USDA SBIR Phase II is where your innovation begins the transition from validated concept to viable product. While Phase I focuses on feasibility, Phase II demands a higher level of technical sophistication and a clear roadmap to impact—whether that’s commercial return or measurable societal benefit.
At this stage, USDA is no longer asking, “Can this work?” Instead, it’s asking, “How will this work in the real world, and why does it matter?” That distinction drives everything about Phase II: from your budget and project scope to how reviewers evaluate your proposal.
Funding and Scope Shift
Phase II awards typically provide up to $600,000 over 24 months—or $650,000 if Technical and Business Assistance (TABA) is included. With greater funding comes the expectation of a fully developed R&D plan. Your technical proposal must show not only what you’ll do but also how it builds on your Phase I success and sets the stage for commercialization.
Commercialization Is No Longer Optional
Unlike Phase I, a comprehensive commercialization plan is now required—and closely scrutinized. Whether your innovation serves niche growers or addresses national food security, you must define your end users, market potential, and the steps you’ll take to deliver a return on USDA’s investment.
Flexibility in What Success Looks Like
Not every USDA Phase II project needs to chase high-margin commercial sales. The agency also values societal returns, such as improved water quality, rural development, or public health outcomes. If your innovation’s impact is societal rather than financial, USDA encourages you to make that case—provided it’s backed by solid evidence and quantifiable benefits.
Know the Evaluation Lens
Phase II proposals are judged on both technical merit and commercial viability. A strong Phase I track record is necessary but not sufficient. Your application must show that the research is innovative, the execution team is capable, and the path to real-world use is credible.
Understand What USDA Expects from Phase II
USDA SBIR Phase II is where your innovation begins the transition from validated concept to viable product. While Phase I focuses on feasibility, Phase II demands a higher level of technical sophistication and a clear roadmap to impact—whether that’s commercial return or measurable societal benefit.
At this stage, USDA is no longer asking, “Can this work?” Instead, it’s asking, “How will this work in the real world, and why does it matter?” That distinction drives everything about Phase II: from your budget and project scope to how reviewers evaluate your proposal.
Funding and Scope Shift
Phase II awards typically provide up to $600,000 over 24 months—or $650,000 if Technical and Business Assistance (TABA) is included. With greater funding comes the expectation of a fully developed R&D plan. Your technical proposal must show not only what you’ll do but also how it builds on your Phase I success and sets the stage for commercialization.
Commercialization Is No Longer Optional
Unlike Phase I, a comprehensive commercialization plan is now required—and closely scrutinized. Whether your innovation serves niche growers or addresses national food security, you must define your end users, market potential, and the steps you’ll take to deliver a return on USDA’s investment.
Flexibility in What Success Looks Like
Not every USDA Phase II project needs to chase high-margin commercial sales. The agency also values societal returns, such as improved water quality, rural development, or public health outcomes. If your innovation’s impact is societal rather than financial, USDA encourages you to make that case—provided it’s backed by solid evidence and quantifiable benefits.
Know the Evaluation Lens
Phase II proposals are judged on both technical merit and commercial viability. A strong Phase I track record is necessary but not sufficient. Your application must show that the research is innovative, the execution team is capable, and the path to real-world use is credible.
Confirm Your Eligibility and Strategic Fit
Before investing time in your USDA SBIR Phase II proposal, ensure you meet all eligibility requirements and are strategically aligned with the program’s priorities. These are two distinct gates—both must be passed to remain competitive.
- Eligibility
- Program Fit
- You must have received a USDA Phase I award. Each Phase I award supports only one Phase II application.
- Your business must qualify as a Small Business Concern (SBC) per SBA standards and be more than 50% U.S.-owned.
- The Principal Investigator must be primarily employed (more than 50% of their time) by your SBC during the project.
- All R&D work must be done in the U.S.—foreign work requires written USDA approval.
