SBIR eligibility when your research is abroad

A common shape for a small medical device company in 2026: incorporated in Delaware, a US office, founders who are US citizens, and a clinical trial that ran in Mexico, India, or Eastern Europe because it was faster and cheaper there. The trial worked. Now the company wants SBIR money to fund the next step. Is it eligible?

Usually yes, with conditions that are easy to get wrong. This post lays out the ownership test, the work location rule, the foreign component and foreign disclosure requirements, and a practical way to structure an application so the foreign trial helps you instead of disqualifying you.

Step one, the company itself

Eligibility starts with the applicant, not the project. Under 13 CFR 121.702 an SBIR applicant must be more than 50 percent directly owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States, or by other qualifying US small businesses, or, where the agency opts in as NIH does, by multiple US venture capital, hedge fund, or private equity firms. It must have 500 or fewer employees including affiliates. STTR permits only the individual ownership route. Investor firms must be organized in the US with a US place of business.

The FY2026 NIH omnibus, PA-27-100, adds that the applicant must be organized for profit with a place of business located in the United States (PA-27-100 full announcement).

A Delaware C corporation with a US address qualifies if the cap table is more than 50 percent US citizens and green card holders. Verify this after every financing. A single large round from a non US fund can tip a company out of eligibility without anyone noticing until the SBA Company Registry certification.

Step two, where the work happens

This is the rule that catches companies with foreign research.

The SBA Policy Directive, section 6(a)(4), requires that research and development be performed in the United States. Agencies may approve a portion of the work outside the country only based on a rare and unique circumstance, for example when a supply, material, or other project requirement is not available in the United States, and the funding agreement officer must approve each such condition in writing (SBA SBIR and STTR Policy Directive).

The work share rules compound this. In Phase I at least 67 percent of the work must be done by the applicant, and in Phase II at least 50 percent. STTR requires at least 40 percent by the applicant and at least 30 percent by the research institution. Any subawardee’s research must also be done in the US (SBIR.gov program basics tutorial).

NIH is more explicit still. PA-27-100 states that non domestic components of US organizations are not eligible to apply, and that NIH will no longer issue awards that involve foreign subawards or subcontracts. Only unfunded international collaborations may be allowed. NSF’s solicitation 26-510 says simply that work must occur in the United States (NSF 26-510).

The practical reading: a completed foreign trial can be cited as preliminary data. Any proposed clinical or technical work in the SBIR budget must be sited at US institutions with US personnel.

Step three, the foreign component

Even unfunded foreign involvement has a name in NIH policy and a paperwork trail.

NIH defines a foreign component as the performance of any significant element or segment of the project outside the United States, either by the grantee or by a researcher employed by a foreign institution, whether or not grant funds are expended. Enrolling human subjects abroad counts. So does an ongoing collaboration with the foreign investigator who ran your trial, even if no dollar flows to them. A foreign component requires NIH prior approval and a foreign justification (NINDS on applications with foreign components, NIH requirements for disclosure).

If the foreign investigator is a co author on your preliminary data and will consult on the new work, that is a foreign component. Disclose it and justify it. If they are only an author on a paper you cite, it is not.

Step four, the foreign disclosure form

Separate from the foreign component rule is the SBIR specific disclosure requirement. The form titled Required Disclosures of Foreign Affiliations or Relationships to Foreign Countries is requested at just in time, and an application that does not submit it will not be considered for funding. It covers all owners and covered individuals, foreign appointments, business, investment, and licensing ties, foreign patents, and cybersecurity exposure. HHS runs a separate security risk assessment on the answers. After award the disclosures are updated annually with the progress report and within 30 days of any change in ownership or structure. Material misstatements can trigger repayment (NIH SEED foreign risk page, eRA Commons form help, Federal Register, June 2023).

The reauthorization that ended the 2025 to 2026 lapse went further. The Small Business Innovation and Economic Security Act of 2026 added mandatory screening for any foreign affiliations with entities located in a country of concern and expanded due diligence covering cybersecurity, patents, employees, and ownership and financial ties (Crowell and Moring client alert).

Mexico, India, and most of Europe are not countries of concern. The disclosures are mandatory regardless. A company that ran its trial in a country of concern, or that has investors, licensees, or patent filings there, faces denial rather than paperwork (NOT-OD-23-139).

Structuring the application

Put the four rules together and a plan falls out.

Lead with the foreign trial as evidence. Preliminary data is the strongest lever on the Approach criterion. Present the effect sizes, confidence intervals, responder rates, and safety findings from the foreign trial in full. Then make each aim close a gap that the trial left open: durability, mechanism, a US population, a closed loop feature, or health economics. If you already hold Phase I equivalent data, look at Direct to Phase II under NOT-OD-19-019 rather than proposing a feasibility study a reviewer will call unnecessary.

Site every funded activity in the United States. Name the US clinical sites, the US contract research organization, the US biostatistician. Letters of support must be specific about site, patient numbers, and role.

Decide what the foreign investigators will do, then disclose it. If they consult, list them as unfunded collaborators, mark the foreign component, and write the justification. If you would rather avoid the prior approval process, thank them in the preliminary data and leave them out of the new work.

Audit the cap table and the patent estate. Foreign investors, foreign licensees, and foreign patent filings all appear on the disclosure form. Know the answers before just in time, not after.

Start registrations now. SAM.gov with a UEI and CAGE code takes three to six weeks, the SBA Company Registry one to two business days after the UEI, and eRA Commons two weeks or more with ORCID linked for every senior and key person. NIH’s own guidance is that the chain can take six weeks or more (NIH SEED, register your company). A foreign disclosure that surfaces a problem at just in time is far cheaper to fix than a registration that is not done by the deadline.

Where this lives in epiensos

Every match in epiensos carries eligibility flags for ownership, size, place of business, work location, work share, foreign subawards, and foreign components. When a notice prohibits foreign components, the rationale says so and suggests framing foreign data as preliminary rather than proposed. The application checklist adds the foreign disclosure form to the just in time task list, and the fact library keeps the cap table summary, the patent list, and the collaborator list with a last verified date, so the answers on the form match the answers in the application.

Foundations are different

If the foreign work is a real obstacle for federal money, note that some private funders do not care. The Michael J. Fox Foundation’s Therapeutics Pipeline Program, for example, permits non US device companies and rolling applications from $250,000 to $5 million (MJFF funding opportunities). epiensos scores those in the same table, so the comparison is on expected value rather than on which portal you happened to open first.