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The next-best thing to free money is available through two federal programs for small businesses involved in technology and innovation.
The Small Business Innovation Research (SBIR) program – the larger of the two – grants money to small and startup businesses to develop products, technology or services that solve pressing problems in agriculture, defense, education, energy, transportation, the environment, space exploration, health and other areas.
The Small Business Technology Transfer (STTR) program requires the business to collaborate with a nonprofit research laboratory or university that can share its technology or expertise with the innovator.
Eleven federal agencies — including the Department of Defense, Department of Energy, National Institutes of Health, NASA and National Science Foundation — offer SBIR grants and contracts, and five offer STTR awards.
Both programs provide money that doesn’t have to be repaid, and the business doesn’t have to surrender equity.
But, as federal programs, the grants are subject to federal procurement regulations.
SBIR and STTR are designed for high-risk, untested innovations, not for conventional enterprises, such as retail or service, or for technology companies with proven ideas.
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