Even with perfect eligibility, a poorly aligned proposal may not advance. USDA funds projects within 10 defined topic areas. Each area has sub-priorities and assigned National Program Leaders (NPLs). Proposals must directly address these areas—not just tangentially. Use the most current Request for Applications (RFA) to match your work to USDA’s goals. Reviewing past awards can help you refine your fit.
Disqualification Alert
Foreign R&D or non-SBC status at the time of award will result in automatic rejection. Verify all criteria before proceeding.
Too often, strong technologies are rejected for misalignment or overlooked eligibility issues. Use the eligibility checklist early and often. And don’t assume general relevance is enough—USDA seeks proposals tightly matched to its evolving priorities.
Prepare Mandatory Administrative Steps Early
USDA SBIR Phase II applications can’t be submitted until several critical registrations are in place—and these systems don’t move quickly. Start early to avoid last-minute submission blockers.
Each registration step builds on the previous one. A delay in any stage—especially UEI or SAM.gov activation—can halt your entire submission. Start these tasks months in advance and validate your status before you begin proposal writing.
Craft a Competitive Technical Proposal
The technical proposal is the backbone of your USDA SBIR Phase II application. It must do more than extend your Phase I research—it must demonstrate a compelling plan to develop your innovation into a market-ready or societally impactful solution.
Begin with Proven Feasibility
Reviewers want to see direct evidence that your Phase I objectives were met. Your proposal must explicitly describe the original goals, the results achieved, and the data that proves feasibility. Include quantitative outcomes, customer or stakeholder feedback, and any pivot points that informed your Phase II design.
Avoid vague claims like “we met all objectives.” Instead, walk reviewers through the evidence. This section should draw a clear line between your Phase I results and the next-stage R&D you’re proposing.
Design a Two-Year Research Roadmap
Your work plan is not just a list of tasks—it’s a coordinated, milestone-driven strategy. Lay out your goals, timeline, deliverables, and risk management approach. If appropriate, include:
- A Gantt chart to visualize timeline and dependencies
- Technical specifications and design goals
- Defined milestones with success criteria
- Anticipated challenges and mitigation strategies
The USDA expects a serious R&D plan that reflects the scale of the award. Whether your work is lab-based, computational, or field-deployed, your methodology must be detailed, credible, and rigorous.
Emphasize Innovation and Technical Merit
The USDA funds high-risk, high-reward research. Show that your project addresses an unmet need or unexplored pathway—and back it with a thoughtful technical rationale. Distinguish your approach from existing methods and explain why it’s better, more efficient, or more accessible.
Acknowledge the risks involved and explain how your Phase I findings reduce those risks. Reviewers want to see bold ideas—but also evidence that they’re executable.
Showcase the Right Team and Resources
Introduce your Principal Investigator and any critical team members or partners. Highlight specific expertise related to your project. Explain the roles of subcontractors or consultants and include letters of commitment as attachments.
Make sure you also describe your research environment—labs, equipment, facilities—and verify that you control or have access to these resources for the duration of the project.
Respect Format and Page Limits
Your technical section must follow USDA’s formatting guidelines and not exceed 50 pages. Reviewers are not required to read beyond that limit. Use appendices only for supplementary items like commitment letters or bios—not to bypass the page count.
Concise, data-supported writing is essential. Your reviewers will be scientists, entrepreneurs, and agency experts. Give them what they need to score your proposal highly—without forcing them to dig for it.
Build a Credible Commercialization Plan
In USDA SBIR Phase II, your commercialization plan carries real weight—it’s not a formality. Whether your path leads to profit, public benefit, or both, your proposal must show how your innovation will leave the lab and reach users.
Address the Required Elements
Your 10-page commercialization plan must include:
- Plain-language project summary: What is your innovation, what problem does it solve, and who needs it?
- Company profile: Include business model, product history, team size, and long-term vision.
- Market analysis: Define your target customers, estimate market size, and summarize competitive dynamics.
