Government Small Business Program Under Attack

What are now large companies like Qualcom and Symantec both came from this one government initiative. Inventions like the electronic toothbrush also came from the same initiative. The Small Business Innovative Research (SBIR) program sponsored by the Federal government is up for reauthorization but conflicting legislation from Congress could threaten the program causing jobs to be lost, and small businesses to lose valuable contracts responsible for employing more than 1.5 million people according to a Save SBIR press release.

The Small Business Innovate Research program was started in 1982 as a way to stimulate technological innovation utilizing up and coming but underfunded small businesses. The program works in two phases. Phase one is for businesses who can demonstrate that they’ve completed enough research and development to produce a promising idea yet still need more development dollars. They are required to prove that it has promise and submit verification that it is not fraudulent or violates any Federal law including copyright or patent laws. Once this takes place, the program pays the business to continue developing the product.

Phase two is for businesses who have a product further down the R&D pipeline and need additional funding to bring the product to market. These are normally larger sums of money than phase one grants. Those who oppose the proposed changes to the SBIR program argue that the under new rules, businesses could bypass the phase one process and receive larger sums of money from phase two, avoiding the phase one safeguards that keep money from being awarded to programs that may not be commercially viable. This would allow more dollars to go to larger businesses already through the beginning stages of growth.

Also in the proposed changes, the maximum amount of time that a small business could receive funding is 3 years. This, argues the Save SBIR organization, isn’t enough time to develop a product. Finally, the way that businesses are chosen for the program will make it easier for heavily funded businesses to receive funding which could squeeze out small businesses who aren’t backed by venture capital firms.

One New England based company who now employs more than 500 people receives 80% of its business from the SBIR program and because proposed changes put a cap on how many times a business can participate in the program, this business could lose 80% of its business in the next few years. “Small businesses are America’s economic engine, and SBIR is an unparalleled success in harnessing the proven innovative power of small, technology-based businesses to meet the nation’s 21st century technology needs,” said Congressman Edward J. Markey.

Small businesses depend on programs like these and the public and private sector both rely on small businesses to bring new ideas to the marketplace.