Reviewing Research Grants from Uncle Sam to Fund Your Startup

By Beverly A. Browning

If you’re in disbelief about the narrow field of grants for business startups, go to the US Small Business Administration’s website. There you find this disclaimer under “What the SBA Doesn’t Offer” when it comes to grants:

  • SBA does NOT provide grants for starting and expanding a business.
  • Government grants are funded by your tax dollars and, therefore, require very stringent compliance and reporting measures to ensure the money is well spent. As you can imagine, grants are not given away indiscriminately.
  • Grants from the federal government are authorized and appropriated through bills passed by Congress and signed by the president. The grant authority varies widely among agencies. SBA has authority to make grants to nonprofit and educational organizations in many of its counseling and training programs, but does not have authority to make grants to small businesses. The announcements for the counseling and training grants will appear on Grants.gov. If Congress authorizes Specific Initiative Grants, organizations receiving such grants will receive individual notifications.
  • Some business grants are available through state and local programs, nonprofit organizations, and other groups. For example, some states provide grants for expanding childcare centers; creating energy-efficient technology; and developing marketing campaigns for tourism. These grants are not necessarily free money, and usually require the recipient to match funds or combine the grant with other forms of financing such as a loan. The amount of the grant money available varies with each business and each grantor.
  • If you aren’t one of these specialized business, both federal and state government agencies provide financial assistance programs that help small business owners obtain loans and venture capital financing from commercial lenders.

Don’t worry. The SBA doesn’t drop you there like a hot potato. For businesses doing specific types of research, the homepage has a link on the bottom right-hand side: Research Grants for Small Business. When you see the list of federal grant-making agencies that award grants to businesses, click the agency name link to continue your research. You can also move over to Grants.gov to search for that specific agency’s grant-funding opportunities, current and past.

Small Business Technology Transfer Program

If your business is high-science/technology-related, you want to take a long look at the SBA’s Small Business Technology Transfer Program (STTR). STTR is a highly competitive program that reserves a specific percentage of federal research and development (R&D) funding for small business and nonprofit research institution partners. The five federal agencies that award STTR research grants are the Departments of Defense, Energy, and Health and Human Services; the National Aeronautics and Space Administration (NASA); and the National Science Foundation.

STTR grant monies are awarded in three phases. Phase I is the start-up phase. Awards of up to $100,000 for approximately one year fund the exploration of the scientific, technical, and commercial feasibility of an idea or technology.

Small businesses must meet certain eligibility criteria to participate in the STTR:

  • American owned and independently operated
  • For-profit
  • Principal researcher need not be employed by small business
  • Company size limited to 500 employees

Nonprofit research institutions must also meet the following eligibility criteria:

  • Located in the United States
  • Falls under one of three definitions:
  • Nonprofit college or university
  • Domestic nonprofit research organization
  • Federally funded research and development center (FFRDC)

The SBA doesn’t limit the number of employees a nonprofit research institution may have.

Small Business Innovation Research

The Small Business Innovation Research (SBIR) Grant Program encourages small businesses to explore their technological potential and provides the incentives to profit from the grant applicant’s ability to take its research or product to the commercialization phase.

Eleven federal agencies award SBIR research grants: the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, and Transportation; the Environmental Protection Agency; NASA; and the National Science Foundation.

Like STTR grants,, the SBIR grant monies are awarded in three phases, with phase I as the start-up phase. Awards of up to $150,000 for approximately six months support exploration of the technical merit or feasibility of an idea or technology.

To participate in the SBIR program, small businesses have to match the following eligibility criteria:

  • American owned and independently operated
  • For-profit
  • Principal researcher employed by business
  • Company size limited to 500 employees

Applying for SBA grants

If you want to apply for an SBA grant, monitor the SBA’s website for announcements about technical assistance workshops and conferences around the country. You should also consider fine-tuning your email subscription on Grants.gov by typing “SBIR” and “STTR” in the keyword search for identifying grant-funding opportunity announcements. Doing so allows you to limit your daily email funding alert to only SBIR and STTR grant announcements.

Every state has an SBIR/STTR contact person appointed by the governor’s office. After you find an SBIR/STTR grant-funding opportunity on Grants.gov, you must take two steps immediately, because the deadline for researching and writing your grant application will be less than 60 days. Here’s what to do:

  1. Download and print out the application announcement.

    This announcement provides information on what will be funded and how to apply.

  2. Call your governor’s office to locate the state’s SBIR/STTR contact person.

    This individual can connect you with experts in your research and development field who can help strategize your approach for federal funding. He can’t write your application for you (that’s your job), but he can tell you what the government is interested in funding and the best way to present your specific information in a competitive research and development grant application.