Do's & Don'ts of the SBIR Grant Application Process

06/02/21 | 8 MIN READ Revised 09/23/21

This article details how to write an SBIR grant proposal, at both the NIH and the NSF.

Small Business Innovation Research (SBIR) grants are federal grants awarded to American small businesses. The grants are for the purpose of furthering research and development, with the long term goal of commercialization. This article does not detail specifics on the application process or other background on the program. If you would like to learn more, check out Finding Funding for Your Biotech Startup. Instead, this article covers writing your physical proposal, including the most important sections and specific tips. If you want to learn even more about the process, you can also check out the SBIR website.

🔬Learn more: What are SBIR/STTR Grants?

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Step 1: What is your question?

Instead of immediately starting with the solution, you should write your grant proposal as a question and an answer (or as a problem and a solution). Most people think that asking a smaller question with your idea being the only answer is the best idea. But, asking a larger question that tells the reviewer “my product matters” is more important. It might be a good idea to take a step back from your product and see whether or not it can answer a broader question.

Step 2: How big is your thinking?

Ask yourself these questions before beginning to write your SBIR grant applications:

  • What is the intellectual merit?
  • What is the big idea around my solution?

You don’t want your product to just be an incremental solution to a very broad problem. It should have a specific purpose and improve upon, or reimagine, an existing solution.

Step 3: Is there a product/service?

SBIR grants are given to companies that are also able to commercialize. They are not grants for pure research. Because of this, reviewers will be looking at your application partially from a commercialization perspective. Does your innovation have the possibility to be marketed and commercialized?

Doing a little bit of consumer research can help you understand whether or not your product is viable in the market. Read about the Voice of Customer process. Because the eventual goal of this grant is commercialization, you need to ask questions such as “Will someone pay for my innovation?” early on in the process.

This is the difference between innovation and invention grants. Innovation grants look to bring a product to market, while invention grants are all about new knowledge or insight. SBIR grants are innovation grants.

Step 4: Why you?

Step 4 is about convincing the reviewer why your team is the best for this project. This usually comes in the form of detailing your team's experience and expertise in the field. Sometimes applicants get hung up on the academic credentials of a team, as opposed to the business experience of the members. That being said, the NIH and NSF sees applicants for an SBIR grant in different lights. The NIH seems to prefer academic experience while the NSF prefers more business experience. Regardless, the team should have a mix of both.

Step 5: Budget

This article does not delve into the budget you will need to apply for an SBIR grant in great detail. In general, there are direct and indirect costs related to applying for an SBIR grant. Direct costs are line items such as application fees. Indirect costs are things like PPE, business licenses, and rent payments.

NSF is based on a grants-only policy, while the NIH can be grants or contracts. NSF will give you money in pieces up front, while the NIH might need to reimburse you after the fact. The NIH can also engage in indirect cost negotiations, if needed, while the NSF can not.

🔬Related: 8 Tips for Writing a Winning SBIR

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Do’s and Don’ts

Now that you know the 5 steps for a pre-application, you can start thinking about actually applying. Below are some basic do's and don'ts to consider when writing your application.

Do: Read the Solicitation

This may seem obvious, but some companies submit applications that are not directly catered to the solicitation that the NIH/NSF posted. Leaving out key details that the solicitation asks for can cause your application to be immediately rejected.

Solicitations commonly are in the form of a Request for Proposal (RFP) or Notice of Funding Opportunity (NOFO). Many applications are denied because they don’t have all necessary sections required in the solicitation. The solicitations are often dense and long, but they are the step-by-step guide for what to put in the proposal.

Do: Submit a Letter of Intent

Some (not all) government agencies request a Letter of Intent (LOI) to be submitted prior to application submission. If so, submit the LOI before the grant application. The granting agency will complete a compliance review of the LOI, which is evaluated for eligibility and completeness, and give feedback to the small business. If the small business’s LOI moves forward, they are invited to submit a full application which is often reviewed by a panel of experts. 

