Small Business Innovation Research and Small Business Technology Transfer Programs Phase II

Eligibility for the SBIR/STTR Phase II program is limited to only SBIR/STTR Phase I recipients. This includes recipients identified via a “novated” or “successor-in-interest” revised funding agreement. Failure to meet the eligibility criteria by the application deadline may result in exclusion from consideration or preclude NIFA from making an award. For those new to Federal financial assistance, NIFA’s About Grants provides highly recommended information about grants and other resources to help understand the Federal awards process. Each applicant must qualify as an SBC through registration with the SBA for R/R&D purposes at the time of selection (see Definitions in Appendix III of this NOFO). SBIR/STTR program eligibility requirements are in place to ensure that the funds go only to small, independent U.S. businesses. The regulations include restrictions about (1) the type of firm, (2) its ownership structure, and (3) the firm’s size in terms of the number of employees. Type of Firm The purpose of the requirement regarding the type of firm is to target the awards to firms with an economic interest in developing the idea or research into a commercial application. 1. An SBIR/STTR small business recipient must be a business concern – it must be organized as a for-profit concern and meet all of the other requirements for a “business concern” in 13 CFR 121.105. Non-profit entities are not eligible (except as the partnering research institution collaborator under the STTR Program). 2. If a recipient is a joint venture, limited partnership, or venture capital partner, each party to the joint venture must be a concern that satisfies all program eligibility requirements regarding type, size, ownership, and control. Ownership & Control The purpose of the ownership requirement is to limit the program to independent firms controlled by US citizens or permanent resident aliens as a way of maximizing the likelihood that the funding will stimulate innovative activity within the US economy. A majority (more than 50%) of a firm’s equity (e.g., stock) must be directly owned and controlled by one of the following: 1. One or more individuals who are citizens or permanent resident aliens of the United States, 2. Other for-profit SBC (each of which is directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States). a. This includes single venture capital operating companies (VCOC), hedge funds, or private equity firms that are SBCs more than 50% directly owned and controlled by individuals who are U.S. citizens or permanent resident aliens of the United States. b. This also includes applicants more than 50% directly owned and controlled by Alaska Native Corporations, Native Hawaiian Organizations, or Indian tribes or by a wholly owned subsidiary of an Alaska Native Corporation, Native Hawaiian Organization, or Indian tribe. 3. A combination of (1) and (2) above. 4. For SBIR only, multiple venture capital operating companies (VCOCs), hedge funds, private equity firms, or any combination of these, so long as no one such firm owns or controls more than 50% of the equity. Note: This option is allowed only for SBIR awards from agencies that are using the authority provided in 15 U.S.C. § 638(dd)(1) (majority‐VC‐owned authority). USDA has not elected to make a portion of its SBIR awards to SBCs that are majority-owned by multiple VCOCs, hedge funds, or private equity firms under 15 U.S.C. § 638(dd)(1). Notes: a. If an Employee Stock Ownership Plan owns all or part of the SBC, each stock trustee and plan member is considered an owner. If a trust owns all or part of the SBC, each trustee and trust beneficiary is considered an owner. b. A potential recipient that is a subsidiary must show that the parent company or parent companies are also a small business entity. The parent company or parent comp