September 30, 2025, the Small Business Innovation Research (SBIR) program lapsed which is really sad because SBIR percolates innovation and small business growth.
As of now, SBIR, along with many other programs and funding to run the government, are dead or frozen because of the government shutdown.
As for SBIR, it is caught up in the quagmire that in Congress. In short, the U.S. House of Representatives passed H.R. 5100 extending SBIR and its sibling program the Small Business Technology Transfer (STTR) for a year. The bill was blocked in the Senate, and senators introduced competing SBIR related bills.
Read on for what SBIR is, why it matters, and what you should be thinking about if SBIR is part of your business.
What is SBIR?
SBIR is a U.S. Government program designed to support small business as they engage in research and development and move that R&D to commercialization. It facilitates entrepreneurs to develop and commercialize products, software, and services for the Department of Defense*, Department of Health and Human Services, Department of Energy, NASA, and other select agencies. Essentially, SBIR is government funding for entrepreneurs who have great ideas to improve national security, energy, space, and biotech, for example:
It is a competitive award – it is not a hand-out, and the competition is fierce. With the shutdown – no SBIR awards are being made.
Why Care About SBIR?
Most people understand that cutting-edge solutions do not come out of large, established companies. (sometimes – Post-it notes came out of 3M, a huge company).
Microsoft and Apple started as small businesses, based on ideas dreamed up by one or two people (depending on whose story you believe) and each changed the world.
Ben and Jerry’s started as a small business – certainly, life changing for many.
Spanx, the innovative and much needed shapewear company, was one person’s idea funded with meager personal savings. Spanx improved lives, including for those who enjoy Ben and Jerry’s.
Bringing it back to defense related innovations that SBIR supports, NASA’s webpage on its SBIR successes is an inspiring read on what SBIR awardees have developed and commercialized.
Bottom line, the creative, forward thinkers, and doers give us things most of us never dream of. They need to stay at the forefront of national security.
FedTech’s CEO Ben Solomon in his article, The Evolution of SBIR: From Confronting Japan to Competing With China is clear on how SBIR supports this:
In an era where global technological leadership underpins both economic prosperity and national security, SBIR may be the single most direct lever the federal government has to shape the future.
The National Defense Industry Association (NDIA) explained in its white paper on SBIR, 2025 Reauthorization of SBIR & STTR: Supporting Small Business Innovations for Defense, that a DoD study found that over the past decade, the number of small businesses in the defense contracting ecosystem has declined 40%. If small businesses do not have a seat at the table, the U.S stands to lose out on defense innovation.
What Should Congress Do?
NDIA and FedTech CEO Ben Solomon and other big brains on SBIR offer the following ideas for SBIR:
- Since Congress only funds SBIR with short-term extensions, Congress should fund the program permanently and put more dollars toward SBIR. This would allow both small business and government agencies with SBIR programs to do some long-term strategic planning related to their R&D and product development.
- Accelerate the SBIR award process and standardize the SBIR award process. BIR funds are awarded in phases. Often, there are long contract delays between the SBIR phases. This is tough for small firms because if funding dries up and they don’t have liquidity, they may fold.
- The NDIA notes in its article that providing a more defined method to move innovative products, software and technology to more “traditional” procurements will get more small business engaged by giving a path for them to pursue and be awarded traditional procurement contracts.
- Develop ways to fund the small business’ work between the SBIR phases so that between R&D, prototype and commercialization SBIR awards, awardees have access to funding to bridge what is the “valley of death” for many small businesses because they are not able to sustain their work because of a lack of funding.
What You Should Do?
Track What Congress Is Doing: Follow the bills that are going to impact SBIR.
Stay Informed: Read up on SBIR advocacy work and thought leadership by organizations like NDIA.
Call Your Senators & Representatives (or have your government relations team do it): Contact those in Congress and their staff to let them know how important SBIR is to national security. (Here at Cassidy Law – we have had several meetings with those in the Senate on how SBIR can do a better job around IP and small businesses.)
Look Into the Future: As a small business founder or business leader – review your strategic plans. You know the routine: plan for catastrophic success but also plan for possible changes in award limits, slower contract award time frames, and limited funding options.
*We will continue using Department of Defense until there has been a name change through the legislative process.
From The 2018 National Defense Strategy
Success no longer goes to the country that develops a new technology first, but rather to the one that better integrates it and adapts its way of fighting.
