Budget Preparation And Submission Instructions

A. Phase I

Budget(s). Proposers are required to submit budgets with their proposals, including specific dollar amounts by budget category. Budget justification(s) are used to explain these amounts in detail. The proposed budget should reflect the needs of the proposed research and development project. Enter budget figures for each project year into Research.gov. The system will automatically generate a cumulative budget for the entire project.

You can add Subaward Organization(s) to your proposal (required for STTR submissions and allowed for SBIR submissions) and make changes to personnel information by navigating to the “Manage Personnel and Subaward Organizations” page.

NSF Phase I SBIR proposals require that at least two-thirds of the budget be allocated to the small business.
NSF Phase I STTR proposals require that at least 40% of the budget be allocated to the small business and that at least 30% of the budget be allocated to the partner research institution.

Funds committed to subawards and consultants are not considered funds allocated to the proposing small business.

All activities on an NSF SBIR/STTR project, including services that are provided by consultants, must be carried out in the United States (“United States” means the 50 states, the territories and possessions of the U.S. federal government, the Commonwealth of Puerto Rico, the District of Columbia, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau). Based on a rare and unique circumstance, agencies may approve a particular portion of the research/R&D work to be performed or obtained in a country outside of the United States, for example, if a supply, material or other item or project requirement is not available in the United States. The funding agreement officer must approve each specific condition in writing.

Please note the solicitation maximum amount for the Phase I proposal budget.

Line A. Senior/Key Personnel. List the principal investigator (PI), co-PI (if STTR) and other Senior/Key Personnel by name, their time commitment (in calendar months), and the dollar amount requested for each person’s compensation. The PI must be budgeted for a minimum of one calendar month of effort per six months of performance to the NSF SBIR/STTR Phase I proposed project. The best source for determining an appropriate salary request, if the given participant does not have a salary history at the small business, is the Bureau of Labor Statistics. In the Budget Justification, provide the title; annual, monthly or hourly salary rate; time commitment; a calculation of the total requested salary; and a description of responsibilities for the PI, co-PI (if STTR) and each of the Senior/Key Personnel.

You can add additional senior/key personnel to your proposal (e.g., for STTR submissions) and make changes to personnel information by navigating to the “Manage Personnel and Subaward Organizations” page.

Note that NSF generally considers every listed “Senior/Key Personnel” on any SBIR/STTR budget as a “covered individual” for the purposes of due diligence (click the link for more information).
Line B. Other Personnel. List the number of people, months and funding for additional personnel: other professionals (technicians, programmers, etc.), administrative/clerical and/or other. These personnel must be employed at the proposing company. The budget justification should state individual employee names and titles (to the extent known), expected role in the project, effort in months and annual salary for each person.

Postdoctoral scholars and students (undergraduate and graduate) would generally only be expected as part of a subaward budget to a research institution. If such persons are legal employees of the company, they may be listed in Line A (Senior/Key Personnel), or Line B.2 (Other Professionals), as appropriate.

Secretarial/clerical effort is generally included as part of indirect costs. Salaries for secretarial/clerical should be budgeted as a direct cost only if this type of cost is consistently treated as a direct cost in like circumstances for all other project and cost objectives.
Line C. Fringe Benefits. It is recommended that proposers allot funds for fringe benefits here ONLY if the proposer’s usual (established) accounting practices provide that fringe benefits be treated as direct costs. Otherwise, fringe benefits should be included in Line I. Indirect Costs.
Line D. Equipment. Please do not use this budget line. Equipment may NOT be purchased on an NSF SBIR/STTR Phase I grant. Equipment is defined as an item of property that has an acquisition cost of $5,000 or more (unless the organization has established lower levels) and an expected service life of more than one year.
Line E. Travel. All budgeted travel must be necessary for the successful execution of the Phase I R&D effort. Travel for purposes other than the project R&D effort (e.g., marketing or customer engagements) is not permitted, EXCEPT for participation in NSF Innovation Corps (I-Corps™). Travel funds related to I-Corps should be included in the I-Corps budget request, see discussion below for Line G. Other. Foreign travel is not permitted.
Line F. Participant Support Costs. Participant support costs are NOT permitted in SBIR/STTR proposals.
Line G.1. Materials and Supplies. Materials and supplies are defined as tangible personal property, other than equipment, costing less than $5,000, or other lower threshold consistent with the policy established by the proposing organization.
Line G.2. Publication Costs/Documentation/Dissemination. Publication, documentation, and dissemination costs are not allowed in SBIR/STTR proposals.
Line G.3. Consultant Services. Consultant services include specialized work that will be performed by professionals who are not employees of the proposing small business. See budget justification guidance for information on the inclusion of letters of commitment from consultants as well as required biographical documentation. All consultant activities must be carried out in the United States (see above). No person who is an equity holder, employee, or officer of the proposing small business may be paid as a consultant unless an exception is recommended by the cognizant program director and approved by the section head of the small business (SB) section. Please also reference IRS guidance on how to distinguish employees from contractors/consultants: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee.
Line G.4. Computer Services. Funds may be allocated for computer services. Requested services with a total cost exceeding $5,000 may require pricing documentation (e.g., quote, link to online price list, prior purchase order or invoice) after the proposal is reviewed, as part of the cognizant program director’s due diligence efforts. Please see Section VI for details.
Line G.5. Subaward(s). Subawards may be utilized when a significant portion of the work will be performed by another organization and when the work to be done is not widely commercially available. Work performed by a university or research laboratory is one example of a common subaward. A subawardee research institution partner is mandatory for STTR proposals.

