The recent federal funding freeze has left many small businesses and startups wondering: Is SBIR funding at risk? The good news is that SBIR and STTR programs remain unaffected by the pause on federal grants. While this freeze impacts certain types of discretionary funding, the Department of Defense (DoD) and other federal agencies have clarified that SBIR/STTR funding operates differently.
Why SBIR Funding Is Not Affected
SBIR and STTR are congressionally mandated programs, meaning they are not subject to executive orders halting grant disbursements. Additionally, while SBIR is sometimes referred to as a “grant,” it is primarily funded as an R&D contract. This distinction is crucial because the current federal funding freeze targets discretionary grant programs, not contractual R&D efforts.
A recent statement from the Pentagon confirmed that small business innovation programs, including SBIR and STTR, are not part of the funding pause (Defense News).
Furthermore, the main focus of the funding freeze is on grants that support initiatives counter to the current administration’s policies, such as DEI (Diversity, Equity, and Inclusion) programs. In contrast, SBIR funding is allocated for research and development of technology, aligning with national security and economic priorities, making it unlikely to be impacted by political shifts.
What About Delays or Indirect Impacts?
While SBIR itself is not frozen, startups should remain aware of potential indirect effects, such as:
Administrative slowdowns: Federal agencies may experience temporary disruptions that could delay award processing.
Uncertainty in follow-on funding: Awards that were initially funded under a previous administration—such as Phase I recipients—may face challenges in securing Phase II funding if there is a shift in funding priorities related to the current administration’s focus areas. This type of shift can occur whenever there is a new administration, as funding priorities may realign with new policy goals.
Shift in agency priorities: Some agencies may reassess their budget allocations, potentially affecting future SBIR topics or award cycles.
Increased competition: If fewer funding avenues remain available for startups, the number of SBIR applicants could rise, making the selection process even more competitive.
How This Compares to Previous Federal Funding Freezes
This is not the first time federal funding has faced uncertainty. In past funding freezes and government shutdowns, SBIR remained one of the most resilient funding mechanisms due to its legal framework and mandatory budget allocations. Unlike other grants that rely on discretionary funding, SBIR funding is embedded within federal agency budgets, providing a layer of protection against sudden policy shifts.
Historically, even during prolonged budget negotiations and continuing resolution periods, SBIR solicitations have continued with minimal disruption. This makes the program one of the most reliable sources of non-dilutive funding for small businesses engaged in cutting-edge research and development.
What Should SBIR Companies Do?
For startups and small businesses navigating SBIR funding, here are some key steps to stay on track:
Monitor agency updates: Keep an eye on official announcements from DoD, AFWERX, NIH, and other SBIR-funding agencies.
Stay in touch with program officers: If you have an ongoing Phase I or Phase II, check in with your contracting officer for any updates.
Keep applying: There is no indication that upcoming SBIR solicitations will be delayed, so continue preparing your proposals.
Plan for longer timelines: Even if your funding is secure, be prepared for potential administrative bottlenecks that could slow contract execution.
Federal Grants Pause and SBIR Funding Bottom Line
Despite the broader federal grant freeze, SBIR and STTR programs remain stable. Small businesses relying on this funding can move forward with their applications and awards without immediate concern. Because SBIR is an R&D contract rather than a discretionary grant, it does not fall within the scope of the current funding freeze.
Furthermore, the administration’s focus is on pausing grants related to specific social policies, not technology and innovation funding.
About Akela Consulting
Akela Consulting is a boutique firm specializing in SBIR and STTR grant writing, helping innovative small businesses secure non-dilutive funding from U.S. federal agencies. With a deep understanding of government funding mechanisms, Akela Consulting supports clients through every stage of the application process, ensuring the best possible chance of success.
For the latest updates on SBIR funding and how to optimize your application, Akela Consulting is here to help. Reach out to stay ahead in the evolving federal funding landscape.
To learn more, visit our website: www.akelaconsultants.com.
