NEWS | Federal Science Funding Cuts Start to Hit Small Business Research and Innovation, SBIR/STTR Projects
- NSBA
- 19 minutes ago
- 2 min read
NSBA and our Small Business Technology Council (SBTC) continue urging Congress and the Administration to prioritize federal action to better support small-business innovation, research, and technology development, including immediate action to reinstate SBIR/STTR programs.
ANALYSIS | Cuts to federal science funding directly undermine the SBIR/STTR programs, disrupting the research-to-commercialization pipeline small businesses rely on to deliver innovation, create high-skilled jobs, and support national priorities.
FEB. 06, 2026 | Recent reporting from E&E News underscores a growing challenge for small businesses that depend on federal research funding, particularly firms participating in the Small Business Innovation Research (SBIR) program, as reductions in federal science budgets ripple through the innovation ecosystem.
The article highlights how small research-focused companies are experiencing contract losses, revenue declines, and layoffs following cuts to federal science and environmental research funding. These impacts are especially acute for SBIR-backed firms, which rely on consistent agency investment to move technologies from early-stage research into commercialization.
SBIR has long served as a critical bridge between federal R&D priorities and private-sector innovation, enabling small businesses to develop and scale technologies that support national needs ranging from energy and environmental monitoring to defense and public health. When agencies scale back science budgets or delay research contracts, SBIR awardees often face stalled projects, workforce reductions, and diminished opportunities to transition Phase II research into market-ready solutions.
One small technology firm cited in the report experienced a steep drop in federal sales and was forced to lay off employees for the first time in decades, a signal, advocates say, of broader stress across the small business research community. Industry observers note that reduced agency staffing and shifting procurement strategies further complicate small firms’ ability to compete for and execute federal R&D contracts.
Small-business advocates warn that these trends risk weakening the research-to-commercialization pipeline that SBIR was designed to support. Without stable and predictable federal science funding, fewer small businesses can sustain R&D teams, pursue follow-on private investment, or deliver innovations that strengthen U.S. competitiveness.
The article reinforces long-standing concerns that cuts to federal science funding disproportionately affect small, research-driven firms, threatening not only individual companies but the broader innovation infrastructure that SBIR helps sustain.
Read the full article here.
