Congress May Increase Small Business R&D Funding House and Senate committee chairs have agreed to substantial increases in Small Business Innovation Research grants as part of a deal to reauthorize the SBIR program for six years. The agreement, announced Dec. 12, apparently ends a years-long stalemate over SBIR and the Small Business Technology Transfer Program. The reauthorization was included in the 2012 Defense Authorization bill, which was awaiting final congressional action at press time. "Because of this deal, businesses will have peace of mind for the next six years,” said Sen. Mary Landrieu, chair of the Committee on Small Business and Entrepreneurship. “The nation's innovators will have more access to federal research dollars, and the process by which they get the funding will be more efficient because we cut down the time for final decisions and disbursements." The agreement was negotiated by Landrieu, D-LA, and House Small Business Committee Chairman Sam Graves, R-MO. On the key sticking point, a share of SBIR funding would go to companies controlled by large venture capital investors, private-equity firms or hedge funds. The bill calls for the first increases in the size of SBIR grants in 30 years. The maximum award in Phase I would rise to $150,000, from the present $100,000. In Phase II the maximum would quadruple to $1 million. It requires agencies to spend 3.2% of their research budgets on SBIR grants, up from the current 2.5%. Grants under the Small Business Technology Transfer Program would rise to 0.45% of budgets, from the present 0.3%. Companies controlled by large VC investor groups, private-equity firms or hedge funds would be eligible for up to 25% of SBIR grants from the National Institutes of Health, the National Science Foundation and the Energy Department. Other agencies could allocate up to 15% of their funds to such companies. The SBIR program has been continued on short-term reauthorizations for years because the House and Senate could not agree on whether VC-controlled companies should share in the funds. Opponents argued that firms controlled by large venture-capital investors were not true small businesses. Some in industry said VC funding was vital for high-dollar, high-risk research in fields such as biotechnology. Graves said, “This deal not only gives the program stability, but it improves the program by opening it up to more companies regardless of their financial structure, it increases the Phase I and II award sizes, and it puts a stronger emphasis on commercialization.” By some accounts, the SBIR program is the largest source of R&D funding for small businesses. It distributed $2.5 billion last year, more than the total early-stage investment by venture-capital firms.