WASHINGTON, DC – Yesterday House Committee on Small Business Ranking Member Sam Graves (R-MO) introduced legislation that would amend the Small Business Innovation Research (SBIR) program, overseen by the Small Business Administration (SBA).  The bill, H.R. 2767, would change the programs eligibility requirements for small businesses and allow firms with considerable venture capital funding to participate in the SBIR program.

Ranking Member Graves said, “Opening up the SBIR program is exactly the kind of legislation Congress should be passing to help small businesses create new, good-paying jobs.  Small businesses develop more patents per employee than large firms; investing in our small innovators is critical to our future.”

The SBIR program, created in 1982, offers competition-based awards to stimulate technology innovation among small firms, while providing government agencies with new, cost-effective, technical and scientific solutions to meet their diverse needs. 

In 2003, the SBA reversed eligibility requirements that prohibited small businesses with more than 50% of venture capital ownership to apply for SBIR funds.  Recent estimates indicate that since the restriction was instituted, applications for SBIR grants have been on the decline.  The National Institutes of Health, one of the largest grantors to medical technology companies, reported application reductions of 11.9 percent in 2005, 14.6 percent in 2006, and 21 percent in 2007.  However, Ranking Member Graves’ legislation would allow companies to apply for SBIR assistance as long as one venture capital company does not own more than half of the small business.  At a time when business owners are struggling to obtain loans, H.R. 2767 will permit them to attract venture capital firms and continue participation in the SBIR program.

Committee Member Aaron Schock (R-IL) introduced changes to the SBIR program that would increase the award size of SBIR grants to small businesses, improve information sharing by creating online databases, and create an interagency policy committee.

On Thursday, the new legislative proposals on SBIR will be marked up by the House Small Business Committee’s Subcommittee on Contracting and Technology.

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