Senate lawmakers this week approved a contentious bill that provides billions in federal research and develop grants for small businesses, including those already backed by multiple venture capital firms.

Sponsored by Sen. John Kerry (D-Mass.), the bill allows companies that are majority owned and controlled by venture capital firms to receive funding under the Small Business Innovation Research program, or SBIR. Previously, the program was open only to individual small-business owners. The program, which was launched in 1982, seeks to boost innovation by smaller firms, especially those in the high-tech sector.

"Although the agreed-upon language is not ideal for the small-business community --namely the absence of stronger efforts to push back against large businesses working to gain unlimited entry to the SBIR program -- there are many other positive aspects of the bill, and it is a compromise [we are] prepared to support," the National Small Business Association said in a statement.

Supporters say both VC funding and SBIR grants are required in today's competitive high-tech market. As a safeguard to protect smaller firms, the reauthorized program allows the National Institute of Health and other agencies to award less than a quarter of their SBIR dollars to venture-backed companies.

Kerry, the chairman of the Senate Committee on Small Business and Entrepreneurship, said the program will help smaller firms "develop technologies to keep our military strong, advance medical breakthroughs, and develop energy resources that are renewable and clean."

The bill is expected to be taken up by the full Senate in September.


Correction: The original version of this story mistakenly included a statement by the National Small Business Association in reference to its opposition to the House version of the SBIR bill. In fact, the organization supports the Senate version.