If you’re a U.S.-based small business developing technology that protects the environment or human health, the EPA SBIR program could be a valuable source of non-dilutive funding. This FAQ-based guide focuses specifically on Phase I and Phase II of the EPA SBIR program — what they fund, how to apply, who’s eligible, and what to expect at each stage. Whether you’re a startup with a novel idea or a more established small business expanding your R&D portfolio, this article aims to answer the practical questions that matter most.
EPA SBIR Overview
The EPA’s Small Business Innovation Research (SBIR) program provides contract-based funding to help small businesses develop technologies that align with the agency’s mission: protecting human health and the environment. Unlike grant-based SBIR programs at some other agencies, EPA issues fixed-price contracts tied to specific topic areas in their annual solicitation. To receive funding, your proposal must directly respond to one of those topics and deliver measurable results.
What the EPA Funds
Each year, EPA identifies priority areas that reflect emerging environmental challenges. These often fall under broad categories such as:
- Clean and safe water
- Air quality and monitoring
- Climate change adaptation
- Circular economy and sustainable materials
- Safer chemicals
- Environmental sensors and risk assessment
Technologies that demonstrate strong commercial potential and align with these categories are most likely to be selected. Keep in mind: EPA will not fund out-of-scope proposals, even if the innovation has general environmental benefits.
Contract vs. Grant: Why It Matters
Because EPA SBIR awards are contracts, not grants, they come with more rigid requirements:
- You must address a specific topic from the solicitation
- You must deliver reports and milestones according to a government schedule
- The EPA defines the work — you execute it
This structure benefits applicants who prefer a clear roadmap and deliverables, but it also means less flexibility than a grant.
Who Can Apply
The EPA SBIR program is open exclusively to U.S.-based, for-profit small businesses. To qualify, your company must meet the following criteria at the time of application and award:
- Have 500 or fewer employees
- Be at least 51% owned and controlled by U.S. citizens or permanent residents (or another eligible small business)
- Be located and operate primarily in the United States
These requirements are strictly enforced — and verified through required federal registrations like SAM and the SBA Company Registry.
Startups vs. Established Firms
Whether you’re launching your first product or expanding an existing R&D portfolio, you can compete for EPA SBIR funding. The agency encourages first-time applicants, including startups with no prior revenue, as long as they present a credible technical plan and team. Past performance is helpful but not mandatory.
What matters most is that your team has the right mix of technical expertise and a clear understanding of how to move the innovation toward commercialization.
Universities and Non-Profits: Partners, Not Applicants
Academic institutions, non-profits, and government labs cannot apply directly to EPA SBIR. However, they can participate as subcontractors or consultants:
- In Phase I, you can subcontract up to 33% of the work
- In Phase II, that limit increases to 50%
These collaborations are common — especially when a business wants access to lab facilities, testing equipment, or expert advisors. Just remember: the small business must perform the majority of the work and retain the leadership role.
How to Apply for EPA SBIR
Applying to the EPA SBIR program is a time-sensitive, multi-step process that begins months before the proposal deadline. Although the proposal itself is submitted through FedConnect, the preparation involves several registrations, documents, and careful attention to formatting requirements.
When to Apply
EPA typically releases its Phase I solicitation in late June, with proposals due about 6–8 weeks later — often in mid-to-late August. For instance, the 2024 Phase I opened June 26 and closed August 21. EPA generally announces the next cycle’s dates on its SBIR website and email list.
Phase II is by invitation only. EPA invites eligible Phase I awardees near the end of their 6-month contracts (e.g., May with a July submission deadline). You cannot skip directly to Phase II.
What You Need to Register
Before you can even access or submit a proposal, your business must register in several federal systems — a process that can take several weeks. These include:
- SBA Company Registry (to get an SBIR Control ID)
- SAM.gov (System for Award Management — required for federal contracts)
- FedConnect (where proposals are submitted)
You cannot submit a proposal without active registrations in all three systems.
Evaluation & Award Timeline
Once your proposal is submitted through FedConnect, it enters EPA’s peer review process. Understanding how your proposal will be evaluated — and when you’ll hear back — can help you plan your business strategy accordingly.
