The landscape for American innovation has hit a sudden and significant roadblock. As of midnight on September 30, 2025, the legislative authority for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs officially lapsed. This SBIR and STTR program expiration has triggered immediate and severe consequences for federal innovation and commercialization funding, leaving thousands of small businesses in a state of financial uncertainty.
NIH: A $1.2 Billion Funding Void
In Notice NOT-OD-26-006, issued on November 17, 2025, the NIH announced that all active SBIR/STTR Notices of Funding Opportunity (NOFOs) are terminated effective October 1, 2025.
While applications received before the cutoff will still undergo peer review, the agency confirmed there will be no new awards without Congressional reauthorization.
Furthermore, applications originally due on January 5, 2026, will not be accepted. This halt removes access to over $1.2 billion in funding from the NIH alone, capital that has been essential for many businesses in bridging the “valley of death” between research and the commercialization.
DoD: Paused Solicitations and Stalled Contracts
The Department of Defense (DoD) has taken a similar stance, opting to pause rather than terminate its programs. However, the SBIR and STTR program expiration means that new awards and solicitations are currently frozen.
Agencies will keep topics slated for release on January 7, 2026, in “pre-release” until they achieve reauthorization
Most critically, even though data protection rules remain in effect, contracting for Phase I and Phase II developments cannot proceed, effectively stalling the defense innovation pipeline.
The Path to Reauthorization
Congress is currently working to address the SBIR and STTR program expiration through several key pieces of legislation:
- H.R. 4777 * H.R. 3169 / S (The INNOVATE Act)
Lawmakers plan to seek a resolution, either through standalone bills or a continuing resolution, before the January 30, 2026, spending deadline. Until that time, multi-year grants remain stalled and agencies lack the authority to issue the new awards that drive American technological advancement.
Bridging the Gap with Leyton
During this period of federal funding instability, small businesses must look toward alternative capital to maintain their R&D momentum. While the SBIR and STTR program expiration has closed one door, the Federal R&D Tax Credit remains a robust and reliable source of non-dilutive funding.
At Leyton, we help innovators navigate these funding gaps by identifying the high-stakes R&D work that qualify for immediate tax relief. Our experts work with your technical teams to ensure that your innovation doesn’t stop just because federal grants have.
