Did the SBIR lapse affect existing awards or funds?

The lapse halted new awards after September 30, 2025, but work under existing awards continued. To help bridge the gap, the 2026 law lets agencies that still have SBIR or STTR funds at the end of fiscal year 2026 use those funds for the programs in fiscal year 2027. Always confirm the current solicitation schedule with the specific agency you are applying to.

Federal Grants Updated July 2026 · 9 min read

SBIR & STTR reauthorized: what the 2026 law changes for applicants

Q: How long are SBIR and STTR reauthorized for?

Both programs are reauthorized through September 30, 2031, a five-year extension. The Senate passed the bill by voice vote on March 3, 2026, the House approved it 345 to 41 on March 17, 2026, and the President signed it on April 13, 2026. The law authorizes roughly $6 billion in funding across the period.

Q: What is the Strategic Breakthrough Award?

The Strategic Breakthrough Award is a new large Phase II funding category created by the 2026 reauthorization for agencies whose annual required SBIR expenditures exceed $100 million. A single company can receive up to $30 million, structured as one award or a milestone-triggered sequence over a performance period of up to 48 months. Total spending on these awards cannot exceed 0.5% of an agency's overall extramural R&D budget. To qualify, an applicant must hold at least one prior Phase I or II award, secure matching funds equal to 100% of the award from new private capital or qualifying government funding, and provide market research showing the technology meets an identified need.

Q: What is the SBIR mill provision in the 2026 law?

To curb so-called SBIR mills, companies that win many small awards without commercializing, the 2026 law directs federal agencies to set their own proposal submission caps starting in fiscal year 2027. Agencies can limit submissions on a per-company, per-solicitation, or per-topic basis, must establish those limits 90 days before each fiscal year begins, and may waive them for a small share of time-sensitive topics.

If you build a startup on non-dilutive federal R&D money, the most important news of the year is short: SBIR and STTR are back. After the programs lapsed and new awards stopped in late 2025, President Trump signed S. 3971, the Small Business Innovation and Economic Security Act, into law on April 13, 2026, reauthorizing both through September 30, 2031. The reauthorization is not just an extension, it adds a new large-dollar award, caps on serial applicants, and tighter security screening. Here is what actually changed, and what it means for your next proposal. New to these programs? Start with our NIH SBIR/STTR guide and SBIR Phase I overview.

The one-line versionSBIR and STTR are reauthorized through FY2031 (signed April 13, 2026, as S. 3971). The law adds a new $30M "Strategic Breakthrough Award," directs agencies to cap serial submissions starting FY2027, and strengthens national-security screening. Confirm current solicitation dates with each agency.

Apr 13, 2026

S. 3971 signed into law

FY2031

Both programs reauthorized through Sept 30, 2031

345-41

House vote (Senate passed by voice vote)

$30M

Ceiling for the new Strategic Breakthrough Award

How we got here, step by step

The programs did not expire quietly. Authorization ran out, new awards stopped for six months, and reauthorization moved through Congress in the first months of 2026:

Sep 30, 2025
The prior authorization expires. New SBIR and STTR awards halt during the lapse, though work under existing awards continues.
Mar 3, 2026
The Senate passes S. 3971 by voice vote. The Small Business Innovation and Economic Security Act clears the Senate.
Mar 17, 2026
The House approves it 345 to 41. Strong bipartisan support sends the bill to the President.
Apr 13, 2026
The President signs it into law. Both programs are reauthorized through September 30, 2031, ending the lapse.

The programs are not paused or on a short-term patch. They are authorized for five years, through fiscal year 2031.

What is new in the 2026 reauthorization

Beyond keeping the lights on, S. 3971 makes several substantive changes. The four that matter most to applicants:

1. The Strategic Breakthrough Award (up to $30M)

The headline addition is a new large Phase II funding category for agencies whose annual required SBIR expenditures exceed $100 million (think the largest funders, such as the Department of Defense and NIH). Key terms:

Feature	Detail
Award ceiling	Up to $30 million to a single small business
Structure	One award or a milestone-triggered sequence, up to a 48-month performance period
Agency spending limit	No more than 0.5% of the agency's overall extramural R&D budget
Contract execution	Agency must execute within 90 days of receiving the proposal
Prior award	Must hold at least one prior Phase I or II award
Matching funds	100% match from new private capital or qualifying government funding
Market evidence	Market research showing the technology addresses an identified need

The Department of Defense layers on extra conditions for its Strategic Breakthrough Awards, including technology-maturity verification, a commitment to include the effort in a program objective memorandum, alignment with high-priority operational requirements, and at least 20% of matching funds from new DoD sources outside SBIR/STTR Phase I and II.

