Introduction To SBIR/STTR Application Budgets
SBIR/STTR grant applications are difficult. Translating your innovation and the accompanying R&D plans into clear and compelling grant language can be arduous. With so much focus on the merits of the project itself, it can be tempting to think of the budget as an afterthought. However, this is where the proverbial rubber meets the road. Your budget isn’t just a financial plan, it’s evidence of your team’s ability and capacity to manage a project and funding effectively.
At BHGC, we’ve spent over a decade crafting successful SBIR/STTR applications. We understand how essential it is to present a clear and comprehensive budget to NIH reviewers. Each project will have distinct budgetary needs, but budgets generally address four broad categories: Direct Costs, Indirect Costs, Fee Costs, and TABA Costs. In this post, we’ll break down each of these categories and offer practical advice for crafting a competitive SBIR/STTR budget.
Direct Costs
Direct costs are the backbone of your project’s budget. These expenses directly support the research and development activities outlined in your application. Examples include:
Personnel Salaries: compensation for the time spent by researchers, engineers, and other team members.
Materials and Supplies: lab equipment, reagents, or other items directly used in experiments or prototyping.
Vendors and/or subcontracts
Consultants
Travel
When describing direct costs in the budget justification, ensure every line item ties clearly to specific activities in your project. Use descriptions explaining how each expense contributes to the work plan outlined in your application.
Indirect Costs
Indirect costs cover expenses that are not directly tied to research activities but are necessary for the project’s execution. These typically include:
Overhead Costs: office rent, utilities, office supplies, computers.
Administrative Costs: salaries for staff managing grant compliance and accounting.
The NIH caps indirect costs (40%) unless you conduct indirect cost rate negotiations with NIH. Clearly documenting your indirect cost rate and ensure it aligns with NIH standards.
Fee Costs
Fee costs are the most flexible component of an SBIR/STTR budget. These discretionary funds are designed to provide the small business with a modest allocation for unforeseen expenses or as a small profit. The fee costs might cover:
Business development activities.
Additional project-related expenses not explicitly listed in the budget.
Internal investments in the business.
Intellectual property
TABA Costs
Technical and Business Assistance (TABA) costs are unique to SBIR/STTR grants. They fund activities that help transition your innovation to the market, including:
Business planning.
Market research and analysis.
Intellectual property (IP) strategy development.
Manufacturing development work
TABA funds are not deducted from your regular budget categories but are an additional allocation that must be requested separately. To secure TABA funding, your team needs to demonstrate how these services will accelerate your innovation’s path to commercialization. Be specific about the services you plan to use and their expected impact on your project’s success.
General Recommendations for Budget Presentation
Effectively presenting your budget to NIH reviewers aligns with the broader principles of a strong SBIR/STTR application. A clear, concise explanation demonstrates awareness of the institute’s needs and requirements, setting your application on the path to success. Connect each budget item directly to the specific needs of your project in concrete, tangible terms. Avoid vague or overly general costs, as they fail to convey the compelling story of your innovation and the ambitions of your project team.
Additionally, failure to adhere to allocation requirements or addressing mandatory budgetary items can raise concerns about your team’s attention to detail necessary to achieve your grant-supported goals.
At BHGC, our business is helping you navigate the complexities of the SBIR/STTR grant program and writing compelling and competitive grant applications with your team. Our approach includes helping you prioritize where budget allocations make most sense for the team and project you’re assembling.
If you’re ready to take that next step toward funding your innovative project, schedule a free consultation with us!