A Small Business Guide to STTR Grants

STTR and SBIR grants are prime funding opportunities for innovative small businesses. Find out if your small business qualifies for these highly coveted grants.

We may receive compensation from partners and advertisers whose products appear here. Compensation may impact where products are placed on our site, but editorial opinions, scores, and reviews are independent from, and never influenced by, any advertiser or partner.

A Montana company making a meat and dairy alternative derived from fungi found in an acidic hot spring in Yellowstone National Park.

A Texas company developing electronic tattoos for tracking blood pressure and other medical stats.

A New York company building a better battery.

What do they have in common? All of these companies recently received grants through the federal Small Business Technology Transfer (STTR) program.

Every year, the federal government sets aside more than $450 million in STTR grants for small businesses developing novel technologies. If your business is doing innovative research and development, you owe it to yourself to see if you might qualify for a grant of your own.


Overview: What is a Small Business Technology Transfer (STTR) grant?

Small Business Technology Transfer (STTR) grants are federal research grants set aside for small businesses. STTR grants are awarded to a company working with a nonprofit research partner, typically a university. The program is administered by the U.S. Small Business Administration (SBA), alongside the Small Business Innovation Research (SBIR) grant program.

SBIR vs STTR: What’s the difference?

SBIR and STTR are both federal research grant programs for small businesses. SBIR is a larger program involving more than a dozen agencies and more than $3.2 billion in annual awards.

STTR awards are given by just five agencies: the Department of Defense (DOD), Department of Education (ED), Department of Health and Human Services (HHS), National Aeronautics and Space Administration (NASA), and National Science Foundation (NSF).

Eligibility requirements for STTR and SBIR programs are similar, but SBIR doesn't require the small business to partner with a research institution. Both programs focus on performing research and development (R&D), not taking technology that is already developed to market.

STTR and SBIR grants can give an innovative startup the capital needed to move from groundbreaking ideas to developing tomorrow's technology.

An image of a Yellowstone National Park thermal feature from Nature's Fynd home page.

Sustainable Bioproducts, LLC, used a NASA STTR grant to develop earth-friendly meat alternatives for astronauts. Source: naturesfynd.com.


Small Business Technology Transfer (STTR) grant eligibility requirements

Here are the basic requirements for an STTR grant. You can find the complete eligibility requirements on the SBIR/STTR program website.

Be a U.S. small business

To qualify for an STTR grant, your business must:

  • Have no more than 500 employees, including affiliates
  • Be operated for profit
  • Be more than 50% owned and controlled by U.S. citizens or permanent resident aliens
  • Have a place of business in the U.S.

Have a nonprofit research partner

STTR grantees work with a university or other research institution to conduct their research. If you don't already have a partner, you can look for one once you find an appropriate solicitation.

The nonprofit partner must be one of the following:

  • A nonprofit college or university
  • A domestic nonprofit research organization
  • A federally funded R&D center

Complete at least 40% of the work

Work must be split among the partners, with at least 40% done by the small business and 30% by the research institution. While the research institution does much of the work, the small business is always considered the STTR applicant and the grantee.

An electronic tattoo sticker being applied to an arm.

Stretch Med, Inc., is using STTR funds to create e-tattoos for medical monitoring. Source: mobihealthnews.com.


Advantages of STTR grants

STTR grants are an incredible opportunity for small businesses that qualify. Here are some of their benefits.

Undiluted capital

STTR grants infuse substantial cash into your business. Phase I awards range from $50,000 to $200,000 for one year, and Phase II awards are generally $750,000 for two years.

STTR grants are "non-dilutive," meaning you don't have to share costs or trade any equity to accept the funds. There are no costs or fees for submitting an STTR grant proposal, and the funds are never repaid. The only real cost is the time to prepare the application, which is admittedly substantial.

Property rights

You retain intellectual property rights to the technology you develop through the STTR program. This puts you in a strong position to go forward and pursue the commercial potential of your work once the grant project is completed.

Expert guidance and support

With the SBA administering the STTR program, you have access to all of the agency’s resources throughout the application and grant project periods. You can tap their experts whenever you have questions or need advice. Participating federal agencies are equally supportive, with many providing mentors to guide small businesses through the process.

Exposure and connections

STTR grantees work with major federal agencies on groundbreaking research. The applications are peer-reviewed, so receiving a grant gives your business visibility and credibility. It also connects you to cutting-edge scientists working in your field.

Follow-on funding

STTR grants are designed to bridge the gap between scientific findings and their commercial application. Some federal agencies award Phase III grants to STTR awardees to pursue commercialization of the research. Many STTR grantees get follow-on funding from private sources to commercialize their work.


How to apply for a Small Business Technology Transfer (STTR) grant

Grant applications are rarely quick or easy, but the STTR application process is more demanding than most. The process can take anywhere from six weeks to several months. Here's a high-level look at the steps involved.

