Eligibility
SBIR eligibility: ownership, control and the traps for funded startups
Foreign ownership, VC-backed cap tables, affiliation rules and PI employment. The eligibility issues that surface late and how to check yours early.
The basics everyone knows
Your company must be a for-profit US business with fewer than 500 employees, organized in the United States, and performing the work primarily in the United States.
Registration takes time on its own. SAM.gov, a UEI, SBA company registry and agency-specific systems all need to be in place before submission, and none of them are same-day processes.
Ownership and control is where it gets subtle
The standard requirement is majority ownership and control by US citizens or permanent residents. Foreign parent companies, offshore holding structures and non-resident majority founders all create genuine problems.
Some agencies allow majority ownership by multiple venture capital, hedge fund or private equity firms under a separate provision, but this is agency specific and requires additional certification. Do not assume it applies.
Affiliation catches people out
Employee counts include affiliates. Common ownership, shared management or economic dependence can pull another company's headcount into yours and push you past the threshold.
If an investor holds control positions across a portfolio, check affiliation before you rely on your own headcount.
The principal investigator rule
For SBIR the principal investigator must have their primary employment with the small business at the time of award and for the duration of the project. Primary employment normally means more than half of their working time.
This is the single most common blocker for university spinouts. STTR exists partly to solve it, allowing the PI to sit at either the company or the research institution, with a required minimum work share for each partner.
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