New Jersey companies may benefit from new rules


Small technology companies in New Jersey may be interested in a set of new proposed regulations by the Small Business Administration. The proposed regulations concern a federal program known as the Small Business Innovation Research program, which provides research grants of $2 billion annually to early-stage technology companies. Final regulations are expected by the end of the year.

One of the key changes to the Small Business Innovation Research (SBIR) program will include permitting startup research firms supported by venture capital to also qualify for SBIR grants.

In addition to expanding funding opportunities for venture-backed companies, the proposed rules would also affect federal agencies that participate in SBIR and a related program, the Small Business Technology Transfer program (STTR). Currently, participating federal agencies that provide in excess of $100 million in external research must set aside 2.5 percent of their external research dollars to SBIR-qualified small companies. Under the new rules, the set-aside rate will gradually increase to 3.2 percent by 2016. Similar set-aside rate increases will go into effect for STTR-qualified companies.

The set-aside change will affect several key federal agencies including the Department of Defense, the National Science Foundation and the National Institute of Health.

According to one expert connected to the New Jersey Small Business Development Center, it is uncertain whether the proposals will actually lead to increased funds for startup technology ventures, but they certainly will promote greater technology commercialization. Another expert predicted that the changes would make the application process for grants more competitive.

From 2006 to 2010, New Jersey companies received more than 800 SBIR and STTR awards worth about $275 million.

Source: New Jersey Business, " Entrepreneurs hopeful for expansion to small-business set-aside program," Beth Fitzgerald, August 1, 2012