Subawards require a separate subaward budget and subaward budget justification, in the same format as the main budget. To enter a subaward budget in Research.gov, go to the Budget module tab and add Subaward Organization(s) by opening “Manage Personnel and Subaward Organizations.” Each subawardee will have its own budget pages for each year of the project.

Subawardees (the institution, not the individual PI or researcher) should also provide a Letter of Commitment that confirms the role of the subaward organization in the project and explicitly states the subaward amount. Provide this letter in the “Other Supplementary Documents” section. Multiple letters should be combined as a single PDF before uploading.

Any subrecipients named in the proposal are also required to *obtain a System for Award Management Unique Entity Identifier (SAM UEI) and register in Research.gov. Subrecipients named in the proposal, however, do not need to be registered in SAM. Entities can obtain a SAM UEI without full SAM registration. If you have a subrecipient that is not fully registered in SAM, but has been assigned a UEI number, please call the IT Help Desk for further assistance.

**An Allocation of Intellectual Property Rights Agreement (IP Rights Agreement) is required for STTR proposals and strongly recommended for SBIR proposals when there is a subaward to another institution. A fully signed agreement is not required for STTR proposals at the initial proposal submission, but it will be required before a recommendation for an award can be made. See further guidance in the “Other Supplementary Documents” section of this page.

No person who is an equity holder, employee, or officer of the proposing small business may be paid under a subaward unless an exception is recommended by the cognizant program director and approved by the section head of the SB section.
Line G.6. Other Direct Costs. This line includes the purchase of technical and/or R&D services from commercial sources. Some typical types of costs that might fall into this category would be analytical/testing services, machining, or contracted design or engineering work from a third-party firm. Requested services or activities with a total cost exceeding $5,000 will require pricing documentation (e.g., quote, link to online price list, prior purchase order or invoice) to be provided after the proposal is reviewed, as part of due diligence.

