The U.S. Congress recently reauthorized the SBIR and STTR programs with important updates that affect small business eligibility. If your company is looking to apply for federal R&D funding, it’s crucial to understand the new requirements. Here’s a concise breakdown of what has changed.
1. Company Requirements
Small businesses applying for SBIR/STTR must still meet the core ownership and operational criteria:
- 50% or more owned by U.S. citizens or permanent residents
- Must be a small business based in the U.S.
- R&D must be performed on American soil
- Physical office/lab facilities are required
What’s new: the reauthorization introduces mandatory security and foreign risk screenings. This means that ownership, investors, and partnerships may be evaluated for ties to foreign entities or restricted organizations. Companies linked to flagged entities could face disqualification.
2. Staff & Team Requirements
Previously, SBIR/STTR required a qualified team with at least one W-2 employee and a Principal Investigator (PI) primarily employed (>51%). These criteria remain in place.
New elements:
- All key personnel are subject to due diligence checks, including background, affiliations, and foreign ties.
- Security risk assessments can impact eligibility, even if all other criteria are met.
3. Project Requirements
Your project idea still needs to be innovative, technical, and commercially promising:
- Must involve technical risks and breakthroughs not done successfully before
- Should follow a logical path to commercialization with clear milestones
Subcontracting rules:
- SBIR: Up to 1/3 of activities may be subcontracted
- STTR: Up to 2/3 of activities may be subcontracted
New: the focus is on security and transparency. Any partnerships or subcontracting relationships may be reviewed to ensure compliance with national security guidelines.
4. The Key Takeaway
Eligibility is no longer just a matter of ownership and R&D location. The 2026 reauthorization emphasizes:
- Security & risk assessment
- Transparency of team and partnerships
- Compliance with federal restricted entity lists
Small businesses must now demonstrate not only that they are eligible by traditional standards, but also that they pose no foreign risk to national security.
Bottom Line
If your company plans to apply for SBIR or STTR funding in 2026 or beyond, start reviewing ownership, team affiliations, and partnerships now. Understanding the updated criteria is essential to avoid surprises and strengthen your application.