article by Kent Hoover

The House passed legislation that would make small businesses majority-owned by venture capital firms eligible for Small Business Innovation Research awards.

Through the SBIR program, 2.5 percent of the outside research budgets of 11 federal agencies -- including the Department of Defense and the National Institutes of Health -- is allocated for small businesses. The program, which funds around $2.3 billion in research every year, has helped thousands of small firms turn promising ideas into real-world applications.

Since 2003, however, the SBIR program has been dogged by controversy over what constitutes a small business. That is when the SBA ruled that a company no longer qualifies as a small business if venture capital firms have an equity stake of 50 percent of more in the company.

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