Don’t: Ignore Review Criteria

The review criteria for the NSF involves 3 main parts:

  • Criterion 1: Intellectual Merit
  • Criterion 2: Broader Impacts
  • Criterion 3: Commercial Impact

The review criteria for the NIH is slightly different. It involves 5 main parts:

  • Criterion 1: Significance
  • Criterion 2: Investigator(s)
  • Criterion 3: Innovation
  • Criterion 4: Approach
  • Criterion 5: Environment

Significance at the NIH is similar to the Intellectual Merit criterion at the NSF. It is essential to address whether or not the idea addresses an important problem (your idea should). You will also notice that the NIH places greater value on the investigators and their academic achievements, as stated earlier. The NIH also evaluates applications based on their approach and plan more heavily than the NSF.

Do: Read Section Guidelines

The NIH and the NSF expect applications to be split up in sections. Each one has different expectations and section titles. Read about the NSF sections. Below are a couple of important sections for each application, whether it be at the NSF or the NIH.

NSF Project Summary

The project summary for a SBIR grant at the NSF is 1-page long. It requires 3 boxes to be filled in: the overview, the intellectual merit, and the broader/commercial impact. This is the first thing the reviewers will see, so it is your chance to convince them that your idea is worth funding.

NSF Project Description

The project description is a bit longer. This is where you can insert your elevator pitch, commercial opportunity, innovation, team, and R&D plan. The project description requires a minimum of 9 pages, and a maximum of 15.

NIH Project Summary/Abstract

The NIH project summary and abstract sections are very similar to the NSF ones. Click the link above to learn more about specific needs/wants from the NIH on these sections. Remember not to include any proprietary information in your summary.

🔬Learn more: 9 Strategies for Winning Grants at the NIH and Beyond

Don’t: ‘Mix’ Sections

Mixing sections refers to blurring the lines between specific section titles like R&D Plan and Commercialization. You should not be talking about your commercialization plan when you should be talking about how you will research the idea in the first place. Save each idea for their respective sections. This will leave you more room to explain each individually, instead of muddling them all together.

Do: Talk to Your Program Manager

When applying to the NIH specifically, it is best to speak with a program manager before beginning and submitting your application. Program managers can help you find which department would benefit most from your application, and help you navigate the NIH process in general.

Check out the NIH RePORTer website. This webpage allows you to search for specific keywords on projects carried out/funded by the NIH. Finding similar projects to your idea can help you find which department to contact and eventually apply to.

Don’t: Leave Out Measurable Goals

The reviewer will want to see whether or not your project has succeeded over the course of the grant. In order to do this, you can not forget to add measurable goals in your application. Measurable goals can change depending on the field of research you wish to pursue.

No matter the field, guaranteed success should not be the goal of your pitch. If your idea is perfectly formed and will have no mistakes, you should skip the SBIR and go straight to venture capital or angel investors!

Your measurable goals should also align with your Research Strategy (for the NIH) and your R&D Plan (for the NSF). This makes sense, as all of your projects should be connected, especially your objectives and overall plan.

Do: Balance Risk with Reality

Oftentimes, Phase I funding applications do not have the means to provide a risk-free grant topic/idea. That is the purpose of the grant. It is to understand whether or not the idea is viable for the market. That being said, you want to make sure you balance out your risks with evidence that your approach is grounded in reality. If you can convince the reviewer that your application is worth taking on despite the risks, you have done a good job.

Balancing risk with reality also ties into setting measurable goals. These goals should be between super-easily attained and impossibly attained, so that your product is the best it can be.

Don’t: Ignore Existing Solutions

Oftentimes, innovators are hesitant to address the existing solution for their specific problem. The current solution could be a different product, a combination of products, or a jerry-rigged solution.

