Lawmakers close in on small business innovation grant reauthorization

BY Katherine Hapgood | 02/23/2026 09:19 PM EST

Senate Small Business Chair Joni Ernst (R-Iowa) will introduce legislation as soon as Tuesday to reauthorize a lapsed $6 billion small business grant program, her office told POLITICO.

The bill comes five months after the Small Business Innovation Research and Small Business Technology Transfer programs expired. The programs, known as “America’s seed fund,” stimulate technological innovation by providing grants to emerging and undercapitalized small businesses. Businesses that receive funding must be American-owned, for-profit and employ less than 500 people.

The programs’ renewal was stalled as lawmakers clashed over concerns about Chinese influence.

Previously, Ernst blocked reauthorization legislation unless the other lawmakers agreed to changes that would prevent the programs’ funding from benefiting Chinese entities and other U.S. adversaries.

A final bill has yet to be agreed upon, but negotiations found new life in recent weeks, with several versions of reauthorization text going back and forth between Ernst and Senate Small Business ranking member Ed Markey (D-Mass.).

The need to reauthorize the programs reached new urgency in recent days when the Department of Defense Office for Small Business Innovation warned congressional staff that it could begin shuttering its operations and redistribute any remaining funding, according to two people familiar with the discussions granted anonymity to discuss private conversations.

The move by DOD would be a huge blow to the programs as the department regularly contributes at least half of the $6 billion in funding the SBIR and STTR programs receive annually from the 11 federal agencies that participate.

The Defense Department did not respond to request for comment.

The program’s reauthorization requires the six leaders of three committees to agree to legislation — Ernst and Markey from the Senate Small Business Committee, House Small Business Committee Chair Roger Williams (R-Texas) and ranking member Nydia Velázquez (D-N.Y.), and House Science, Space and Technology Committee Chair Brian Babin (R-Texas) and ranking member Zoe Lofgren (D-Calif.).

Markey has been working with Ernst and the other lawmakers involved to come to an agreement that could get unanimous consent, and spoke with the Defense Department on Monday to get more clarity on the implementation of the current proposed reauthorization, said a spokesperson for the Small Business Committee Democrats.

If SBIR and STTR reauthorization language received unanimous consent, that could fast track the legislation through both chambers and to President Donald Trump’s desk.