NIH & NSF SBIR Budgets Explained: How Much Funding Can You Capture in 2025?

Are you ready to secure non-dilutive funding for your startup in 2025? If so, the NSF and NIH SBIR programs are offering some incredible opportunities. But here's the big question: how much funding can you actually capture? So make sure to stick around until the end of this video where I'll hash out the updated budget caps for both NIH and NSF. And plus, I'll hash out what are the 3 biggest budgeting categories that you need to know to best structure your proposal and optimize your chances to secure some SBIR funding. So stick around and let's dive right in. Hey guys, welcome back to the channel. If you're joining us for the first time, I'm Stacy Chin, a professional federal grants and contracting consultant who's helped to raise over $40 million of non-diluted funding for startups developing innovations in healthcare, climate, and defense. Founders aiming to capture SBIR funding from the NIH or NSF needs to keep a close eye on their budget caps and requirements because this is where the opportunity for your startup starts. For instance, the NIH is a powerhouse to fund new healthcare innovations across therapeutics, cancer, and biomedical engineering to tackle some of the biggest challenges in developing new therapeutics, medical devices, and digital health solutions. Meanwhile, the NSF is a leader in advancing scientific and engineering breakthroughs, and their funding priority is focused on game-changing technologies. Like AI, quantum computing, and clean energy. And here's why this distinction matters. Each of the different funding agencies are structuring their budgets based on what they're looking for and prioritize. So for example, during the COVID-19 pandemic, the NIH might boost their funding opportunities for pandemic prevention or mental health tech. So that means startups in those areas might have a boost in funding opportunities. Likewise, if the NSF increases their funding budgets in clean energy or advanced manufacturing, innovations in those areas might have a better chance to hit those jackpots. So by aligning your proposal objectives with the agency's funding goals, you can strategically position yourself to optimize your chances to secure some non-dilutive funding. Either way, and despite which SBIR opportunity you want to go for, your budget boils down to 3 main categories: the direct costs, the indirect costs, and the small business fee, or also known as the profit. Understanding what entails in each of these categories will be your key to create an optimal budget that not only meets the agency's requirements and needs, but will also optimize your chances to secure SBIR funding. If you need additional budgeting help, make sure to check out our Excel sheets on our website at keepyourequity.co. All right, now let's break down each of these three categories. Let's start off with the direct costs. This is the backbone of your SBIR budget. Direct costs are associated with the expenses directly tied to carrying out your proposed SBIR efforts. And these costs are essential to carrying out your R&D plan that's laid out in your SBIR application. So when I work with my clients, we always start by hammering out what are we proposing and how will we execute it? And from there, we can break down the direct costs needed to make that happen. Next up are the indirect costs, which covers all of the behind-the-scenes expenses that are necessary to keep your business running while you execute the SBIR project. You can think of these costs as mandatory costs to run your business, that are not directly related to your proposed R&D efforts. So examples of indirect costs can include rent, office supplies, or legal counsel. And here's the catch. Indirect costs are typically calculated based on a percentage of your direct costs, and the rates might vary depending on your startup's position and also the agency's requirements. So for example, the NSF allows for 50% of the budgeted salaries or wages or 10% of the modified total direct cost as the indirect cost for startups. And the NIH permits up to 40% of your total direct costs as your indirect cost budget. Now let's talk about the small business fee, or otherwise known as the profit. And this fee is designed to provide startups with flexibility, something every founder needs. Unlike direct or indirect costs, the small business fee isn't tied to specific budget items, which means you can use these funds for additional efforts under the award or even for certain prohibited expenses. Like patent filings or equipment purchases. For SBIR budgets, the small business fee allows startups to claim up to 7% of the total direct and indirect costs for NIH Phase I and Phase II SBIR applications. Now for NSF, that's 7% for Phase I and up to 10% for a Phase II. So for example, if your NIH SBIR Phase I budget includes $100,000 of direct costs plus $40,000 of indirect costs, This brings your total budget to $140,000. That means you can propose up to 7% of that total, or $9,800, as your small business fee. All right, I know you're dying for me to answer the question, what are the NIH and NSF budget limits for 2025? Here we go. So for the NSF SBIR Phase I application, you can request up to $305,000 for a Phase I project between 6 to 12 months. Now for an NSF SBIR Phase II application, you can propose up to $1,250,000 for a project period up up to 2 years. Now let's jump to NIH. Now for the NIH SBIR Phase 1 application, you can propose up to $314,000 of non-diluted funding for a Phase 1 SBIR project. And for a Phase 2 application, you can propose up to $2,095,000 for a project period up to 2 to 3 years. Also, both the NIH and NSF SBIR programs offers a fast-track option, and this application combines Phase 1 plus Phase 2 into one accelerated pathway, letting you to move from feasibility towards development and the commercialization seamlessly and faster. If you think you qualify, make sure to reach out to the agency's program manager, have a discussion to see if you're a good fit. And with that, thank you so much for watching until the end of this video. If you found any of these tips helpful, please hit the like button and subscribe to the channel so that you can learn new ways to keep your equity throughout your fundraising journey. And also don't forget to check out our website at keepyourequity.co for more resources, templates, advice, and courses to help you secure non-dilutive funding. Thank you again for joining me today, and I'll see you in a video very soon.