Why Innovation Funding Continues to Elude Small Businesses

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funding-eludes.jpgTwo federal programs that help foster small-business innovation have struggled for financial support this year. The Small Business Innovation Research and Small Business Technology Transfer programs limp along from year to year on annual authorizations, waiting for lawmakers to get up the gumption to make their more than $2 billion in funding permanent.

An agreement to reauthorize the funding for a year almost coalesced last summer, but then ground to a halt when the Senate and House couldn't agree on language that might have helped venture capitalists invest and helped more-established businesses qualify for the funding.

We all know money for innovation and research is always money well-spent. New products and new technologies help drive the economy forward again.

So what's the holdup? Here's why this vital funding effort continues to flounder:

Too many bigger problems. This has been a year of big-picture thinking -- healthcare reform and big stimulus packages. SBIR kind of got lost in the shuffle.

Partisan bickering. As Democrats felt their grip on power loosening and Republicans sensed their increasing, it seems both sides got more cantankerous and less likely to make a deal.

Lack of small-business leadership. The major small-business organizations have been busy on other issues this year -- trying to get capital flowing to the sector again and trying to affect the healthcare bill, mainly. There wasn't really anyone spearheading an effort to lock down the innovation funds.

It got hijacked. Funny story, but the House bill reauthorizing SBIR/STTR funds actually passed last week. But it didn't have anything in it about innovation funding at that point. Using a time-honored way to skirt legislative rules, lawmakers scraped the existing bill clean and then used the bill number to hasten passage of a bill repealing the military's "Don't Ask, Don't Tell" policy. Strange but true.

At the moment, SBIR/STTR funding is authorized through January. Then the drive for more funding begins yet again. 

Innovation funding shouldn't have to be like a kid whining for her allowance every few weeks. Let's hope our legislators can pull it together and bring stability to this program with a longer-term funding authorization in 2011. It's embarrassing that the government's support for innovation is basically limping along on month-to-month authorization.

Has your business gotten or applied for SBIR or STTR funding? Tell us about how it helped your company. 

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