SBRI Contract vs Grant: What Changes for a UK SME
An SBRI award is a development contract, not a grant. You are paid as a supplier to a public body for work that answers a problem the body has defined, and that changes who sets the scope, what you can charge, how the money is paid and how the IP is handled. This article sets out those differences using the funders' own documents, as of 2026-10-09, so you can judge which route suits your project.
What "SBRI" means in practice
SBRI stands for the Small Business Research Initiative. A public sector body, the "challenge owner", describes a problem and invites small businesses to propose solutions. Two routes matter to UK deep-tech companies:
- SBRI Healthcare, funded by NHS England, runs clinically themed competitions based on NHS unmet need (SBRI Healthcare website, checked 2026-10-09).
- Innovate UK Contracts for Innovation, which lets public sector organisations run challenge-led competitions across other areas. UKRI's page (last updated 23 April 2026) lists one open opportunity at the time of writing, with awards of £40,000 to £80,000.
Both sit outside the usual Innovate UK grant competitions, which is why advice written for grants often does not carry over.
The legal difference: procurement, not subsidy
SBRI Healthcare's Open Call 4 FAQ states: "SBRI Healthcare is not a research grant and follows pre-procurement rules and does not constitute state aid." Its Phase 1 applicant guidance says successful applicants receive a Development Agreement, "which is subject to VAT". UKRI says that "Contracts for Innovation funding is never considered a subsidy under the Subsidy Control Act 2022".
An Innovate UK grant is different. The October 2025 Innovate UK grant terms and conditions refer throughout to the Subsidy Control Act 2022, and clause 16.5 says no subcontract or other agreement with a third party can breach it. For a grant, the subsidy rules shape how much of your costs can be funded. Our subsidy control explainer covers that, and our intervention rates article covers the resulting percentages.
Side-by-side comparison
Question | Innovate UK grant | SBRI contract |
|---|---|---|
Who defines the problem? | Innovate UK sets a competition scope, and you propose a project within it. | The public body defines a specific challenge. UKRI says the mechanism lets challenge owners "shape competitions". |
Share of costs funded | A proportion of eligible costs. You fund the rest. | Costs are priced as a supplier. SBRI Healthcare's Open Call 4 FAQ says no match funding is required for the Real World Implementation and Evaluation Fund. |
Profit | Not applicable: you claim eligible costs. | SBRI Healthcare guidance: costs "must reflect actual costs at a 'fair market value' and profit should not be included". |
Payment | Quarterly, in arrears, on a claim for costs incurred, invoiced and paid (Innovate UK terms, clause 9.3). | Set by the Development Agreement. SBRI Healthcare's guidance page does not state the payment schedule, so read the invitation to tender. |
VAT | Claims are for "net eligible costs" (Innovate UK terms, clause 9.3). | SBRI Healthcare: enter costs net of VAT, and 20% VAT may be added if applicable. |
IP | Owned by you (Innovate UK terms, clause 19.1). | Retained by the applicant, with usage rights for the funder (see below). |
Partners | Collaboration is common, and partners can be funded. | One contract with one lead. SBRI Healthcare treats other organisations as subcontractors. |
IP: kept by you, with strings you should read
Under Innovate UK's October 2025 terms (clause 19.1), any intellectual property rights developed during or as a result of the project are owned by you. Clause 17.3 adds that for five years after the project Innovate UK expects reasonable steps to exploit the results in the UK.
SBRI Healthcare's Open Call 4 FAQ says intellectual property rights are retained by the applicant, but "certain rights of usage may be applied by the funding authority including royalty-free, non-exclusive licence rights", along with a right to require licences to third parties at a fair market price. UKRI's Contracts for Innovation page says the challenge owner "retains free usage rights to foreground intellectual property".
So in both SBRI routes you keep ownership, but the buyer can use what you build. That matters if you plan to license the technology exclusively, or if an investor will ask about freedom to operate. The IP terms differ between competitions, so read the invitation to tender and the sample agreement before you commit. Do not rely on a general summary, including this one.
What changes in how you plan the project
- Scope comes from the buyer. A grant lets you shape the project to your roadmap within a scope. An SBRI contract asks you to solve the buyer's stated problem. If your technology only partly overlaps with the challenge, expect assessors to notice.
