Shaheen helps lead effort to save SBIR funding

The U.S. House is trying to weaken the U.S. Senate’s bid to reauthorize two programs that bring millions of dollars of research money to small businesses, according to U.S. Sen. Jeanne Shaheen, D-N.H., who is joining with Republican Sen. Scott Brown of Massachusetts to lead a coalition to preserve the programs.At issue are the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), two programs that have brought in nearly a half-billion dollars to high-tech firms in New Hampshire since the programs began in 1983 — roughly $30 million a year during the last three years alone, according to a federal database.”It has been one of the most successful federal programs there is,” said Fred Kocher, president of the New Hampshire High Tech Council, who worked on the legislation when he was on the staff of then-New Hampshire Sen. Warren Rudman. In fact, it was the first Rudman-sponsored bill passed in 1983.”I think they should basically leave it alone, and reauthorize it for eight years,” said Kocher.”SBIR is an important program to our present and future economic strength,” said Shaheen, a member of the Senate Committee on Small Business. “It supports innovative entrepreneurs in New Hampshire and across the country who will help keep America competitive and create jobs. Businesses need the certainty of a long-term reauthorization for this program to be effective.”Neither the House nor the Senate has even passed a version of the bill yet, but negotiation is already under way on a variety of issues, including funding.SBIR funding is set as a percentage of various agencies’ budgets. The Senate is pushing for an increase, while the House is for keeping the same percentage as in previous years. But it wasn’t the dollar amount that was discussed in a letter to the committees on small business in both the Senate and House that was written by Shaheen and Brown and signed by nine other senators (including New Hampshire Republican Kelly Ayotte).Instead, the letter focuses on the length of the authorization, the distribution of the funds, the elimination of Phase One grants, and the involvement of firms controlled by venture capital.The Senate version would reauthorize the programs for eight years, the House for three. In the past few years, it has been reauthorized on a year-to-year basis. A longer-term authorization would “give it some certainty, which we haven’t had,” Kocher said.SBIR has been an entirely merit-based program, meaning some states — particularly New Hampshire — have done better on a per-capita basis than others.Under the House version, the award would be based on the median state average for the nation, giving a windfall to states that have been unsuccessful in the past. That would mean fewer funds going to the Granite State.”The greatest strength of the SBIR program is that it is merit-based, not quota-driven, ensuring that the taxpayers’ dollars are invested wisely and that small businesses with the greatest potential to grow are given that chance,” said the senators’ letter.Under the current three-phase program, the first phase — with awards of about $100,000 — is for a six-month exploration process. After that, the business can go to a two-year award of up to $750,000, when R&D work is preferred and the developer evaluates commercialization potential.Phase 3 funding — which comes entirely through U.S. Small Business Administration-backed loans — is for ideas that move from the laboratory to the marketplaceThe House version of the bill would skip Phase One in order to save money and speed commercialization, but the effect would be just the opposite, according to the letter, wasting larger amount of funding on projects that haven’t been evaluated.”Skipping Phase I means that the government would be spending $1 million of taxpayer dollars and a wait time of up to two years to find out whether a technology was promising, instead of $150,000 and six months,” said the letter.Finally, the House version would allow companies backed with a greater percentage of private equity and hedge funds to go after the funding.”That has been a key debate,” said Kocher.The smaller startups can’t get much of that kind of financing, so if venture capital-backed firms “got more a piece of a pie, that will take it away from backyard firms that are going to attract that kind of capital,” he said. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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