Regardless of the type of current solution to the problem, you need to prove why yours is better than the other product. In doing so, you can prove why your product needs to be funded in order to make people’s lives easier. Answer the question: why would someone pick your product over someone else’s, or nothing at all?

Check out this article on customer discovery in order to help you understand how to find the current solution to whatever problem you aim to fix.

Do: Include the 3Ws (and 1H)

The 3Ws and 1H are: who, what, why, and how. If you ask a friend or colleague to read your proposal, they should be able to identify each:

  • Who is in charge and what is their credibility?
  • Why do you want to do the project?
  • What do you want to do?
  • How do you plan to do it?
  • How will you know if you succeeded?

The answers to each of these questions should be easy to find when someone reads your application.

Don’t: Forget a Letter of Support

A letter of support indicates to the reviewer that your project has been backed by someone in the industry. For the NIH, they look for letters of support that establish credibility of the principal investigator (PI). They also want to see that the methodology in the proposal is valid. 

The NSF looks for a letter of support that will validate a market need and validate the technical expertise of the team. This could be something as simple as a potential customer who writes to validate that the proposed solution is something they would spend money on. 

Do: Apply for the track that makes the most sense for your company

SBIR grants are offered in three phases. Companies can apply the traditional route by applying to and completing Phase I, then applying to Phase II. Companies also have a choice to apply direct to Phase II or the fast track, which is Phase I and II bundled together. The success rate for Phase I, fast track, and direct to Phase II are roughly the same, and the NIH does not compare standard Phase II applications to direct to Phase II applications. For all those reasons, apply to the program that makes the most sense to your company rather than finding the one that gives your company a better success rate.

🔬 Related: How Incubators Can Improve Your SBIR Grant Application with a letter of support.

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Most Common Reasons for Rejection

Here are a few of the most common reasons that a reviewer might reject a specific proposal. Most of these can be fixed quite easily, so avoiding them on your first application is paramount for early success:

  • Did not convince reviewers that there is novelty or uniqueness
  • Lack of technical detail
  • No statements about feasibility, risk, or measure of success
  • Lack of references to prior work by others in the same field
  • Not enough expertise on the team
  • Did not understand who the customer is (specifically for the NSF)

General Tips and Takeaways

An application that is approved by either the NSF or the NIH for an SBIR grant needs to have all of the proper elements clearly laid out. This seems quite simple, but oftentimes researchers will fail to read the initial solicitation, or leave out key bits of market research. The application should be clear and easy to read for the reviewer, so that they can easily establish your goals and how you plan to accomplish them.

Frequently Asked Questions about the SBIR Grant Application Process

Q: What are the differences between business development and commercialization?

A: Business development is making phone calls and establishing connections with customers to pave the way for sales. Commercialization is the entire plan to go to market, including your pricing, business model, market segment, etc.

Q: How do you balance communicating that there is risk, but the project is also feasible?

A: You can say that the project involves risk, but the money being granted by the SBIR will help de-risk it before commercialization. There should be a little bit of risk, because a federal grant’s purpose is to take the technical risk away before another source attempts to fund your project (like VCs or angel investors).

This content comes from a University Lab Partners webinar hosted in partnership with the SBDC @ UCI Applied Innovation, featuring Laura Beken & Louis DiNetta.

📽️ Watch the full webinar here.

The SBDC @ UCI Applied Innovation is a resource for any high-technology, high-growth, scalable venture from both the Orange County and UCI ecosystem that needs assistance with business planning, business development and funding-readiness. The center hosts several VC and Angel investors on site, as well as various ecosystem partners and industry professionals who work closely with the entrepreneurs.

Laura is a healthcare executive and a passionate business creative in the innovation space. Louis DiNetta is presently Manager, Technology Business Development, at the Delaware Small Business Development Center, is an active board member of the Delaware Founders Initiative.

Be sure to subscribe to the ULP YouTube Channel to never miss another webinar, and connect with us on LinkedIn to stay in the loop!


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