In this instructional video, Stacy Chin of KeepYourEquity.co walks innovators through the essential steps for budgeting an NIH SBIR or STTR grant in 2024. She breaks the budget into three main categories—direct costs (salaries, supplies, travel, consultants, subawards), indirect costs (general and administrative overhead, capped at 40% of direct costs for startups), and the small business fee (profit), which can be up to 7% of the combined direct and indirect costs. Using a concrete $100,000 direct‑cost example, she demonstrates how to calculate a $40,000 indirect cost and a $9,800 small business fee. The video then reveals the NIH 2024 budget caps: up to $306,872 for Phase I (6‑24 months) and up to $2,045,816 for Phase II (12‑36 months), with fast‑track applications allowed to request the same amounts across both phases. Stacy points viewers to budgeting templates on keepyourequity.co, links to NIH and NSF budget limit pages, and encourages founders to consult solicitation guidelines or NIH program officers for clarification on eligible costs. The overall goal is to demystify budget planning so startups can maximize non‑dilutive funding opportunities.
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Today we're diving into an exciting but crucial topic for all you innovators out there, and that is understanding the NIH SBIR Phase 1 and Phase 2 budget limits for 2024. So in today's video, we're going to chat about how to effectively plan for your SBIR budget. We'll go over all the nuances for NIH funding and how to maximize your chances for SBIR success. And this information could be a complete game changer for your startup. So whether you're a seasoned entrepreneur or a first-time founder, this This video will be jam-packed with all the essential tips and strategies to help you maximize your non-dilutive funding potential for the upcoming year. Hey guys, welcome back to the channel. I'm Stacy Chin from KeepYourEquity.co, and our mission is to help startups secure non-dilutive funding. We specialize in science and tech startups by helping them to secure federal funding from programs such as the SBIR and the STTR. If you're interested in learning more about those programs, I'll leave a link in the description to another video below. Also, we advise a lot of other private and public businesses as well as NGOs, help them secure funding for federal grants and contract opportunities. All right, so now let's dive into the most critical aspect of your NIH SBIR or STTR application, the budget planning. I know this can seem daunting for many founders, often viewed as a complex and challenging task, but guess what? It doesn't have to be that way. So today I'm going to simplify this process for you, and we're going to break down budgeting into manageable steps. And to even make SBIR budget planning more of a breeze, we have lots of excellent templates to help you budget for a Phase 1, a Phase 2, a Direct-to-Phase 2, or even a Fast-Track application on our website at keepyourequity.co. So make sure to go there and check those out. In those templates, we've also outlined what you'll need to do to prepare for a budget justification, which is also a must-have in your NIH SBIR or STTR grant. So before we chat about numbers, let's go over the 3 main categories to consider when you prepare for your SBIR or STTR budget, and those are the direct costs, indirect costs, and the small business fee, or the profit. First, let's chat about the direct costs in your SBIR budget. So these are the expenses that are essential for executing the research outlined in your SBIR or STTR application. When I guide clients through budget creation, our first step is to hammer down the proposal project and the execution strategy. Following this, we can then identify the direct costs necessary to bring that plan to life. So what falls under the direct cost? Think of these as tangible resources required for your research: salaries for the key team members, like the principal investigator or the PI, along with support staff such as scientists and engineers that will bring your project towards fruition. It also covers materials and supplies, essential travel costs associated with publishing and documentation, fees for consultants, and subawards, amongst many others. So in essence, direct costs are the nuts and bolts that you need to keep your research project moving forward. All right, so once you've established your direct costs, now time to calculate the indirect costs. Indirect costs are the overarching expenses vital for the day-to-day operation of your business that are separate from the specific expenses of your SBIR project. So think of the indirect cost as kind of the backbone of your general and administrative expenses while your project is going underway. And these expenses can include office rent, utility bills, postage, office supplies, and occasional legal consultation. Typically, the indirect costs are calculated as a percentage of your direct cost, and this rate can differ, especially in academic settings, which is often negotiated with federal agency. However, for startups that do not have a negotiated rate like the universities, they can claim up to 40% of the direct for the proposed indirect cost budget. And it's important to know that you can propose a lower rate for your indirect costs, but whatever you do, do not exceed this 40%. All right, so let's do some math to give you guys an example. So say you are a startup applying for an NIH SBIR Phase 1 application and your total direct cost equals to $100,000. That means that startup can claim up to 40% of the direct cost, or $40,000, as their indirect cost. See, that wasn't too hard, right? So lastly, let's dive into what I think is the most exciting part of the SBIR budget, which is the small business fee, or otherwise known as the profit. But what exactly does this entail? The small business fee is designed to mirror the normal profit margins that profit-making firms receive from R&D work. And what makes this fee quite interesting is that it's neither an indirect or direct cost, and this flexibility allows startups to allocate these funds as they see fit, whether it's for additional efforts within the R&D work or covering certain expenses that might be deemed ineligible underneath SBIR award. And that can include purchases of equipment, foreign travel, or patent filing fee. However, if there's any uncertainty about what counts as eligible versus ineligible costs within your SBIR application, it's always wise to either read the solicitation guidelines or reach out to an NIH program officer for clarity. And that's because it is so important to navigate these regulations properly so you best maximize your SBIR award. So for startups, businesses can claim up to 7% of the total direct and indirect cost as their small business fee for both the NIH Phase 1 and Phase 2 application. So let's head back to our example and do more math. So say you are a startup again applying for an NIH Phase 1 SBIR application, and your total direct costs are $100,000. That means the startup can claim up to 40% of that as their indirect cost, which is $40,000. Now taking it one step further, if you want to request a small business fee of 7%, that means you can ask up to $9,800, which is 7% of the combined $140,000 total of your direct and indirect cost. Are you still with me? Okay, good. All right, now I'm sure you're eagerly anticipating the answer to the most critical question of this video: what are the NIH budget limits for the SBIR/STTR applications in 2024? So let's dive into the specifics now. So for Phase I SBIR/STTR applications, you're looking at a maximum budget of $306,872 per project timeline between 6 to 2 years. Now for a Phase II budget, you can request up to $2,045,816 for a project timeline between 1 and 3 years. Finally, if you're pursuing a fast-track SBIR application, which combines Phase I and Phase II together, you can request the same amount within the Phase I and then again in the Phase II SBIR application budgets. I'll leave a link to the NIH website below in the description so that you can read more about these budget limitations. So with that, thank you so much for watching till the end of this video. I hope you found these tips helpful to learn how to best budget your SBIR application if you're pursuing one for the NIH in 2024. Also, make sure to check out NSF SBIR/STTR budget limits, which I'll leave a link in the description below as well. And if you haven't done so, I would greatly appreciate it if you can like this video, subscribe to the channel, and comment below. And by doing so, you'll get lots of helpful tips and tricks on how you can secure non-diluted funding throughout your fundraising journey. And as always, don't forget to check out our website at keepyourequity.co for more resources, templates, advice, and eventually courses to help you secure funds in this manner. Thank you so much for joining me again, and I'll see you in a video very soon. [MUSIC] [MUSIC]
