The Funding Map Changed
If you are a tech startup looking for non-dilutive funding in February 2026, the map you used 18 months ago is wrong. SBIR and STTR, the flagship programs that provided $4 billion annually to small businesses doing R&D, expired on October 1, 2025. NIH terminated all SBIR/STTR notices of funding opportunity. NSF paused new Project Pitches. DoD paused rather than terminated, but no new solicitations are being issued. Three competing reauthorization bills are in Congress. None has passed. A clean one-year extension (H.R. 5100) passed the House unanimously in September 2025 and stalled in the Senate. Meanwhile, a different kind of money surged. VC deals in defense tech hit $49.1 billion in 2025, up from $27.2 billion the year before. The FY2026 defense budget allocated $148 billion for research, development, test, and evaluation. DIU processes Commercial Solutions Opening proposals in 60 to 90 days. AFWERX has transitioned 470 companies to Phase III contracts worth $1.44 billion. And the One Big Beautiful Bill Act quietly made the tax code more valuable to startups than most individual grants. The picture is not bleak. It is different. The startups that adapt to where the money moved will face less competition than those still waiting for SBIR to come back. For the full SBIR reauthorization status, see our dedicated guide. For R&D funding alternatives, see our BAA and OTA guide.
SBIR/STTR: Where Things Actually Stand
Three bills are competing for the reauthorization: The SBIR/STTR Reauthorization Act of 2025 (S.1573 / H.R.3169) is the primary bipartisan bill. It would extend authority, expand agency allocations, strengthen commercialization support, and codify Direct-to-Phase II pilots. The INNOVATE Act (S.853) introduces a lifetime cap of $75 million in combined Phase I/II funding per organization, limits PIs to one application per solicitation, caps organizations at three applications per solicitation, and creates a simplified "Phase I-A" for first-time applicants. The RAMP Act (H.R.3239) emphasizes commercialization outcomes and expanded Direct-to-Phase II authority. Reauthorization is widely expected to be attached to broader appropriations legislation. But no vote has been scheduled. Existing awardees are in a different position than new applicants. Phase III contracts remain valid. AFWERX STRATFI ($3 million to $15 million) and TACFI ($375,000 to $2 million) are still accepting rolling submissions from companies with existing DoD SBIR/STTR awards. If you have a current Phase II, the path forward exists. If you are a first-time applicant, the door is closed for now. DOE is a partial exception. ARPA-E operates under separate authority and has active SBIR/STTR solicitations: CATALCHEM-E and SUPERHOT SBIR/STTR have application deadlines in February and March 2026. DOE's Office of Science runs its own annual SBIR program with 60+ technical topics and solicitation windows from May through January. When SBIR does return, the overall Phase I success rate historically runs about 17%. NSF is the most generous at roughly 20%. DoD runs closer to 15%. Over 20% of first-time applications fail on administrative compliance alone, before technical review.
🔍 Search related opportunities now
Defense Innovation: Where the Money Moved
For startups building technology with defense or dual-use applications, 2026 is arguably the best funding environment in history. The numbers are large enough to be worth understanding even if defense is not your primary market. DIU (Defense Innovation Unit) has obligated $1.7 billion in prototypes and holds $5.5 billion in transition contract ceiling values. Their portfolio companies represent $20.1 billion in combined private investment. The Commercial Solutions Opening process accepts 5-page or 15-slide proposals and makes awards in 60 to 90 days. Compare that to SBIR's typical six-month timeline. AFWERX and SpaceWERX have issued approximately 10,400 SBIR/STTR contracts worth $7.24 billion to date. In FY2024 alone, 470 companies transitioned to Phase III contracts totaling $1.44 billion. With the SBIR freeze blocking new entrants through AFWERX, the STRATFI and TACFI programs offer an alternate path: STRATFI awards $3 million to $15 million for strategic capabilities, TACFI awards $375,000 to $2 million for tactical innovation. Both accept rolling submissions. The DoD Office of Strategic Capital launched a direct loan program with up to $984 million available through FY2026. Individual loans range from $10 million to $150 million at Treasury-based interest rates with tenors up to 50 years. The first solicitation drew 200+ applications totaling $8.9 billion across 38 states, so competition is intense, but the program targets critical technology areas where commercial lenders will not go. Army Applications Laboratory has awarded $183 million to 158 companies across 31 states, with 83% going to small firms and 16% to companies that had never worked with DoD. Average notification time: 15 days. Their 45% transition rate is notable, though they report that over half of completed projects still fail to reach production. SOFWERX executes purchase orders in under 30 days and has processed approximately $200 million since 2015. If your timeline is weeks rather than months, this is worth investigating. The $151 billion Golden Dome SHIELD IDIQ for missile defense represents the newest major contracting vehicle for defense tech startups.
