Congress created the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs in 1982 and 1992, respectively. These programs require certain government agencies to set aside a percentage of their extramural budgets so domestic small businesses can engage in research and development (R&D) with a strong potential for technology commercialization. Accordingly, 11 agencies support the SBIR program with five of them also having STTR programs. The Small Business Administration serves as the coordinating agency for the programs.
Small businesses receive multiple benefits by applying for SBIR/STTR awards. The funding is stable, predictable, and not a loan. In addition, the capital is non-dilutive, and the small business retains certain intellectual property rights for their developments. Companies can use their proposals for SBIR/STTR awards as an opportunity to develop a relationship with a university or other research institutions. These programs allow innovative small businesses to offset the cost of R&D while leaving them in control of any developed IP.