There are three other specific activities that may be included on G. Other Direct Costs, at the option of the proposing small business.
1. The proposer may budget up to $10,000 as a direct charge for the following specific purposes related to financials and accounting:
- Hiring a certified public accountant (CPA) to prepare audited, compiled, or reviewed financial statements;
- Hiring a CPA to perform an initial financial viability assessment based on standard financial ratios so the recipient organization would have time to improve its financial position prior to submitting the Phase II proposal;
- Hiring a CPA to review the adequacy of the recipient’s project cost accounting system; and/or
- Purchasing a project cost accounting system.
  If the proposer elects to budget funds for one of the above purposes, the Budget Justification should include a brief description of the desired use of funds. The use of funds must be approved by the cognizant SBIR/STTR program officer prior to award. Note that it is a routine practice to pay for routine accounting costs using Indirect Costs; the funds listed in this case are for one-time and non-routine actions that would not be appropriate as indirect costs.
1. NSF Innovation Corps (I-Corps): The proposer is strongly encouraged to budget up to an additional $25,000 to cover costs related to undertaking the I-Corps program. I-Corps is an immersive, seven-week, entrepreneurial training program that facilitates the translation of invention to impact. This program provides direct, hands-on experience in customer discovery — a key step in the entrepreneurial process that involves talking to and getting critical feedback from potential customers, partners and other industry stakeholders. The interviews allow the team to evaluate the commercial potential of their innovation for translation into a successful product and/or service. Other benefits of the I-Corps program include mentorship and networking opportunities. Simply list this item as “I-Corps” in the budget justification. I-Corps is a competitive program; acceptance into the program is not guaranteed as a result of an SBIR/STTR Phase I award. Costs that are allowable are limited to travel costs related to customer discovery as part of the I-Corps program (this could include costs associated with registration/attendance at events for the purpose of customer discovery) and salary/wages for team members who participate. All costs related to the I-Corps training must be in line with approved salary rates and other relevant federal guidelines. Note: International travel for customer discovery cannot be reimbursed, nor can any salary/wages for work done while outside of the United States.
2. SBIR/STTR Technical and Business Assistance (TABA): Proposers are encouraged to include up to $6,500 to assist in technology commercialization efforts (as outlined in the current SBIR/STTR Policy Directive and the 15 U.S. Code § 638). It is not required that proposers identify a specific use for TABA funds at the time of proposal submission, though they are welcome to do so. Prior to expending funds for TABA, Phase I awardees will be required to obtain approval from their cognizant NSF SBIR/STTR program director. Specifically, TABA funding is for securing the services of one or more third-party service providers that will assist with one or more of the following commercialization activities:
  - Commercializing the SBIR/STTR product or process, including securing intellectual property protections.
  - Phase II commercialization plan research and preparation.
  - Phase II broader impact plan research and preparation.
  - Making better technical decisions on SBIR/STTR projects.
  - Solving technical problems that arise during SBIR/STTR projects.
  - Minimizing technical risks associated with SBIR/STTR projects.
Line I. Indirect Costs. Indirect costs are defined as costs that are necessary and appropriate for the operation of the business, but which are not specifically allocated to the project. Common indirect cost expenses include legal and accounting expenses, employee health insurance, fringe benefits, rent and utilities. If your small business has a federally negotiated rate, please provide a copy of the negotiated indirect cost rate agreement. If your organization has no negotiated rate with a federal agency, and no previous experience with federal indirect cost rate negotiation, you may claim (without submitting justification) a total amount of indirect costs (inclusive of fringe benefits) either up to 50% of total budgeted salary and wages on the project, or equal to 15% de minimis on modified total direct costs (MTDCs) on the project.

Modified Total Direct Cost (MTDC): MTDC means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). The calculation of MTDC should exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs.
Line K. Fee. Up to 7% of the total indirect and direct project costs may be requested as a small business fee (7% of Line J). The fee is intended to be consistent with normal profit margins provided to profit-making firms for R&D work. The fee applies solely to the small business receiving the award and not to any other participant in the project. The fee is not a direct or indirect “cost” item and may be used by the small business concern for any purpose, including additional effort under the NSF SBIR/STTR award (including items on the “Prohibited Expenditures” list below).

Prohibited expenditures, including, but not limited to, Equipment, Foreign Travel, Participant Support Costs and Publication Costs, are not allowable expenditures as either direct or indirect costs. However, these expenses may be purchased from the small business fee funds (Line K).

B. Phase II

Budget(s). Proposers are required to submit budgets with their proposals, including specific dollar amounts by budget category. Budget justification(s) are used to explain these amounts in detail. The proposed budget should reflect the needs of the proposed R&D project. Enter budget figures for each project year into Research.gov. The system will automatically generate a cumulative budget for the entire project.

Please note the solicitation maximum amount for the Phase I proposal budget.

Budgets for small businesses will be reviewed against the cost principles of the Federal Acquisition Regulations (FAR) Part 31, as amended by the budget preparation instructions outlined below.

NSF Phase II SBIR proposals require that at least 50% of the budget be allocated to the small business.
NSF Phase II STTR proposals require that at least 40% of the budget be allocated to the small business and that at least 30% of the budget be allocated to the partner research institution.

Funds committed to subawards and consultants are not considered funds allocated to the proposing small business.

All activities on an NSF SBIR/STTR project, including services that are provided by consultants, must be carried out in the United States (“United States” means the 50 states, the territories and possessions of the U.S. federal government, the Commonwealth of Puerto Rico, the District of Columbia, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau). Based on a rare and unique circumstance, agencies may approve a particular portion of the R/R&D work to be performed or obtained in a country outside of the United States, for example, if a supply, material or other item or project requirement is not available in the United States. The funding agreement officer must approve each such specific condition in writing.

Line A. Senior/Key Personnel. List the PI, co-PI (if STTR) and other Senior/Key Personnel by name, their time commitment (in calendar months), and the dollar amount requested for each person’s compensation. The PI must be budgeted for a minimum of one calendar month of effort per six months of performance to the NSF SBIR/STTR Phase I proposed project. The best source for determining an appropriate salary request, if the given participant does not have a salary history at the small business, is the Bureau of Labor Statistics. In the budget justification, provide the title; annual, monthly or hourly salary rate; time commitment; a calculation of the total requested salary; and a description of responsibilities for the PI, co-PI (if STTR), and each of the Senior/Key Personnel.

