Trump signs bill reauthorizing federal aid to defense startups
President Trump has signed a bill restoring federal funding to tech startups in California and elsewhere, money that had been held up for more than six months.
The Small Business Administration money, a key source of capital for new aerospace and defense firms in the Los Angeles region, ran out in October after a Congressional impasse.
The Small Business Innovation and Economic Security Act signed by Trump on Monday funds the Small Business Innovation Research (SBIR), the Small Business Technology Transfer (STTR) and related programs.
They provide more than $4 billion in seed funding to commercial startups that provide valuable services to the government and public, stimulate the economy and help maintain the country’s competitive edge.
The money is awarded by multiple agencies, including the Health and Human Services and Energy departments and NASA, with the military distributing the largest portion.
The funding has helped launch defense and aerospace startups across Southern California, including Costa Mesa autonomous weapons maker Anduril Industries, now valued at more than $30 billion.
Sen. Joni Ernst (R-Iowa), chair of the Senate Committee on Small Business and Entrepreneurship, held up reauthorization over concerns some startups had become reliant on the money instead of developing commercial businesses. She proposed a bill with a $75-million lifetime funding cap for individual companies.
Sen. Ed Markey of Massachusetts, the committee’s ranking Democrat, contended the bill would crimp innovation and hurt companies.
The reauthorization includes no lifetime caps but requires departments to set limits on how many times companies can apply each year for the SBA funding, prioritizing startups .
The bill also establishes a Strategic Breakthrough Allocation program that awards up to $30 million in SBA funding to a single company provided it can bring in matching funding.
The new program is intended to assist startups to become commercially viable after they run through their SBIR or STTR funding, which are intended to fund feasibility studies and prototypes. STTR requires a partnership with a research institution.
Other provisions in the bill include new due diligence standards to prevent any tech developed by the startups from falling into the hands of adversaries such as China .
“With a bipartisan, five-year reauthorization signed into law, small businesses are once again empowered to create these innovative technologies and tackle our nation’s most pressing challenges head-on,” Markey said in a statement.