How Proposals Are Evaluated
EPA uses a panel of external technical reviewers to score each proposal against specific criteria published in the solicitation. These typically include:
- Technical Approach: Is the R&D plan clear, realistic, and well-designed to prove feasibility?
- Innovation: Does the idea offer a novel solution beyond current technologies?
- Team Qualifications: Does your team have the expertise needed to complete the work?
- Environmental Impact: How well does your innovation align with EPA’s mission and topic area?
- Market Opportunity: Is there a viable customer base and commercial path?
- Commercialization Strategy: Have you considered how to move from prototype to market?
Reviewers score each area independently, and scores are combined to determine rankings.
What Happens After Submission
The typical Phase I award cycle looks like this:
- Late August: Submission deadline
- Fall: Peer reviews conducted
- November–December: Awards and decline notices issued
- January: Contracts begin
For Phase II, the schedule is similar but delayed by about 6–8 months from the Phase I start.
Note that EPA does not provide detailed debriefs to Phase I applicants who are not selected. If your proposal is declined, you’ll receive a notification via FedConnect but little feedback. For Phase II, limited reviewer comments may be shared.
After Phase II
If your business successfully completes an EPA SBIR Phase II project, you’ve developed and validated a technology that meets EPA’s goals. But unlike some agencies, EPA does not fund a Phase III under SBIR. This stage — commercialization — is your responsibility, though the program is designed to set you up for that success.
What Happens After Funding Ends
At the conclusion of Phase II, you’ll submit a final report to the EPA outlining your results, commercialization potential, and any next steps. From there, the expectation is that your business will use the data, prototype, or pilot results to:
- Attract private investors or venture capital
- Enter the market through direct sales, licensing, or joint ventures
- Apply for follow-on funding from other government programs
EPA will not continue to fund R&D on that topic unless it’s competitively awarded through another round or solicitation.
EPA SBIR does not offer Phase III funding.
You’ll need to transition to private capital, partnerships, or other non-SBIR sources to commercialize your product.
Proposal Tips & Best Practices
The EPA SBIR program is competitive — each year, only a small percentage of Phase I applicants are awarded contracts. But strong proposals share common traits that can help you stand out.
Write to the Review Criteria
EPA’s reviewers score each section of your proposal based on published criteria. Align your narrative with these categories:
- Organize your technical proposal using the same headings
- Explicitly address how your work meets EPA’s mission and the specific topic you’re applying to
- Highlight the novelty and feasibility of your idea with clear data, methods, or pilot plans
Showcase a Capable Team
Even if your business is new, a strong team can make a difference. Demonstrate:
- Your lead researcher’s relevant experience
- Subcontractor or consultant roles and qualifications
- Any past SBIR awards or commercialization progress (if applicable)
If the Principal Investigator isn’t a full-time employee yet, explain when they will join and what their role will be.
Emphasize Commercialization Early
EPA understands Phase I is about feasibility — but reviewers want to know there’s a path forward. Even in Phase I, include:
- Who the customers would be
- What the value proposition is
- Early thoughts on licensing, manufacturing, or go-to-market plans
Start your SAM and FedConnect registrations at least 6 weeks before the deadline.
Delays are common, and you cannot submit without active registrations.
Final Takeaways
The EPA SBIR program offers a focused pathway for small businesses developing solutions to environmental challenges. Whether you’re building sensors to monitor air pollution or creating biodegradable materials for water filtration, understanding how Phase I and II work can position you for success.
Here’s what to remember as you plan your application:
- You can only submit one proposal per year to the EPA SBIR solicitation. Choose your best idea that fits their published topics.
- EPA SBIR is a contract-based program. That means clear deliverables, fixed budgets, and topic-specific R&D.
- Phase III funding is not available from EPA. Start thinking about commercialization early — investor pitches, customer pilots, and real-world data will matter.
- Get your registrations done early. SAM.gov and FedConnect delays have caused missed opportunities for many small businesses.
With the right preparation and a compelling proposal, the EPA SBIR program can help turn your innovation into a commercial solution — one that’s good for business and for the environment.