You can add additional senior/key personnel or subaward institutions (e.g., for STTR submissions) to your proposal, and make changes to personnel information by navigating to the “Manage Personnel and Subaward Organizations” page.

Note that NSF generally considers every listed “Senior/Key Personnel” on any SBIR/STTR budget as a “covered individual” for the purposes of due diligence (see “Merit Review Criteria and Process” information).
Line B. Other Personnel. List the number of people, months and funding for additional personnel: Other Professionals (technicians, programmers, etc.), administrative/clerical and/or other. These personnel must be employed at the proposing company. The budget justification should state individual employee names and titles (to the extent known), expected role in the project, effort in months and annual salary for each person.

Postdoctoral scholars and students (undergraduate and graduate) would generally only be expected as part of a subaward budget to a research institution. If such persons are legal employees of the company, they may be listed in Line A (Senior/Key Personnel), or Line B.2 (Other Professionals), as appropriate.

Secretarial/clerical effort is generally included as part of indirect costs. Only those who will be performing technical work should be listed under personnel.
Line C. Fringe Benefits. It is recommended that proposers allot funds for fringe benefits here ONLY if the proposer’s usual (established) accounting practices provide that fringe benefits be treated as direct costs. Otherwise, fringe benefits should be included in Line I. Indirect Costs.
Line D. Equipment. Equipment is defined as non-expendable, tangible personal property, having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. However, organizations may elect to establish their capitalization threshold as less than $5,000. Equipment should be budgeted consistently with the proposing organization’s capitalization policy. Requests should not be made for general-purpose or routine equipment that a business conducting research in the field should be expected to have available. The budget justification must explain the need for any equipment and include the item identification/description, vendor identification, quantity, price and extended amount. The budget justification should also include, as a separate document if needed, pricing documentation (e.g., quotes, invoices, links to online price lists, past purchase orders, etc.) for each budgeted piece of equipment.
Line E. Travel. All budgeted travel must be necessary for the successful execution of the Phase II R&D effort. Travel for purposes other than the project R&D effort (e.g., marketing or customer engagements) is not permitted.

The Budget Justification must include the purpose for domestic travel and, for each budgeted trip: the destination, purpose of travel, number of days, and the estimated costs for airfare, cab fare, car rental, per diem rates, hotel, and other incidentals.
Line F. Participant Support Costs. Participant support costs are NOT permitted in SBIR/STTR proposals.
Line G.1. Materials and Supplies. The budget justification must include an itemized listing of materials and supplies, including the item/description, vendor, unit cost, quantity, price and extended amount. Any single material or supply item with a total cost of $5,000 must be further itemized into smaller cost items or supported by pricing documentation (e.g., quote, link to online pricing list, and past purchase order) in the budget justification.
Line G.2. Publication Costs/Documentation/Dissemination. Publication, documentation and dissemination costs are not allowed in SBIR/STTR proposals.
Line G.3. Consultant Services. Consultant services include specialized work that will be performed by professionals who are not employees of the proposing small business. See budget justification guidance for information on the inclusion of Letters of Commitment from consultants as well as required biographical documentation. All consultant activities must be carried out in the United States (see above). No person who is an equity holder, employee, or officer of the proposing small business may be paid as a consultant unless an exception is recommended by the cognizant program director and approved by the section head of the SB section.

Please also reference IRS guidance on how to distinguish employees from contractors/consultants: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee.

The proposal must include a signed agreement (Letter of Commitment) from each consultant confirming the services to be provided (role in the project), primary organizational affiliation, number of days committed to the research effort, availability to provide services, and consulting daily rate. The agreement must clearly state the number of days on the project, the consulting daily rate (8 hours/day) and the total dollar amount of the consulting agreement. Include a copy of the signed Letter of Commitment in the “Other Supplementary Documents” section. Any information in the Letter of Commitment above and beyond the above will be considered not responsive and may be removed from your proposal. Multiple letters should be combined as a single PDF before uploading.

