# SBA Proposes SBIR Commercialization Thresholds

The Small Business Administration (SBA) proposed a commercialization standard for firms receiving more than 25 combined SBIR/STTR Phase II awards during the prior five completed fiscal years. Under the proposal, affected firms would need to earn at least 33% of revenue from sources other than Phase I and Phase II funding for the FY2027 assessment, rising to 50% in FY2028; firms missing the threshold could be barred from submitting new Phase I or Direct-to-Phase-II proposals for one year. The comment deadline was October 31, 2026, which has passed. The proposal lists November 15, 2026, as its effective date, but it is described as not yet finalized, so that date should not be treated as confirmation that the standard is in force.

- Small businesses and contractors with high volumes of SBIR/STTR Phase II awards should assess their revenue mix and commercial customer-development plans against the proposed thresholds.
- The potential one-year proposal restriction could affect firms’ R&D funding pipelines and future federal business development, particularly those relying heavily on SBIR/STTR awards.
- The proposal states a November 15, 2026 effective date; firms should confirm SBA’s final status and applicable guidance before making eligibility decisions.

**Jurisdictions:** federal
**Topics:** Regulatory Compliance, Grants & Funding
**Published:** November 01, 2026

### Government Entities
- Small Business Administration (SBA)
- SBA Office of Investment and Innovation

### Sources
- [SBA Proposes New Benchmark to Curb Misuse of Innovation Grants](https://smallbiztrends.com/sba-proposes-new-benchmark-to-curb-misuse-of-innovation-grants) - Small Business Trends
- [SBIR program finally gets a commercialization standard with teeth - Washington Technology](https://www.washingtontechnology.com/opinion/2026/10/sbir-program-gets-reforms/416867) - Washington Technology