North Carolina Creates SBIR/STTR Incentive, Matching Program

With the passage of the state's biennial budget, North Carolina's small businesses are now eligible for follow-on support from the state for research projects funded under the federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

A provision in the budget creates the One North Carolina Small Business Fund, a special revenue fund of up to $3 million to be used for the North Carolina SBIR/STTR Incentive Program and the North Carolina SBIR/STTR Matching Funds Program. Both programs will be administered by the North Carolina Board of Science and Technology.

The incentive program provides grants to eligible businesses to offset costs associated with submitting proposals for funding under the SBIR/STTR programs. The grants will reimburse an eligible business for up to 50 percent of the costs of preparing and submitting a SBIR/STTR Phase I proposal, up to a maximum of $3,000. An eligible North Carolina business may receive one grant per year.

The Matching Funds Program provides grants to eligible North Carolina businesses to match funds they receive through a SBIR or STTR Phase I award and to encourage these businesses to apply for Phase II awards. The grants will match funds received by an eligible North Carolina business under an SBIR/STTR Phase I proposal up to a maximum of $100,000. Under the program, a business will receive 75 percent of the total grant upon receipt of a Phase I award; upon submission of the Phase II application and acceptance of the Phase I report by the funding agency, a business will receive the remaining 25% of the total grant. An eligible North Carolina business may receive one grant per year, and up to five matching grants over its lifetime.

Robert McMahan, the governor's senior advisor for science and technology and the executive director of the North Carolina Board of Science and Technology, said the programs should significantly increase the growth and competitiveness of North Carolina companies under the SBIR/STTR program. The programs also are expected to help bridge the gap between the state's internationally recognized R&D capacity and the commercialization of products that spring from it. "The downstream effects of a program like this in terms of company and job creation across the state should be significant," McMahan said.

In recent years, North Carolina has ranked above the national average in R&D funding, but at or below the national average in SBIR and STTR funding.

State SBIR proposal assistance and matching award programs are regaining popularity across the country. The NC program is modeled after similar efforts in Indiana and at the Oklahoma Center for the Advancement of Science & Technology. In FY 2004, Michigan also committed $1 million to provide a 15 percent match of SBIR Phase I awards through its Technology Tri-Corridor SBIR Emerging Business Fund.

Text of the legislation authorizing the One North Carolina Small Business Fund is available on page 215 of North Carolina's budget bill: http://www.ncleg.net/Sessions/2005/Budget/S622-PCCS.pdf.