Published: 4/17/2026
by Tara Steffen, PhD
Senior Medical Writer at Crane Group
The “Small Business Innovation Research (SBIR)” and “Small Business Technology Transfer (STTR)” programs originally expired on September 30, 2025, which caused a six-month lapse in federal funding and general chaos within the startup community. As of April 13, 2026, the programs have been re-authorized through the passing of “The Small Business Innovation and Economic Security Act,” but not without some changes.
Key takeaways:
- Increased security measures.
- New opportunity for Phase II breakthrough funding, up to $30M USD.
- Limits on number of proposals submitted per year by a small business.
- Increased education and focus on transitioning SBIR/STTR technologies to Phase III.
- TABA funding may now be used to hire new staff that are specific to goals of the program.
We describe some of the major changes that specifically impact applicants and awardees below:
Bolstering Research Security of SBIR and STTR Awards: One of the most significant changes for the SBIR/STTR program includes the expansion of security risk evaluations for SBIR/STTR applicants. Small businesses can and will be evaluated during the due diligence process, disclosures submitted, and through coordination with the intelligence community, Federal law enforcement, and other counterintelligence agencies. There is also an expanded list of prohibited connections that the small business (or their affiliates) cannot have in order to be eligible to receive SBIR/STTR funding. If, during this process, there is a decision to deny an application due to security risk, the Federal agency has a requirement to the small business to identify the reason for the denial, as long as it does not compromise national security. That being said, there is a clear policy that states that denial an application will not prohibit the small business from being eligible for future awards in subsequent cycles.
Phase II Strategic Breakthrough Funding: Small businesses that have received at least 1 prior Phase II award (SBIR or STTR) and can demonstrate 100% matching funds (private capital/non-SBIR/STTR federal funding/or combination) may be eligible for up to $30M USD, depending on the budget of the participating Federal agency. The small business must have market research that shows their technology is an effective solution to an identified need. We anticipate that information will become available as each Federal agency selects their topics. Specific to the Department of Defense (DoD), the product must meet necessary readiness levels, priorities, and operational needs. Additionally, the small business only needs 20% matching funds to be eligible.
Reducing Administrative Burden: Beginning in FY 2027, each Federal agency will be required to set a cap on the number of proposals that a small business may submit in response to Phase I and Phase II solicitations, per year. The limit will be defined by each agency using one of the following methods: a limit for any small business on a fiscal year basis, a limit for any small business on a solicitation basis, or a limit for any small business on a topic basis. It is currently unknown what the NIH’s decision is regarding proposal limits.
There is language in place for waivers to the proposal number limit on a topic-by-topic basis, as long as it is time-sensitive, urgent to the mission of the Federal agency, and the Director reasonably believes that it cannot be met by other small business that have not reached the proposal limit. That being said, the number of waivers granted will be limited to under 5% of an agency’s overall topics for their SBIR/STTR programs.
Phase III Education & Improvements: Changes to this act require the establishment of training activities for contracting officers and Federal agency employees that have procurement or acquisition responsibilities to ensure their awareness of Phase III awards under the SBIR and STTR programs. This goes hand in hand with the new requirements of simplified and standardized procedures and contracts for Phase I, Phase II, and Phase III SBIR awards and standardized solicitation provisions and contract clauses that provide guidance to the small business on what market research (and other information) is required for Phase III award eligibility. The goal here is to transition as many new technologies as possible that are supported by the Phase I and II programs to commercial use.
Technical and Business Assistance Improvements: The TABA program is an existing element to the SBIR/STTR program wherein recipients can receive funding as part of their Phase I or Phase II program for business-specific activities. There are many new changes to the TABA program as part of this bill. Amendments in this act focus on the inclusion of “Cybersecurity Assistance” as a TABA eligible activity, which was not specified previously. Another big change was the removal of language around Vendor Selection that specified that the Federal agency held the power to select vendors that a small business could use and limit the contract term to 5 years. Now, the small business itself may select vendors to assist in meeting their goals. Brand new to this act, a small business may use funding provided by TABA to hire new staff, augment staff, or direct staff to conduct or participate in training activities consistent with the goals of the TABA program. Finally, each agency that has an Innovation Corps (I-Corps) program, and is required to conduct an SBIR/STTR program, now must provide an option for awardees to request participation in an I-Corps teams course, I-Corps bootcamp, or another equivalent training program. Payment for the program may come from TABA funding, funds made available by the awarding Federal agency, an I-Corps team grant, the participating team, or any combination. What remains unchanged are the dollar amounts associated with the Phase 1 ($6,500) and Phase 2 ($50,000) TABA programs.