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Government Small Business Program Under Attack

What are now large companies like Qualcom and Symantec both came from this one government initiative. Inventions like the electronic toothbrush also came from the same initiative. The Small Business Innovative Research (SBIR) program sponsored by the Federal government is up for re authorization but conflicting legislation from Congress could threaten the program causing jobs to be lost, and small businesses to lose valuable contracts responsible for employing more than 1.5 million people according to a Save SBIR press release.

The Small Business Innovate Research program was started in 1982 as a way to stimulate technological innovation utilizing up and coming but underfunded small businesses. The program works in two phases. Phase one is for businesses who can demonstrate that they’ve completed enough research and development to produce a promising idea yet still need more development dollars. They are required to prove that it has promise and submit verification that it is not fraudulent or violates any Federal law including copyright or patent laws. Once this takes place, the program pays the business to continue developing the product.

Phase two is for businesses who have a product further down the R&D pipeline and need additional funding to bring the product to market. These are normally larger sums of money than phase one grants. Those who oppose the proposed changes to the SBIR program argue that the under new rules, businesses could bypass the phase one process and receive larger sums of money from phase two, avoiding the phase one safeguards that keep money from being awarded to programs that may not be commercially viable. This would allow more dollars to go to larger businesses already through the beginning stages of growth.

Also in the proposed changes, the maximum amount of time that a small business could receive funding is 3 years. This, argues the Save SBIR organization, isn’t enough time to develop a product. Finally, the way that businesses are chosen for the program will make it easier for heavily funded businesses to receive funding which could squeeze out small businesses who aren’t backed by venture capital firms.

One New England based company who now employs more than 500 people receives 80% of its business from the SBIR program and because proposed changes put a cap on how many times a business can participate in the program, this business could lose 80% of its business in the next few years. “Small businesses are America’s economic engine, and SBIR is an unparalleled success in harnessing the proven innovative power of small, technology-based businesses to meet the nation’s 21st century technology needs,” said Congressman Edward J. Markey.

Small businesses depend on programs like these and the public and private sector both rely on small businesses to bring new ideas to the marketplace.

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Small Business Action Alert

Alerts from Small Business California

There is raging battle going on in Washington over reauthorization of the Small Business Innovative Research[SBIR] program. Now you are probably saying to yourself this doesn’t affect me but it does indirectly. Read on

The SBIR program directs $2.2 billion annually in Federal grants to small technology businesses across the country.

There is legislation in the House [HR 2965] which would allow venture capital controlled companies to participate in SBIR. With this legislation, Congress is changing the definition of small business to include subsidiaries of multinational corporations and companies majority owned by multi-billion venture capital funds and  other large financial institutions, including foreign institutions to in SBIR. This fundamental change in definition of a small business opens the door to greatly reducing Federal Research and Development grants for companies that have traditionally been defined as small business- those with 500 or fewer employees.

Small businesses which creates most of the private sector jobs and exceed all of the patent filings of research universities currently gets only 4.3% of the Federal R&D grants. Passage of HR 2965 would not only reduce money going to traditional small businesses but because of the increased size of grants reduce the number of grants by 50%. I am urging you to send an  email to Speaker Pelosi and Congresswoman Speier asking them to oppose this. FYI the Senate Small Business & Entrepreneurship Committee has passed S1233 which would not allow this. Congressman Markey and Congresswoman Tsongas will be introducing an amendment tomorrow more friendly to small business

Text of the email to the Congresswomen could be

Dear Speaker Pelosi/Speier

I am a small business owner in San Francisco. There is a bill in the house HR 2965 dealing with reauthorization of the Small Business Innovative Research program which would change the definition of small business to include venture capital firms with more than 500 employees. I urge you to support the Markey/Tsongas amendment.

Sign and make sure your address is included

Please send the Email to Brian Perkins in Jackie Speier’s office Brian.Perkins@mail.house.gov

And Mark Herbert in Speaker Pelosi’s office Mark.Herbert@mail.house.gov

You can send one email to both

If you want the Markey amendment please let me know.

If you want to call the numbers are Speier- Brian Perkins- 650 342-0300

Pelosi- Mark Herbert- 556-4862.

If they are not there leave a message.

Time is of the essence as the vote in the House could be as early as Tuesday. Also I will be meeting  with Speaker Pelosi’s representative with a group of SBIR recipients Tuesday at 10:30

Please, please , take a few moments to write or call. Please send me copy of email or let me know you called.

If they VC’s are successful they have said they want all the SBA programs open to them

Scott Hauge

President

CAL Insurance and Associates, Inc.

2311 Taraval Street

San Francisco, CA  94116

www.cal-insure.com

Phone:  (415) 680-2109

Fax:      (415) 680-2137

“Always looking out for you”

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Tags: Action Alert, Entrepreneurship, R&D Grants, SBIR, Small Business, Small Business Action Alert, Small Business Innovative Research