- Margins are not available during the project. Because profit is excluded, the contract funds your costs but does not build a surplus. Overheads are allowed in proportion to effort. SBRI Healthcare's guidance rules out full economic costing.
- Milestones carry weight. SBRI Healthcare's Phase 1 guidance asks for up to five key milestones with objective success criteria. An Innovate UK note for a 2024 SBRI competition (a competition-specific Q&A, so treat it as indicative) describes payment against delivery of milestones.
- Phases decide the size. SBRI Healthcare's Phase 1 guidance gives an upper limit of £100,000 excluding VAT and a maximum of six months, and says to check the brief for the current competition. Contracts for Innovation phases must involve at least two funded suppliers and fund at least 50% R&D activity (UKRI).
- Prerequisites are broader. SBRI Healthcare applications must show commitments on patient and public involvement, health inequalities and NHS net zero, which the funding panel considers.
A live example: NHS Cancer Programme Open Call 4
SBRI Healthcare's site shows the application portal opening on 14 October 2026. The Real World Implementation and Evaluation Fund is open to single organisations, requires an NHS partner in England and an independent evaluation partner, and does not require match funding. The Innovation Spread Fund is available only to Integrated Care Boards and Cancer Alliances, so a company would sit there as a vendor. Our Open Call 4 article covers eligibility in detail. Confirm dates and funding levels on SBRI Healthcare's pages, since they change.
When an SBRI contract is probably not for you
- Your project is driven by your own roadmap and the challenge only loosely overlaps with it.
- You need a funded consortium with several paid partners. An SBRI contract is with a lead supplier.
- You are pre-prototype and want to do open-ended research. SBRI Healthcare lists "costs to support basic research, development of research hypotheses, and experimental designs" as ineligible.
- You cannot work to a buyer's timetable and milestones.
It is a better fit when a named public body has the problem, you have a credible solution close to deployment, and a customer relationship with the NHS or another public buyer is part of the commercial plan. Having the NHS as a sponsor of the work may also help the later sales conversation, though that is our inference rather than anything the funders promise.
How GrantHero helps you decide
A grant is not the only public route, and a poor-fit application costs weeks. GrantHero's Discovery tier, which is free on the pricing page as of 2026-10-09, matches your project against funding competitions and runs eligibility fit checks, so you see which are worth your time before you write anything. If you go ahead, the paid Expert Support plan (listed at £1,300 plus a 3% success fee) combines platform drafting support with expert review. Experienced grant experts work alongside the platform, and we will say so if we think a competition is not right for you. Life sciences teams can see more on our healthcare page.
Checks before you commit
- Read the invitation to tender and sample agreement for IP, payment and termination terms.
- Price your costs net of VAT at fair market value, with no profit.
- Confirm that the buyer's problem is one your technology solves today, not after more research.
- Have your legal adviser review the agreement before signing.
Frequently Asked Questions
Is SBRI a grant?
No. SBRI Healthcare states that it is "not a research grant" and follows pre-procurement rules. Successful applicants receive a Development Agreement, which is a contract for development work (SBRI Healthcare, checked 2026-10-09).
Do I keep the IP from an SBRI project?
In the sources we checked, yes: SBRI Healthcare says IP rights are retained by the applicant, and UKRI describes Contracts for Innovation as a way to create and retain IP. The funder or challenge owner keeps usage rights, including royalty-free licence rights, so read the terms of the specific competition.
Is SBRI funding 100% of project costs?
SBRI Healthcare says no match funding is required for the Real World Implementation and Evaluation Fund in Open Call 4. UKRI's Contracts for Innovation page does not state a funding percentage, so check each competition brief.
Does the Subsidy Control Act apply to SBRI?
UKRI states that Contracts for Innovation funding is never considered a subsidy under the Subsidy Control Act 2022, and SBRI Healthcare says its awards do not constitute state aid. Innovate UK grants are different, and their terms refer to the Act.
Can an SBRI contract include profit?
SBRI Healthcare's Phase 1 guidance says costs must reflect fair market value and profit should not be included. Check the brief for any other competition.