DOE Opens $147 Million Phase II Funding Round for Small Businesses

The U.S. Department of Energy opened approximately $147 million in FY25 Small Business Innovation Research and Small Business Technology Transfer Phase II funding opportunities on July 22, giving eligible U.S. small businesses a new federal route to continue developing energy technologies toward commercialization.

The opportunity is not a final award announcement. DOE will make future competitive awards to qualifying for-profit small businesses that meet Small Business Administration eligibility rules. Prior DOE SBIR/STTR Phase I, Phase II and Follow-on Phase II recipients are expected to receive direct outreach with application requirements and timelines.

DOE also announced a separate FY26 Phase I opportunity tied to its Genesis Mission on the same date. That Phase I release is distinct from the approximately $147 million FY25 Phase II opportunity covered here.

What Phase II funding supports

SBIR and STTR are competitive, nondilutive programs, meaning the federal funding does not require a company to give up ownership in exchange for the award. DOE describes the general pathway as Phase I feasibility work, Phase II development and prototyping, and Phase III or other follow-on opportunities aimed at commercialization.

Phase II is therefore intended for technologies that have already completed earlier feasibility work. It can help a company improve a prototype, address technical risks and prepare for later commercial development. It is not the same as a commercial contract, a guarantee of market adoption or proof that a product will reach customers.

STTR projects involve a small business working with a research institution. DOE also identifies universities, national laboratories, federally funded research and development centers, manufacturing firms and engineering partners as possible sources of expertise or facilities, depending on the stage of development.

DOE has moved the programs under one office

The funding round follows an April 28, 2026 overhaul in which DOE consolidated SBIR and STTR management under its Office of Technology Commercialization. DOE said the change is intended to improve efficiency, strengthen commercialization pathways, streamline the applicant experience and deepen engagement between small businesses and the department’s national laboratories.

The department’s stated goal is to help narrow the gap between federally supported research and technologies that can attract customers, investment or follow-on support. That is an intended policy outcome, not evidence that the newly opened funding round will produce particular jobs, products or market share.

Independent context comes from Federal News Network, which reported in July on parallel National Science Foundation efforts to help move promising research toward commercial use. The broader federal push reflects concern about the so-called “valley of death” between laboratory results and private-sector investment.

Security reviews are part of the application process

Applicants will face more than a technical-merit review. DOE says security risk is reviewed separately, and Phase II applicants must submit a cybersecurity self-assessment. The department says the detailed requirements for that assessment will be included in the applicable Phase II funding announcement.

DOE’s due-diligence process addresses foreign affiliations, foreign ownership and financial relationships, technology licensing agreements, joint ventures and business relationships involving entities or individuals in countries of concern. It also examines connections to specified sanctions and restricted-party lists.

The 2026 law expanded the categories agencies must consider, including certain affiliations involving covered individuals, owners or key personnel; investment relationships; licensing or joint ventures; and business relationships with entities or individuals in a foreign country of concern. DOE says it may decline to fund applications presenting unacceptably high foreign risk.

That does not mean every foreign connection automatically disqualifies an applicant. The department describes the process as a risk review separate from technical scoring. Small businesses are encouraged to vet employees, investors and partners and to strengthen protections for intellectual property and research information.

Congress extended SBIR and STTR through 2031

Congress enacted the Small Business Innovation and Economic Security Act on April 13, 2026, as Public Law 119-83. The law reauthorized SBIR and STTR through September 30, 2031, and added national-security, accountability and innovation reforms.

The practical effect is that commercialization planning and compliance preparation now sit closer together. Companies and research partners should be prepared to document ownership, affiliations, licensing arrangements, key personnel relationships and cybersecurity practices before applying.

What applicants should do next

DOE says applicants must complete three registrations before submitting an application: registration in the System for Award Management, the SBA Company Registry and the DOE SBIR/STTR Application Hub. DOE warns that SAM registration can take up to eight weeks, so businesses should not wait until the application deadline to begin.

Applicants should also monitor DOE’s formal instructions for topic-specific requirements, deadlines, registration rules and the details of the cybersecurity self-assessment. The next concrete measure of the program’s impact will be the awards DOE ultimately makes and the technologies that recipients can move from development into later commercial opportunities.

Sources

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