SBIR vs. STTR: What's the Difference and Which Should You Apply For?

SBIR and STTR are the two largest sources of non-dilutive R&D funding for small businesses in the United States. Both distribute billions of dollars annually, and both are open to for-profit small businesses. But they have important structural differences that determine which one is right for your situation.

What Is SBIR?

The Small Business Innovation Research (SBIR) program was established in 1982 and requires 11 federal agencies to allocate a portion of their R&D budgets — currently 3.2% — to small businesses. The program funds research and development with defined commercialization potential.

SBIR has three phases: Phase I ($150,000–$275,000) validates feasibility, Phase II ($750,000–$1.5 million) develops the prototype or technology, and Phase III commercializes the product using private or non-SBIR federal funding. There is no mandatory university partner requirement.

What Is STTR?

The Small Business Technology Transfer (STTR) program is structurally similar to SBIR but with one critical requirement: the small business must formally partner with a U.S. research institution — a university, federally funded R&D center, or nonprofit research organization.

Under STTR, at least 40% of the work must be performed by the small business and at least 30% by the research institution. The funding amounts are comparable to SBIR, and five agencies participate: DOD, DOE, HHS, NASA, and NSF.

Key Differences at a Glance

• Research partner: SBIR — optional. STTR — required (minimum 30% of work).
• Participating agencies: SBIR — 11 agencies. STTR — 5 agencies.
• Principal investigator: SBIR — must be primarily employed by the small business. STTR — can be employed by either the business or the research institution.
• IP rights: Both programs allow the small business to retain intellectual property rights, though licensing terms with the research partner must be negotiated in STTR.
• Competition level: STTR generally has fewer applicants than SBIR due to the partnership requirement, which can improve odds for qualifying companies.

Which Should You Apply For?

Choose SBIR if your technology is primarily developed in-house, you don't have an existing university partnership, or you want maximum flexibility in how work is allocated. SBIR is the right default for most small businesses pursuing federal R&D funding.

Choose STTR if your technology originated from university research, you have an active collaboration with a research institution, or the principal investigator you want to list is employed by a university rather than your company. STTR is also worth considering if you've been rejected from SBIR — the pool is smaller and the partnership requirement filters out many applicants.

How to Apply

Both programs use the same application portal at sbir.gov, where you can search open solicitations by agency, topic area, and keyword. Solicitations are released on a rolling basis — some agencies release one solicitation per year, others release multiple.

Before applying, register your business in SAM.gov (System for Award Management) — this is required for all federal funding and can take several weeks. Also confirm that your business meets the core eligibility requirements: U.S.-based, for-profit, fewer than 500 employees, majority U.S.-owned.

Once you've identified a matching solicitation, browse available grants on GrantLocate to check for complementary federal and state programs you can pursue in parallel while your SBIR or STTR application is under review.