It can be confusing to identify the maximum budget request allowed for your next investigator-initiated small business grant application.
When planning your project, you need to know whether you are conducting Phase I or Phase II research, whether your research project matches an approved waiver topic, and whether the NIH institute or center (IC) that will receive your application has set any IC-specific budget limitations.
Phase I or Phase II
In the context of NIH Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) funding, Phase I and Phase II have specific definitions:
- Phase I: Feasibility and Proof of Concept—helps you focus on the feasibility, technical merit, and commercial potential of your research project.
- Phase II: Research and Development—lets you continue the research and development efforts initiated in Phase I. Once you’ve reached your Phase I milestones, you can apply for a Phase II award; for SBIR only, if your project has already demonstrated feasibility but you have not received a Phase I award, you can apply for a Direct-to-Phase II award and bypass Phase I.
To be clear, the SBIR/STTR “phases” are distinct from clinical trial terminology for “phases.”
Besides their budget implications, the two phases carry requirements for project period length: 6 months to 2 years for Phase I research projects and 1 to 3 years for Phase II research projects.
Setting Limits
The Small Business Administration (SBA) sets caps for total costs on SBIR/STTR grant awards for all federal agencies, above which an agency must request SBA approval. These levels tend to increase slightly from year to year. (Remember, “total costs” is a vocabulary term that means the sum of direct costs and facilities & administrative, or indirect, costs.)
Also annually, HHS submits to SBA (and receives SBA approval for) a list of waiver topics within which NIH SBIR/STTR grant awards may exceed the default SBA-caps.
Finally, NIH ICs may set their own caps for those topic areas in which HHS received SBA waiver approval. The majority of applications NIAID receives from small businesses fit within those topic areas.
The Actual Numbers
As of October 23, 2024, SBA’s hard cap (total cost) limits for Phase I and II awards are as follows:
- Phase I—$314,363
- Phase II—$2,095,748
Those amounts are for an award’s entire project period, i.e., not an annual rate.
You may exceed those numbers if your application addresses a waiver topic. To review the list of approved waiver topics, go to Approved SBIR/STTR Topics for Awards over Statutory Budget Limitations.
Currently at NIAID, we have the following budget caps for approved waiver topics:
- Phase I—$300,000 per year for up to 2 years (i.e., up to $600,000 for the entire project period)
- Phase II—$1 million per year for up to 3 years (i.e., up to $3 million for the entire project period)
If you would like additional information or want to speak with an NIAID program officer to evaluate your proposed project for IC mission and waiver topic fit, reach out to Dr. Natalia Kruchinin from our NIAID Small Business Program Team for assistance.
Two Warnings
Do not mistake our highlighting these caps as encouragement to push your application’s budget request to the limit. As always, your budget proposal must be reasonable and appropriate for the scope of your research and completion of the project.
Also, recall that NIH ICs may each have a different budget cap for their approved waiver topics. If you apply with NIAID’s budget caps in mind but your Phase II application is assigned to, say, the National Institute of Neurological Disorders and Stroke (NINDS), then your award budget would be subject to NINDS’ budget caps for approved waiver topics (i.e., $2.5 million total costs for up to 3 years). Remember, you can Use the PHS Assignment Request Form to help steer your application’s IC assignment.