The OBBBA Tax Changes: Automatic Non-Dilutive Funding
The One Big Beautiful Bill Act, signed July 4, 2025, made tax code changes that are arguably more impactful for many startups than any individual grant program. Unlike grants, these benefits are automatic if you qualify. No application, no review panel, no six-month wait. Section 174A restored immediate expensing of domestic R&D costs. Since 2022, companies had been required to amortize R&D expenses over 5 years (15 years for foreign research), which meant recognizing only 20% of spending in the year it occurred. That requirement is now permanently eliminated. If your startup spends $500,000 on R&D this year, you deduct $500,000 this year. The payroll tax offset expanded. Startups with less than $5 million in gross receipts and fewer than 5 years of revenue can apply up to $500,000 of R&D tax credits annually against payroll taxes. For a pre-revenue deep-tech startup, this is effectively cash back from the government for doing R&D. 100% bonus depreciation was restored permanently for assets acquired after January 19, 2025. Section 179 expensing limits increased to $2.5 million (from $1 million) with the threshold raised to $4 million. QSBS (Section 1202) was enhanced: the exclusion increased to the greater of $15 million or 10x basis (from $10 million), and the asset threshold rose to $75 million (from $50 million). This matters for founders and early investors at exit. Small businesses with less than $31 million in average receipts from 2022 to 2024 can amend prior returns to claim retroactive relief on R&D amortization. The practical implication: a startup spending $300,000 annually on R&D can recover a meaningful fraction of that through tax credits and immediate expensing without writing a single grant proposal. For details on how tax credits interact with federal grants and cost share requirements, see our grant budgets guide.
What's Still Open Outside Defense
Several programs continue operating or have separate authority from SBIR. NSF I-Corps provides $50,000 per team plus a 7-week immersive entrepreneurship program focused on customer discovery. The 2026 Winter cohorts are running now. Since 2012, I-Corps has trained over 3,000 teams, roughly half of which formed startups that collectively raised $7 billion in private capital. If you are pre-SBIR and still validating your market, I-Corps is the right starting point. ARPA-E maintains active solicitations under separate authority. Their programs are topic-specific (geothermal, catalysis, energy storage) but the awards are substantial. The budget situation is uncertain: the administration requested $200 million (a 57% cut from FY2025), the House offered $350 million, and the Senate offered $414 million. The final number depends on conference. ARPA-H offers Mission Office Innovative Solution Openings (ISOs) on a rolling basis. Their Autonomous Interventions and Robotics (AIR) program has full proposals due March 18, 2026. Because ARPA-H is newer, competition is less intense than at established agencies. CHIPS Act funding continues with $33.7 billion already awarded of the $39 billion in manufacturing incentives. The large awards go to established fabs (Samsung $4.745 billion, Intel, TSMC), but the R&D office has approximately $54 million in small business programs and the Semiconductor Materials NOFO accepts concept plans through November 1, 2026. Commerce may require equity, warrants, or IP licensing in exchange for funding. DARPA's technical offices maintain open Broad Agency Announcements refreshed annually, posted on SAM.gov. These are flexible and not subject to the SBIR expiration. For energy sector startups, DOE loan programs with $400 billion in lending authority and state clean energy programs offer additional paths.
State Programs Filling the Gap
State innovation programs cannot replace $4 billion in annual SBIR funding, but they operate independently of federal reauthorization and can provide meaningful early-stage capital. Massachusetts runs the most comprehensive state program. InnovateMass offers up to $350,000 for clean energy technology (deadline March 9, 2026). CriticalMass provides up to $1 million for growth-stage commercialization. The Massachusetts Life Sciences Center offers up to $40 million in tax incentives per round. MassTech Collaborative has active R&D matching grants. Illinois's SBIR/STTR Match Program offers up to $250,000 in matching funds through the Department of Commerce and Economic Opportunity, with a deadline of June 30, 2026. This requires an existing federal SBIR/STTR award, but companies with pre-expiration awards are eligible. New Jersey's Innovation Evergreen Fund provides investment capital through NJEDA, and their SBIR/STTR Direct Financial Assistance Program supplements federal awards. California's Dream Fund provides $10,000 to qualifying startups. The state grants portal (grants.ca.gov) centralizes state funding opportunities. Wyoming, Pennsylvania, and Idaho also run innovation-related programs. The smart approach is stacking: a company that combines a state innovation grant, OBBBA tax credits, and a single federal program (ARPA-E, DARPA BAA, or CHIPS Act) assembles a non-dilutive funding package that approaches what SBIR alone would have provided. Each piece is smaller, but together they work.
Practical Steps Based on Where You Are
What to do depends on your stage and sector. If you have an existing SBIR/STTR award: Your Phase III rights are intact. Look at STRATFI and TACFI for follow-on defense funding. State match programs in Illinois and New Jersey can supplement your existing award. Continue executing on your current work; the reauthorization will likely include continuity provisions for existing awardees. If you are a first-time applicant in defense or dual-use: Skip waiting for SBIR. Apply to DIU's Commercial Solutions Opening (60 to 90 days to decision), check DARPA's open BAAs on SAM.gov, and investigate Army Applications Lab and SOFWERX for rapid prototyping contracts. Register on SAM.gov now if you haven't. If you are a first-time applicant in clean energy: ARPA-E has active solicitations under separate authority. State clean energy programs (Massachusetts InnovateMass, California ZEV incentives) are open. DOE's Office of Science SBIR runs its own annual cycle. If you are a first-time applicant in health or biotech: ARPA-H ISOs accept proposals on a rolling basis. PCORI has multiple open funding cycles with awards up to $12 million. BARDA is running a $100 million antiviral prize. See our healthcare funding guide. If you are pre-revenue: Start with NSF I-Corps ($50,000, 7-week program). File for OBBBA tax credits if you have any R&D spending. Investigate state programs with lower barriers to entry. Build your SAM.gov registration and SBA Company Registry ID now so you are ready when SBIR returns. Regardless of sector: file for the OBBBA R&D tax credits. The $500,000 payroll tax offset for young startups and immediate R&D expensing are available now, require no application, and provide cash-equivalent benefits that compound every quarter. Search startup and innovation funding on Funding Landscape