- Go-to-market strategy: Explain how you’ll reach early adopters—sales channels, partners, or pilot users.
- Revenue and funding outlook: Describe how you’ll sustain the business and what follow-on capital may be required.
- Intellectual property (IP): Clarify patent status, licensing plans, or other IP strategies.
Avoid generic statements. Instead, tie your plan to validated insights—such as Phase I outreach, letters of interest, or industry partnerships.
Formatting Note
Letters of interest or support are not counted toward the 10-page limit. Include them as appendices to strengthen your case.
Show You’ve Done the Homework
A strong plan reflects real engagement with your market—not just downloaded statistics. Reviewers want to see that you’ve talked to customers, tested assumptions, and iterated based on feedback.
If your target is a USDA program, federal buyer, or rural cooperative, make that clear. Include letters of intent or testimonials if possible. This is especially critical for non-commercial impacts (e.g., soil health, food equity) that lack traditional revenue metrics.
Quantify Risk and Competition
USDA reviewers expect realism. Acknowledge market risks and detail your mitigation strategies. Profile your top competitors and explain how your solution compares. If the field is crowded, show how your niche or technical edge creates a defensible position.
For projects with long commercialization timelines, emphasize near-term validation steps and stakeholder traction.
Define Long-Term Impact
Tie your commercialization approach back to USDA priorities—whether through economic impact, food system resilience, rural job creation, or environmental sustainability. Reviewers want to know not just how you’ll sell the product, but why it matters in the bigger picture.
Master the Budget and TABA Strategy
Your USDA SBIR Phase II budget isn’t just an estimate—it’s a reflection of your project management skills and commercialization readiness. You may request up to $600,000 for the core project, or $650,000 if you include Technical and Business Assistance (TABA).
Build a Compliant Budget
Your proposal must include a detailed cost breakdown using USDA’s required budget forms. Be prepared to justify each line item. Common direct costs include:
- Salaries and wages (aligned with effort percentages)
- Fringe benefits
- Materials and supplies
- Equipment (if justified)
- Subcontractors or consultants
- Travel (for project work or USDA meetings)
Indirect costs are allowed but must follow your approved rate or use the de minimis rate (10% of modified total direct costs). Costs must be reasonable, allocable, and consistently treated.
Use TABA Funds Strategically
TABA is a separate, optional category—up to $50,000 in Phase II—for commercial readiness support. It’s not for research or product development. Instead, it can cover:
- IP analysis and protection
- Market validation and segmentation
- Customer discovery and business planning
- Financial modeling and investor pitch development
You can either opt to use USDA’s designated TABA provider or propose your own third-party vendor. If you choose the latter, you must include a letter from that vendor outlining their services and qualifications.
TABA funds are not part of your research budget, so use them to boost your commercialization outcomes without cannibalizing your core R&D scope.
Submit Error-Free and On-Time
A strong proposal is only valuable if it’s submitted properly—and on time. The USDA SBIR Phase II program accepts proposals only once per year, typically with a strict deadline posted on Grants.gov. Late or incomplete submissions are not reviewed.
Final Submission Checklist
Before submission, confirm:
- All required forms are completed in the correct format (PDF, font size, margins, etc.)
- SAM.gov, SBA, and Grants.gov registrations are active and correctly linked
- Your Authorized Organization Representative (AOR) is listed and approved in Grants.gov
- File names follow USDA conventions (avoid special characters or long names)
- Appendices are included and referenced correctly
Once submitted, Grants.gov will generate a confirmation. USDA’s National Institute of Food and Agriculture (NIFA) may follow up with requests for clarification, so monitor your email closely.
Submission Tip
Submit at least 48 hours before the deadline to allow time for system errors or corrections.
A well-written proposal can take months to develop—don’t let avoidable upload issues jeopardize your chances. Treat the submission like a deliverable: complete early, double-check every step, and confirm receipt.