2. Submission caps to curb "SBIR mills"

To address companies that win many small awards without transitioning technology to market, the law directs agencies to set their own proposal submission caps starting in fiscal year 2027. Agencies can limit submissions on a per-company, per-solicitation, or per-topic basis, must establish those limits 90 days before each fiscal year begins, and may waive them for a small share (no more than 5% of annual topics) of time-sensitive solicitations. If your strategy relies on high-volume applications, expect that to be constrained going forward.

3. Tighter national-security screening

The law strengthens foreign-risk review. Agencies must examine whether applicants or covered individuals have foreign affiliations, investment ties, licensing or joint-venture arrangements, or other business relationships connecting key personnel to entities in countries of concern. Companies on designated federal watch lists (including the Section 889 prohibition list, the Military End User list, the 1260H Chinese military companies list, and the Non-SDN Chinese Military-Industrial Complex Companies list) are excluded. Agencies have broad discretion to deny awards on security grounds and must give written notice of the basis for a denial.

4. Stronger Phase III transition and better data

The reauthorization pushes the Small Business Administration to strengthen its policy directive so procurement center representatives advocate for "maximum practicable use and transition" to Phase III, and encourages simplified procedures, standardized contracts, and model solicitation clauses across Phase I, II, and III. The Federal Procurement Data System will also be updated to classify SBIR/STTR awards and reference relevant prior work on follow-on awards.

What the lapse means for your funds and timing

The six-month gap halted new awards, but existing awards continued. To soften the disruption, the law includes a bridge: agencies that still hold SBIR or STTR funds at the end of fiscal year 2026 may use those funds for the programs in fiscal year 2027. In practice, solicitation calendars are resuming, but they vary by agency. Before you build a submission timeline, confirm the current schedule directly with the agency you are targeting.

Practical note: reauthorization sets the rules, but each agency implements them on its own timeline, and several provisions (submission caps, some award mechanics) phase in starting FY2027. Always check the specific solicitation and the agency's SBIR office for how a rule applies to your proposal.

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Frequently asked questions

Is SBIR funding back in 2026?

Yes. President Trump signed S. 3971, the Small Business Innovation and Economic Security Act, into law on April 13, 2026, reauthorizing SBIR and STTR through September 30, 2031. New awards had been halted during a six-month lapse after the previous authorization expired on September 30, 2025. With the law signed, agencies can resume issuing awards.

How long are SBIR and STTR reauthorized for?

Through September 30, 2031, a five-year extension. The Senate passed the bill by voice vote on March 3, 2026, the House approved it 345 to 41 on March 17, 2026, and the President signed it April 13, 2026. The law authorizes roughly $6 billion in funding across the period.

What is the Strategic Breakthrough Award?

A new large Phase II category for agencies whose annual required SBIR expenditures exceed $100 million. A company can receive up to $30 million, as one award or a milestone-triggered sequence over up to 48 months, capped at 0.5% of the agency's extramural R&D budget. Eligibility requires a prior Phase I or II award, 100% matching funds from new private capital or qualifying government funding, and market research showing the technology meets an identified need.

What is the SBIR mill provision?

To curb companies that win many small awards without commercializing, the law directs agencies to set proposal submission caps starting in fiscal year 2027, on a per-company, per-solicitation, or per-topic basis. Agencies must set those limits 90 days before each fiscal year and may waive them for a small share of time-sensitive topics.

Did the lapse affect existing awards or funds?

The lapse halted new awards after September 30, 2025, but work under existing awards continued. The law also lets agencies with leftover SBIR or STTR funds at the end of fiscal year 2026 use them for the programs in fiscal year 2027. Confirm the current solicitation schedule with the specific agency you are applying to.

Bottom line

SBIR and STTR survived their lapse and are now on firm five-year footing through fiscal year 2031, signed into law as S. 3971 on April 13, 2026. For most applicants the day-to-day process is unchanged, but three shifts are worth planning around: a new $30 million Strategic Breakthrough Award for graduates of the program with private matching capital, coming submission caps that will limit high-volume applicants from FY2027, and stricter national-security screening. The practical move now is to confirm your target agency's reopened solicitation schedule and line up the matching capital and commercialization evidence the larger awards require. Keep building with our SBIR Phase I guide, the NSF Phase II fast-track, and federal grants for startups.

This is educational information about federal grant policy, not legal or financial advice. Program rules and solicitation schedules change and vary by agency; confirm current guidance with the agency's SBIR/STTR office before applying. Sources: S. 3971, the Small Business Innovation and Economic Security Act (signed April 13, 2026); University of Washington Federal Relations; Crowell & Moring client alert; International Economic Development Council; NSBA. Last reviewed July 11, 2026.