The consulting daily rate represents the total labor compensation for an 8-hour period and may not exceed $1,000 per day. Any miscellaneous costs, such as supplies, that are not included as part of the daily rate must be identified and justified. Consultant travel should be shown under the domestic travel category, Line E, but counts as an outsourcing expense for the purpose of determining whether the small business concern meets the minimum level of effort for an NSF SBIR/STTR proposal.
Line G.4. Computer Services. Funds may be allocated for computer services. Requested services with a total cost exceeding $5,000 may require pricing documentation (e.g., quote, link to online price list, prior purchase order or invoice) after the proposal is reviewed, as part of the cognizant program director’s due diligence efforts. Please see Section VI for details.
Line G.5. Subaward(s). Subawards may be utilized when a significant portion of the work will be performed by another organization and when the work to be done is not widely commercially available. Work performed by a university or research laboratory is one example of a common subaward. A subawardee research institution partner is mandatory for STTR proposals.

Subawards require a separate subaward budget and subaward budget justification, in the same format as the main budget. To enter a subaward budget in Research.gov, go to the Budget module tab and add Subaward Organization(s) by opening “Manage Personnel and Subaward Organizations.” Each subawardee will have its own budget pages for each year of the project.

Subawardees (the institution, not the individual PI or researcher) should also provide a Letter of Commitment that confirms the role of the subaward organization in the project and explicitly states the subaward amount. Provide this letter in the “Other Supplementary Documents” section. Multiple letters should be combined as a single PDF before uploading.

The proposing organization’s budget justification must discuss the tasks to be performed and how these are related to the overall project. Also discuss any organizational relationships (e.g., common ownership or related parties) between the proposing organization and the subawardee, and the type of subaward contemplated (e.g., fixed price or cost reimbursement).

A subawardee research institution (RI) partner is mandatory for STTR proposals. Explicitly list who the research partner will be and provide a brief description of the work they will perform. A minimum of 40% of the research, as measured by the budget, must be performed by the small business concern and a minimum of 30% of the research, as measured by the budget, must be performed by a single subawardee research institution. Subawardees are also not permitted to request profit (Line K) as part of their budgets.

Any subrecipients named in the proposal are also required to obtain a SAM UEI and register in Research.gov. Subrecipients named in the proposal, however, do not need to be registered in SAM. Entities can obtain a SAM UEI without full SAM registration. If you have a subrecipient that is not fully registered in SAM, but has been assigned a UEI number, please call the IT Help Desk for further assistance.

An Allocation of Intellectual Property Rights Agreement (IP Rights Agreement for future IP) or a Cooperative Research Agreement is required for STTR proposals and strongly recommended for SBIR proposals when there is a subaward to another institution. A fully signed agreement is not required for STTR proposals at the initial proposal submission, but it will be required before a recommendation for an award can be made. See further guidance in the “Other Supplementary Documents” section of this guidance.

No person who is an equity holder, employee, or officer of the proposing small business may be paid under a subaward unless an exception is recommended by the cognizant program director and approved by the section head of the Small Business (SB) section.
Line G.6. Other Direct Costs. This line includes the purchase of technical and/or R&D services from commercial sources. Some typical types of costs that might fall into this category would be analytical/testing services, machining, or contracted design or engineering work from a third-party firm. Requested services or activities with a total cost exceeding $5,000 will require pricing documentation (e.g., quote, link to online price list, prior purchase order or invoice) to be provided after the proposal is reviewed, as part of due diligence.

SBIR/STTR Technical and Business Assistance (TABA): Proposers may include up to $50,000 to assist in technology commercialization efforts (as outlined in the current SBIR/STTR Policy Directive and the 15 U.S. Code § 638). Specifically, this funding is for securing the services of one or more third-party service providers that will assist with one or more of the following commercialization activities:
- Making better technical decisions on SBIR/STTR projects.
- Solving technical problems that arise during SBIR/STTR projects.
- Minimizing technical risks associated with SBIR/STTR projects.
- Commercializing the SBIR/STTR product or process, including securing intellectual property protections.
  
  TABA funding can be allocated among multiple service providers and for multiple purposes.
  
  If a proposer is not able to identify what commercial assistance may be required at the time of submission, the proposing small business may block up to $50,000 for TABA activities on Line G.6 (“Other”) with the understanding that prior to expending funds for these purposes, the recipient will be required to obtain approval from their cognizant NSF SBIR/STTR program officer.
Line I. Indirect Costs. Indirect costs are defined as costs that are necessary and appropriate for the operation of the business, but which are not specifically allocated to the project. Common indirect cost expenses include legal and accounting expenses, employee health insurance, fringe benefits, rent and utilities. If your small business has a federally negotiated rate, please provide a copy of the negotiated indirect cost rate agreement. If your organization has no negotiated rate with a federal agency, and no previous experience with federal indirect cost rate negotiation, you may claim (without submitting justification) a total amount of indirect costs (inclusive of fringe benefits) either up to 50% of total budgeted salary and wages on the project (Budget Line A+B), or equal to 15% de minimis on modified total direct costs on the project.

