The Small Business Innovation Research (SBIR) program remains in limbo as negotiations between key
senators have reached an impasse. With no clear timeline for resolution, research teams and startups need to
understand what’s happening and how to move forward strategically.
State of Play: circa Dec 16, 2025
The SBIR program authorization expired in September 2025, and reauthorization negotiations have been ongoing since then. As of mid-December 2025, the fate of SBIR reauthorization rests primarily with two senators: Joni Ernst (R) of Iowa and Ed Markey (D) of Massachusetts. A compromise proposal has been developed by various groups, including each congressional office, the House committee, and also by our friends at The Alliance, among others. The latest as of this week is that Ernst’s office is waiting on a response from the Markey side. Markey has suggested a continuing resolution: a “transparent attempt to delay for a year the needed reforms”, to quote a non-partisan friend who is very close to the situation.
The core issue is straightforward but contentious: how to define success in the SBIR program. Specifically at issue is allowing “SBIR Mills” to continue to exist. An SBIR Mill is basically an entity that sees SBIRs revenue (and profit) as the end-goal, versus using SBIR/STTR money to advance products to get to commercialization in order to improve the standard of care or state of the art, and create economic growth in the form of jobs, company growth, and innovation & economic leadership. Here’s a more robust definition of an SBIR Mill. The only thing that link does not do is quantify the dearth virtually no actual progress or commercial revenue these SBIR Mills make.
As a compromise, Senator Ernst has offered to back off the proposed $75 million hard funding cap in exchange for a commercialization benchmark that would require companies to eventually achieve a 1:1 ratio, meaning non-SBIR revenue must eventually match or exceed a company’s total SBIR revenue over time. This compromise would allow flexibility while ensuring that SBIR awards lead to real commercial outcomes, real-world impact, and economic and innovation growth.
However, Senator Markey is refusing to negotiate any restrictions that might push some Massachusetts SBIR recipients out of the system. The impasse reflects two fundamentally different philosophies:
- One side believes SBIR is seed funding designed to bootstrap small businesses toward commercial
viability and sustainable business models beyond perpetual grants. - The other side believes that continuous SBIR funding can be a valid business model unto itself,
without requiring commercialization benchmarks.
Meanwhile, over 75 Massachusetts companies have signed a letter asking Senator Markey to support reform
and reauthorize the program. Markey’s response has been to propose a one-year extension, widely seen as an attempt to delay meaningful reforms.
What You Need To Do Now
While the political process plays out, you have concrete steps you can take to protect your research pipeline and position your team for success:
1. Make Your Voice Heard
Contact both senators to encourage action:
- Write to Senator Ed Markey to urge support for compromise reforms that balance accountability with continued program access.
- Write to Senator Joni Ernst also, to urge support for compromise reforms that balance accountability with continued program access.
We will update this post with more detailed actions for constituents who you can reach. Your voice matters. Elected officials respond to constituent input, and the SBIR community needs to demonstrate that reform and reauthorization are both urgent priorities.
2. Plan Now for When Reauthorization Happens
The program will eventually be reauthorized. When it is, there will be pent-up demand and intense competition.
Start building now:
- Target April 5, 2026 as your planning date for NIH, and mid-March for DoD/NSF/others. Even if that date shifts, treating it as your deadline ensures you’ll be ready to submit early when the window opens. For example, DARPA is clear: on the first Wednesday after reauthorization, there will be a deadline 4 weeks out. Let’s Go!
- Rewards go to those who are prepared. Teams that have been developing their proposals during the lapse will have a significant competitive advantage over those scrambling to start fresh.
- Draft your Specific Aims now and align all critical components: budget, preliminary data, partner letters, and technical narrative.
- Tighten your competitive edge. Use this time to secure top-tier collaborators, generate additional data, refine your product positioning and differentiation, and align every section to the relevant agency’s mission and priorities.
- Be ready to move quickly when formal guidance is posted. Prepared teams will submit higher-quality applications while others are still ramping up.
3. Explore Alternative Funding Sources
Broaden your horizons and don’t wait on SBIR alone! Grant Engine has over 300 non-SBIRs from federal, foundation, state, and other non-dlutive funding opportunities available to support your product development and commercialization work.
Grant Engine maintains an active database of these opportunities. Contact us to learn which sources align with your technology, stage, and mission focus. Diversifying your funding pipeline reduces dependence on any single program and accelerates your path to market.
4. Stay Informed and Agile
Expect the landscape to evolve quickly. Monitor updates from us on LinkedIn, our blog, and other trusted sources in the innovation community. When news breaks, you’ll want to respond immediately, but only if your materials are already prepared.
The Bottom Line: It’s An Opportunity Not A Threat
The SBIR reauthorization impasse is frustrating, but it doesn’t have to derail your plans. By taking action now (making your voice heard, building your proposals, exploring alternative funding, and staying prepared) you position your team to thrive regardless of how long the political process takes. Go after one, two, or ten of the many, many opportunities that are out there.
The companies and research teams that succeed in the next funding cycle will be those who refused to wait on the sidelines.
Need help identifying alternative funding sources or strengthening your grant strategy? Grant Engine has over 300 federal and foundation opportunities in our database, plus expert guidance to help you build winning proposals. If you have questions about how these updates affect your strategy, or want support preparing for finding new opportunities, contact us. Together, we will continue pushing innovation forward.
text: (650) 885-9872
email: greatscience@grantengine.com
Website: grantengine.com
Sources and Further Reading
● Senate INNOVATE Act (S.853) – March 5, 2025
● SBIR/STTR Reauthorization Act (S.1573) – May 1, 2025
● House INNOVATE Act (H.R.4777) – July 28, 2025
● SBIRC 2025 Reauthorization Recommendations – September 25, 2025
● Massachusetts Startups Letter to Senator Markey – October 2, 2025
● The Alliance – SBIR reform advocacy and resources
● SBIRC (Small Business Innovation Research Connector) – Industry advocacy group