Recent Congressional debate over federal funding shuttered a critical pipeline that feeds American biotechnology innovation. On November 17, 2025, the National Institutes of Health (NIH) released a short notice to the research community that the NIH Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) program had expired, “effective immediately.” The SBIR/STTR program funds small business innovations across the federal government, including the Departments of Agriculture, Commerce, Energy, Health and Human Services, and Defense. All these agencies’ SBIR/STTR programs have gone dark. This is a very big deal—companies will fail and the benefits of their innovations will remain unrealized.
The SBIR/STTR Program is an Engine for American Innovation
The SBIR/STTR program is a four-decade-old federal program run by the Small Business Administration to stimulate technological innovation and commercialization through the awarding of competitive seed grants to companies partnering with universities or individual researchers starting their own companies. SBIR is the larger of the two components and directly supports entrepreneurs and their companies; STTR supports partnerships between the private sector and universities.
Both components are lifelines for biotechnology start-ups and research laboratories that need to raise capital without forfeiting equity and intellectual property (i.e., so-called “non-dilutive” funding). In other words, the SBIR/STTR program provides funding with no financial strings attached. Additionally, since innovators preserve their ownership of the company and its innovations, they have leverage to secure follow-on funding from venture and private industry. There is nothing else like it.
Through the SBIR/STTR program, over 4,000 companies have received more than $4 billion annually to bridge a product from concept to commercialization—a scientific landscape sometimes referred to as innovation’s “valley of death.” By reducing the biggest barrier to commercialization—non-dilutive funding for early-stage development—this program allows the American biotechnology community to take many more “shots on goal,” a sports analogy often used to emphasize the critical need for risk-taking.
This funding has revolutionized our country’s innovation pipeline and shaped our public-private ecosystem, which has proven successful in improving the lives of Americans. Illumina (DNA sequencing platforms), 23andMe (consumer genetic testing), and Moderna (mRNA delivery technologies) are just a few examples of companies that received early SBIR/STTR support.
No one can predict where the next breakthrough will come from; the best strategy is to increase the number of innovators working toward commercialization. Shuttering the SBIR/STTR program instead does the opposite.
Congressional Reauthorization for the SBIR/STTR Program is Delayed
Responsibility for the SBIR/STTR program’s expiration sits squarely with Congress. The SBIR/STTR program requires periodic Congressional reauthorization; a process overseen by the House and Senate Small Business Committees, with additional input from committees that oversee federal research agencies. The congressional leaders involved have been unable to reach an agreement on the terms of reauthorization, despite months of debate, and therefore, authorization for the SBIR/STTR program lapsed on October 1, 2025, when the new fiscal year began.
While this is not the first time there has been difficulty in coming to an agreement on SBIR/STTR reauthorization, it is the first time in recent history that a short-term fix has not been agreed upon through congressional appropriations or other maneuvers, such as a one-year clean extension agreement. Notably, the Chair of the Senate Small Business Committee, Senator Joni Ernst, remarked before Congress that she “cannot support a one-year clean extension of the SBIR/STTR programs unless meaningful reforms are included.” Senator Ernst’s reforms include increasing competition for awards to increase impact, reallocating some STTR funds to SBIR projects, addressing concerns over exploitation of SBIR/STTR funds by a small number of high-volume awardees, and strengthening research security provisions. “If my colleagues truly oppose even basic safeguards,” said Ernst, “then this SBIR set-aside charade should end.”
There is no doubt that improvements can be made to the program; Senator Ernst is right to address the important issues of exploitation and enhancing research security. But Congress, to use a common change management mantra, needs to “fix the plane while they are flying it,” not halt critical innovation and investment in the name of reform.
Supporters of the SBIR/STTR Program Must Act Now
I am dismayed by the reaction of some in the innovation community who view the expiration of SBIR/STTR as a temporary pause that will surely be resolved as Congress moves forward with its fiscal year 2026 budgetary appropriations. As the above Congressional debate demonstrates, there is much at play here and much at stake. Also, once a Congressional program expires, the political energy and capital required to reauthorize it increase, and competing priorities with more favorable profiles may take precedence.
The harm done to our research innovation community from this delay in funding could be profound. Imagine that you are the Chief Executive Officer of a small biotechnology start-up dependent on an active SBIR grant, and you just learned that your annual renewal, which you are relying on for your next year’s budget, will now be unavailable. Or imagine that you are an academic researcher with a promising prototype for a drug, device, or technology that meets the moment for commercial development, only to find that the most important source of funding that would allow you to take your idea from concept to commercialization is not available.
These two scenarios are currently unfolding among hundreds, if not thousands, of SBIR/STTR awardees and potential awardees. That’s hundreds of potentially transformative drugs, devices, and technologies that are now without a critical source of capital for their commercialization. Many of these promising innovations will undoubtedly be lost.
This is not the time for America’s innovation community to sit on the sidelines. It is a moment for us to act.
Now is the time for the research innovation community to engage with Congressional leaders and communicate the critical and urgent nature of SBIR/STTR reauthorization. The SBIR/STTR program reaches all 50 states, funding small businesses nationwide. Nearly every community benefits from the SBIR/STTR innovation lifeline. We need Congress to reauthorize the SBIR/STTR program immediately and reinvigorate this biotechnology lifeline.