Modified Total Direct Cost (MTDC): MTDC means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). The calculation of MTDC should exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs.
Line K. Fee. The small business fee is intended to be consistent with normal profit margins provided to profit-making firms for R&D work. The fee, if requested, is limited to 10% of the total amount on Line J (total amount requested = total direct costs + indirect costs). The fee is not a direct or indirect “cost” item and may be used by the small business concern for additional effort under the NSF SBIR/STTR award and for items that would otherwise be prohibited as direct or indirect costs.

Prohibited expenditures, including, but not limited to, Foreign Travel, Participant Support Costs and Publication Costs, are not allowable expenditures as either direct or indirect costs. However, these expenses may be purchased from the small business fee funds (Line K).

Note: Should the proposal be considered for funding, the proposal will be referred to the NSF Cost Analysis and Pre-Award Review (CAP) Division’s SBIR/STTR Phase II Administrative/Financial Reviews website. Proposing small businesses will then be given 10 calendar days to provide CAP with the underlying supporting documentation for their budget. The organization should review and understand the CAP documentation requirements as it prepares its budget. Once NSF requests the underlying supporting documentation for the CAP review, proposers will not be given an opportunity to re-budget unsupported costs. Funding will be provided for only the dollar amount that is reasonable and adequately supported. The awarded Phase II budget will reflect the supported dollar amount for the proposed effort. Organizations that accept awards at less than the proposed dollar amount may not reduce the effort to be provided; however, organizations may choose to decline award offers.

C. Fast-Track

Budget(s). Proposers are required to submit budgets with their proposals, including specific dollar amounts by budget category. Budget justification(s) are used to explain these amounts in detail. The proposed budget should reflect the needs of the proposed R&D project. Enter budget figures for each project year into Research.gov. The system will automatically generate a cumulative budget for the entire project.

IMPORTANT: The budget and budget justification for the Phase I component of the proposed SBIR/STTR Fast-Track project must be uploaded to the year 1 budget in Research.gov, while the Phase II component of the proposed Fast-Track project must be uploaded to the year 2 and year 3 budget sections in Research.gov.

All activities on an NSF SBIR/STTR project, including services that are provided by consultants, must be carried out in the United States (“United States” means the 50 states, the territories and possessions of the U.S. federal government, the Commonwealth of Puerto Rico, the District of Columbia, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau). Based on a rare and unique circumstance, agencies may approve a particular portion of the R/R&D work to be performed or obtained in a country outside of the United States, for example, if a supply, material or other item or project requirement is not available in the United States. The Funding Agreement officer must approve each such specific condition in writing.

Please note the solicitation maximum amount for the Fast-Track proposal budget.

Line A. Senior/Key Personnel. List the PI, co-PI (if STTR) and other Senior/Key Personnel by name, their time commitment (in calendar months) and the dollar amount requested for each person’s compensation. The PI must be budgeted for a minimum of three calendar months of effort per six months of performance to the proposed NSF SBIR/STTR Fast-Track project. The best source for determining an appropriate salary request, if the given participant does not have a salary history at the small business, is the Bureau of Labor Statistics. In the Budget Justification, provide the title; annual, monthly or hourly salary rate; time commitment; a calculation of the total requested salary; and a description of responsibilities for the PI, co-PI (if STTR) and each of the Senior/Key Personnel.

You can add additional senior/key personnel to your proposal (e.g., for STTR submissions) and make changes to personnel information by navigating to the “Manage Personnel and Subaward Organizations” page.

Note that NSF generally considers every listed “Senior/Key Personnel” on any SBIR/STTR budget as a “covered individual” for the purposes of due diligence (see “Merit Review Criteria and Process” information).
Line B. Other Personnel. List the number of people, months and funding for additional personnel: Other Professionals (technicians, programmers, etc.), administrative/clerical and/or other. These personnel must be employed at the proposing company. The budget justification should state individual employee names and titles (to the extent known), expected role in the project, effort in months and annual salary for each person.

Postdoctoral scholars and students (undergraduate and graduate) would generally only be expected as part of a subaward budget to a research institution. If such persons are legal employees of the company, they may be listed in Line A (Senior/Key Personnel), or Line B.2 (Other Professionals), as appropriate.