1. Make sure you qualify

Review the STTR eligibility criteria thoroughly before you begin. If you're unsure whether you qualify, reach out to your SBA district office representative to confirm that you meet the basic requirements to participate in the STTR program.

2. Identify a grant opportunity

Once you're sure you're a candidate, you can search topic areas on the SBIR/STTR database to find a match. You'll find all of the current solicitations for SBIR/STTR grants in the database. You can filter the results for just STTR solicitations, and you can further filter by agencies to see open opportunities.

Web search results for open STTR grants.

You can search open STTR grant solicitations on the SBIR/STTR website. Source: sbir.gov.

There's a lot to sort through, but reading the results can give you a good idea of the types of projects each agency is funding. You can also read about past awards to see examples of companies that succeeded. From their stories, you might see a path forward for your project.

STTR grants are long games, so don't be discouraged if you don't find a match right away. Grant solicitations are released throughout the year, so make a note to revisit the site every few months to see if a new solicitation aligns with your mission. As you can see from the examples we started with, businesses are pursuing all kinds of research with STTR funds.

3. Review grant criteria

Once you've identified a good match, you'll need to check the unique requirements and parameters in the solicitation. These include:

  • Eligibility requirements of the grant and awarding agency
  • Prerequisites
  • Amendments and notices
  • Project specifications
  • Points of contact
  • Submissions timeline

4. Partner with a research institution

If you aren't already partnering with a research institution, you will need to establish a partnership to continue. As noted above, your nonprofit STTR partner must be a college or university, nonprofit research organization, or federally funded research center in the U.S.

5. Name a principal investigator

Every SBIR or STTR project must have a principal investigator (PI) who provides scientific and technical direction for the project. The PI must:

  • Be primarily employed by the small business or the research partner
  • Have the skills, knowledge, and resources to conduct the proposed research
  • Be available to perform the research for the duration of the project
  • Be a legal U.S. resident

"Primarily employed" means the PI cannot be employed full-time with another business at any time during the award period. An STTR awarding agency may have more specific requirements.

6. Complete registrations

The STTR application process begins with registrations. If you don't already have a federal employer identification number (EIN), you will need to obtain that first.

From there, you must register with these systems:

The awarding agency may have additional registration requirements to complete.

7. Complete prerequisites

Some agencies require submissions before the full application. The NSF, for example, began requiring a project pitch in advance of the full proposal in 2019. The foundation reviews the pitch and invites qualified applicants to submit a full proposal. This can give you valuable feedback and save time if you aren't a viable candidate for the solicitation.

A video about an SBIR/STTR grantee using insects to create sustainable animal feed.

A video about Beta Hatch, another SBIR/STTR success story. Source: sbir.gov.

8. Draft the proposal

STTR funding proposals are detailed descriptions of your business, qualifications, and prior R&D. They generally include these standard grant elements:

  • Business plan
  • Executive summary
  • Budget with detailed operating expenses
  • Technical proposal

To build your case, be sure to provide detailed evidence for how you meet each requirement of the grant, including:

  • Research done to date
  • Technical expertise of your PI and other researchers
  • Cost controls and financial accountability
  • Potential impact of your R&D on the world

Consider these tips on writing federal grant applications as you assemble your application.

9. Consult an expert

Before submitting your proposal, run it by someone who has experience with proposals for your awarding agency. Your partner institution is a good source to tap, as well as mentors from the SBA and the awarding agency. Use their feedback to polish your proposal.

The SBA provides extensive SBIR/STTR resources for small businesses interested in SBIR/STTR grant funds, including videos of SBIR/STTR success stories, online tutorials, and live training events.

10. Soldier on

Your first STTR grant proposal might take off like a space shuttle or sputter out somewhere in the depths of a federal database. No matter. It takes persistence and fortitude to work at the cutting edge of science and technology, and getting an STTR grant is no exception.

So don't be discouraged. You can learn a lot even by researching the opportunities and working through the application process. If one project doesn't pan out, you'll be better prepared to apply for the next one.


Funding for the future

It takes a special person to pull microbes out of a geothermal spring and think, "I could eat this," or come up with the idea of "epidermal electronics," or imagine you just might be the one to design a better battery. Entrepreneurs are dreamers by nature, and STTR grants are a great way to make your dreams a reality. Search the database to see if there might be an STTR grant in your future.

The Ultimate Guide to Building Virtual Teams

Knowing how to build a strong virtual team is more important today than ever -- and there are six critical things you must do to succeed. That's why we've created this ultra-timely 19-page report on what you should be doing now to set your virtual team up to win.

Enter your email below to access our (no-strings-attached) free report, "The Ultimate SMB Guide to Building High-Performing Virtual Teams."

The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.