When preparing an SBIR/STTR grant application, understanding budget limitations and allowable costs is crucial. This knowledge helps you create a realistic and compliant budget, increasing your chances of securing funding. Here's what you need to know:
Budget Limitations
SBIR/STTR programs have specific funding limits that vary by agency and phase:
NIH (as of 2024)
- Phase I: Up to $306,872 for 6-12 months
- Phase II: Up to $2,045,816 for up to 2 years
NSF (as of 2024)
- Phase I: Up to $305,000 for 6-12 months
- Phase II: Up to $1,250,000 for up to 24 months
Other agencies like DOD, DOE, and NASA may have different limits. Always check the specific funding opportunity announcement for the most up-to-date information.
Budget Categories
SBIR/STTR budgets typically include three main categories:
- Direct Costs
- Indirect Costs (Facilities and Administrative costs)
- Fee (profit)
Allowable Direct Costs
Direct costs are expenses directly attributable to the project. Common allowable direct costs include:
- Personnel salaries and wages
- Fringe benefits
- Equipment (usually limited to equipment necessary for the research)
- Materials and supplies
- Travel (for project-related activities)
- Consultant fees
- Subcontract costs (limited to 33% for SBIR and 60% for STTR of total award)
Indirect Costs
Indirect costs (also known as overhead or F&A costs) are expenses not directly attributable to the project but necessary for the general operation of the organization. For SBIR/STTR grants:
- NIH allows up to 40% of total direct costs minus equipment, subcontracts, and consultant fees exceeding $25,000
- NSF allows up to 50% of total direct costs excluding subawards and equipment
Fee
A fee (essentially profit) can be included in SBIR/STTR budgets:
- NIH allows up to 7% of total costs (direct + indirect)
- NSF allows up to 7% of total costs for Phase I and up to 10% for Phase II
Unallowable Costs
Certain costs are generally not allowed on SBIR/STTR grants, including:
- Entertainment expenses
- Alcoholic beverages
- Lobbying costs
- Patent costs (in most cases)
- Marketing and sales costs
- Debt payments
Additional Considerations
- Equipment purchases are often limited and may require prior approval
- Foreign travel usually requires prior approval
- Salaries are typically capped at executive level II of the federal executive pay scale
Tips for Budget Preparation
- Read the funding opportunity announcement carefully for specific budget instructions
- Ensure all costs are reasonable, allocable, and allowable
- Provide detailed justifications for all budget items
- Consider seeking assistance from experienced grant writers or consultants
Remember, while these guidelines are generally applicable, specific requirements can vary by agency and funding opportunity. Always refer to the latest guidelines from the specific agency you're applying to.
By understanding these budget limitations and allowable costs, you can create a compliant and competitive budget for your SBIR/STTR application, increasing your chances of securing funding for your innovative research and development project.
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