Secretarial/clerical effort is generally included as part of indirect costs. Salaries for secretarial/clerical should be budgeted as a direct cost only if this type of cost is consistently treated as a direct cost in like circumstances for all other project and cost objectives.
Line C. Fringe Benefits. It is recommended that proposers allot funds for fringe benefits here ONLY if the proposer’s usual (established) accounting practices provide that fringe benefits be treated as direct costs. Otherwise, fringe benefits should be included in Line I. Indirect Costs.
Line D. Equipment. Equipment may NOT be purchased in the Phase I component (Year 1 of an NSF SBIR/STTR Fast Track grant but MAY be included in the budget of a Phase II component (Years 2 and 3). Equipment is defined as an item of property that has an acquisition cost of $5,000 or more (unless the organization has established lower levels) and an expected service life of more than one year. Equipment should be budgeted consistently with the proposing organization’s capitalization policy. Requests should not be made for general-purpose or routine equipment that a business conducting research in the field should be expected to have available. The budget justification must explain the need for any equipment and include the item identification/description, vendor identification, quantity, price, and extended amount. The budget justification should also include, as a separate document if needed, pricing documentation (e.g., quotes, invoices, links to online price lists, past purchase orders, etc.) for each budgeted piece of equipment.
Line E. Travel. All budgeted travel must be necessary for the successful execution of the Fast Track R&D effort. Travel for purposes other than the project R&D effort (e.g., marketing or customer engagements) is not permitted. Foreign travel is not permitted.
Line F. Participant Support Costs. Participant support costs are NOT permitted in SBIR/STTR proposals.
Line G.1. Materials and Supplies. Materials and supplies are defined as tangible personal property, other than equipment, costing less than $5,000, or other lower threshold consistent with the policy established by the proposing organization.
Line G.2. Publication Costs/Documentation/Dissemination. Publication, documentation and dissemination costs are not allowed in SBIR/STTR proposals.
Line G.3. Consultant Services. Consultant services include specialized work that will be performed by professionals who are not employees of the proposing small business. See budget justification guidance for information on the inclusion of letters of commitment from consultants as well as required biographical documentation. All consultant activities must be carried out in the United States (see above). No person who is an equity holder, employee, or officer of the proposing small business may be paid as a consultant unless an exception is recommended by the cognizant program director and approved by the section head of the SB section. Please also reference IRS guidance on how to distinguish employees from contractors/consultants: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee.
Line G.4. Computer Services. Funds may be allocated for computer services. Requested services with a total cost exceeding $5,000 may require pricing documentation (e.g., quote, link to online price list, prior purchase order or invoice) after the proposal is reviewed, as part of the cognizant program director’s due diligence efforts. Please see Section VI for details.
Line G.5. Subaward(s). Subawards may be utilized when a significant portion of the work will be performed by another organization and when the work to be done is not widely commercially available. Work performed by a university or research laboratory is one example of a common subaward. A subawardee research institution partner is mandatory for STTR proposals.

Subawards require a separate subaward budget and subaward budget justification, in the same format as the main budget. To enter a subaward budget in Research.gov, go to the Budget module tab and add Subaward Organization(s) by opening “Manage Personnel and Subaward Organizations.” Each subawardee will have its own budget pages for each year of the project.

Subawardees (the institution, not the individual PI or researcher) should also provide a Letter of Commitment that confirms the role of the subaward organization in the project and explicitly states the subaward amount. Provide this letter in the Other Supplementary Documents section. Multiple letters should be combined as a single PDF before uploading.

Any subrecipients named in the proposal are also required to obtain a SAM UEI and register in Research.gov. Subrecipients named in the proposal, however, do not need to be registered in SAM. Entities can obtain a SAM UEI without full SAM registration. If you have a subrecipient that is not fully registered in SAM, but has been assigned a UEI number, please call the IT Help Desk for further assistance.

An Allocation of Intellectual Property Rights Agreement (IP Rights Agreement) is required for STTR proposals and strongly recommended for SBIR proposals when there is a subaward to another institution. A fully signed agreement is not required for STTR proposals at the initial proposal submission, but it will be required before a recommendation for an award can be made. See further guidance in the “Other Supplementary Documents” section of this page.

No person who is an equity holder, employee, or officer of the proposing small business may be paid under a subaward unless an exception is recommended by the cognizant program director and approved by the section head of the SB section.
Line G.6. Other Direct Costs. This line includes the purchase of technical and/or R&D services from commercial sources. Some typical types of costs that might fall into this category would be analytical/testing services, machining or contracted design or engineering work from a third-party firm. Requested services or activities with a total cost exceeding $5,000 will require pricing documentation (e.g., quote, link to online price list, prior purchase order or invoice) to be provided after the proposal is reviewed, as part of due diligence.

