1982. The award guidelines for SBIR and STTR awards are increased from $100,000 to $150,000 for Phase I and from $750,000 to $1 million for Phase II, allowing for an additional Phase II on the same project should it be especially promising;

• Increases the SBIR program allocation from 2.5 to 3.2 percent and the STTR allocation from .3 percent to .45 percent over the course of the reauthorization, which allows more access for small businesses to compete for R&D funds;

Karen E. Klein detailed what had been holding up the programs’ reauthorization in a piece a few months ago:

The programs, which were established nearly 30 years ago and must be reauthorized about once a decade, funneled about $2.2 billion to small companies in fiscal 2011. While they generally receive bipartisan support, the programs have come close to expiring and been extended on a short-term basis a dozen times since 2008, with the latest quick fix taking place last May.

At issue in long-term reauthorization is whether the programs should be open to small businesses majority-owned by venture capital and hedge funds, an idea pushed by biotech and venture capital groups and their allies in Congress, but opposed by independent small business advocates, who fear that non-venture-capital-backed companies would lose out in the competition for government dollars.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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