One of the most persistent myths among would-be business owners is that Uncle Sam and other organizations dole out free, no-strings-attached grants to business startups. With rare exceptions, it doesn’t happen. Yet the fairy tale persists and “small-business grants” has long been one of the most popular searches online.
There is, however, one small-business grant program that really does exist. It’s called the Small Business Innovation Research program (www.sbir.gov). It offers specialized high-tech development grants and is administered by the U.S. Small Business Administration.
Eleven different federal agencies participate, including the departments of Energy, Education, Agriculture, Commerce, Defense and Transportation, plus the Environmental Protection Agency, NASA, National Science Foundation and others. These agencies openly invite small firms to submit their technology problem-solving proposals for possible funding.
Be aware, however, that it is a highly competitive, highly specialized program focused exclusively on developing new technologies and rarely if ever funds startups.
But if that’s what your business does, the program is definitely worth a shot. It stimulates technological innovation in the private sector by funding research and development (R&D) at small companies.
Funding R&D in a small company is tricky business, often requiring large amounts of cash with an uncertain outcome sometime in the future. The beauty of an SBIR grant is that it generally comes with no strings attached. And the federal government has over $2 billion it must spend annually on small-business technology development. Money is used for all stages, from concept to prototype to marketplace.
A typical SBIR grant is about $850,000, but can go to $2 million or more, according to Fred Patterson, who co-founded two companies that received almost $50 million in SBIR grants. Patterson now runs SBIR Coach (www.sbircoach.com), which counsels business owners on how to seek SBIR funding. He says that while about 15 percent of SBIR proposals are funded, the odds can be as high as one-in-three at some agencies.
For more details, start at the main program website, SBIR.gov. From there you can link to current solicitations, SBIR conferences and events, state resources and past awards. The past awards in particular are helpful to see the types of projects that have been funded, which agencies funded them, and the type of small business that was awarded the grant.
SBIR Gateway (www.zyn.com/sbir) is another helpful site to visit. •
Daniel Kehrer can be reached at editor@business.com.
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