There are two other specific activities that may be included on G. Other Direct Costs, at the option of the proposing small business.
i. The proposer may budget up to $10,000 as a direct charge to the Phase I budget for the following specific purposes related to financials and accounting:
- Hiring a CPA to prepare audited, compiled, or reviewed financial statements.
- Hiring a CPA to perform an initial financial viability assessment based on standard financial ratios so the recipient organization would have time to improve its financial position prior to submitting the Fast Track I proposal.
- Hiring a CPA to review the adequacy of the recipient’s project cost accounting system.
- Purchasing a project cost accounting system.
  If the proposer elects to budget funds for one of the above purposes, the budget justification should include a brief description of the desired use of funds. The use of funds must be approved by the cognizant SBIR/STTR program officer prior to award. Note that it is a routine practice to pay for routine accounting costs using Indirect Costs; the funds listed in this case are for one-time and non-routine actions that would not be appropriate as indirect costs.
  ii. SBIR/STTR Fast-Track Technical and Business Assistance (TABA): Proposers are encouraged to include up to $6,500 in the Phase I component budget and up to $50,000 in the Phase II component budget to assist in technology commercialization efforts (as outlined in the current SBIR/STTR Policy Directive and the 15 U.S. Code § 638). Specifically, this funding is for securing the services of one or more third-party service providers that will assist with one or more of the following commercialization activities:
- Commercializing the SBIR/STTR product or process, including securing intellectual property protections;
- Making better technical decisions on SBIR/STTR Fast-Track projects;
- Solving technical problems that arise during SBIR/STTR projects; and/or
- Minimizing technical risks associated with SBIR/STTR projects
  If a proposer is not able to identify what commercial assistance may be required at the time of proposal submission, the proposing small business may block up to the maximum allowable amount for TABA activities (as detailed above) on Line G. Other with the understanding that prior to expending funds for these purposes, the recipient will be required to obtain written approval from the cognizant NSF SBIR/STTR Fast-Track program officer.
Line I. Indirect Costs. Indirect costs are defined as costs that are necessary and appropriate for the operation of the business, but which are not specifically allocated to the project. Common indirect cost expenses include legal and accounting expenses, employee health insurance, fringe benefits, rent and utilities. If your small business has a federally negotiated rate, please provide a copy of the negotiated indirect cost rate agreement. If your organization has no negotiated rate with a federal agency, and no previous experience with federal indirect cost rate negotiation, you may claim (without submitting justification) a total amount of indirect costs (inclusive of fringe benefits) either up to 50% of total budgeted salary and wages on the project, or equal to 15% de minimis on modified total direct costs (MTDCs) on the project.

Modified Total Direct Cost (MTDC): MTDC means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). The calculation of MTDC should exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs.
Line K. Fee. Up to seven percent (7%) of the total indirect and direct project costs may be requested as a Small Business Fee for the Phase I budget component. Up to ten percent (10%) of the total indirect and direct project costs may be requested as a fee for the Phase II budget component. The fee is intended to be consistent with normal profit margins provided to profit-making firms for R&D work. The fee applies solely to the small business receiving the award and not to any other participant in the project. The fee is not a direct or indirect “cost” item and may be used by the small business concern for any purpose, including additional effort under the NSF SBIR/STTR award (including items on the “Prohibited Expenditures” list below).

Prohibited expenditures, including, but not limited to, Foreign Travel, Participant Support Costs and Publication Costs, are not allowable expenditures as either direct or indirect costs. However, these expenses may be purchased from the small business fee funds (Line K).

Note: Should the Fast-Track project advance past the first stage gate for the Phase II component (see link),the PI will be referred to the NSF Cost Analysis and Pre-Award Review (CAP) Division’s SBIR/STTR Phase II Administrative/Financial Reviews website. Proposing small businesses will then be given 10 calendar days to provide CAP with the underlying supporting documentation for their budget. The organization should review and understand the CAP documentation requirements as it prepares its budget. Once NSF requests the underlying supporting documentation for the CAP review, proposers will not be given an opportunity to re-budget unsupported costs. Funding will be provided for only the dollar amount that is reasonable and adequately supported. The awarded Phase II budget will reflect the supported dollar amount for the proposed effort. Organizations that accept awards at less than the proposed dollar amount may not reduce the effort to be provided; however, organizations may choose to decline award offers.

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