Not a US Citizen? You May Still Have a Path to US Government Funding

Amisha Prakash · Proposal Arc LLC · Oct 14, 2026

I talk to a lot of founders whose companies are based outside the U.S., or who are building here but aren’t U.S. citizens yet. Sooner or later, almost all of them ask me the same question: “Do we qualify for U.S. government funding?”

My honest answer is usually a good news / bad news conversation. I like to get the bad news out of the way first (rip the Band-Aid off), so let’s start there.

The bad news: SBIR/STTR won’t work (yet)

SBIR and STTR are the go-to programs for early-stage, non-dilutive R&D funding, together more than $4 billion a year. They are also built for U.S.-owned small businesses, and the rules are strict:

• Ownership: The company must be at least 51% owned and controlled by U.S. citizens or permanent residents (or by small businesses that are themselves majority owned by them).
• Location: The lead applicant must be a for-profit with a place of business in the U.S., and the the work must be performed in the U.S.
• The PI: The Principal Investigator must be more than 50% employed by your company for the life of the project.
• The team: Everyone budgeted on the project should hold US Citizenship or permanent residence status. Visa holders can qualify, but many defense topics involve export-controlled technology, and those often require U.S. persons.

The 2026 reauthorization didn’t loosen anything. SBIR/STTR came back on April 13, 2026 after a six-month lapse, and the new law added more foreign-risk screening. Agencies now look harder at ownership, investors, partnerships and IP.

So for many founders, getting SBIR-eligible means a major change to how the business is formed (for example, a U.S. co-founder holding majority ownership and control), or waiting for their legal status to change, which can take years. Both are big decisions and are often not feasible for a business.

Now for the good news: SBIR is not the only door.

Good news #1: State programs care more about where you are than who you are

Federal small business programs ask who owns you. Many state programs ask a different question: Are you here, hiring here, and doing the work here? States fund these programs for economic development, so eligibility usually centers on location and jobs.

A few examples:

• Texas Space Commission (SEARF). Texas set aside $150 million for space and aeronautics grants. Eligibility turns on an “established presence” in Texas, like employees in the state and a fixed place of business. The portal is closed right now and most of the money has been awarded, so watch for the next round.
• Ohio Third Frontier (TVSF). The Phase 1 & 2 Startup Funds offer funding for small business funding with no cost share. It’s for Ohio startups commercializing technology licensed from Ohio research institutions or non-profits.
• California SEED. These micro-grants are written specifically for immigrant entrepreneurs, including people who aren’t citizens or permanent residents. It’s aimed at small businesses meeting a community need, not hard tech, but it shows state money can be designed with non-citizens in mind.
• California IBank Small Business Loan Guarantee. This is the state-level answer to the SBA loan problem. IBank guarantees loans so lenders can say yes to California small businesses, and its FAQ says it does not consider citizenship or immigration status. The borrower has to be a business entity, not an individual.

One tip: read the eligibility section line by line. Every program is different, and some require an in-state entity or in-state headcount by a certain date. Your state’s small business office is a good place to start looking. In California, CalOSBA’s funding page lists state and federal grant and loan programs in one place.

Good news #2: Accelerators that welcome international founders

Accelerators are another strong option, and the best ones for this situation are often backed by state economic development money. Each has its own rules, and many take equity, but citizenship usually isn’t the gate.

• GENIUS NY (Syracuse). Funded by Empire State Development, it focuses on uncrewed systems, robotics and advanced air mobility. It awards a $1 million grand prize and four $500,000 investments, and its FAQ says plainly that you don’t need to be a U.S. citizen to apply. The trade-offs: the investment is a SAFE, and two members of your leadership team need to be based in Syracuse for at least 12 months. This year’s applicants came from every continent except Antarctica.
• 43North (Buffalo). A startup competition open to entrepreneurs worldwide. Winners relocate their CEO and half their staff to Buffalo for at least 12 months, and the investment comes in exchange for equity.
• NATO DIANA. If your company is based in a NATO country, this one’s for you. Selected companies get €100,000 in contractual funding plus access to 200+ test centres and military end users. The 2027 call closed in July, so watch for the next one next summer.

Yes, some of these mean giving up equity and spending a year in a new city, but for the right company, this is money, a network and a soft landing in the U.S. all at once.

Good news #3: EdTech founders, follow the ESA money

If you’re building an education product, there’s a path that doesn’t involve a grant application at all. Education Savings Accounts (ESAs) put state education dollars into family-managed accounts, and families spend those dollars with approved providers. Instead of applying for funding, you become an approved vendor and families buy your product or service.

The scale is real. In Alabama alone, more than 34,000 students were approved for 2026–27, representing more than $174 million in accounts. Vendor approval rules are set state by state, so check each program’s provider requirements.

I walk through how ESAs work and how to become an approved provider in my other blog post here: https://proposalarc.com/2026/08/13/government-funding-isnt-just-for-big-tech-a-parent-and-providers-guide-to-education-savings-accounts/

Good news #4: Federal doors without the 51% rule

SBIR’s ownership rule is specific to SBIR. Plenty of federal money flows through other channels that don’t ask who owns you, or are even built for foreign companies.

• Defense Innovation Unit (DIU). DIU buys commercial technology through Commercial Solutions Openings, and any commercial entity can compete. It wants working products or near-commercial prototypes that can be adapted to a defense problem within 12 to 24 months. Expect questions about foreign investors on your cap table.
• Foreign Comparative Testing (FCT). This DoD program exists specifically to test mature technology from allied countries. A DoD organization sponsors your product, and the program funds the testing, typically $600,000 to $1 million per project. Best fit: products that are already in production.
• Selling to the government directly. Yes a purchasing contract is government funding too! Any company, foreign or domestic, starts with SAM.gov registration, and foreign firms can hold GSA Schedules. Watch the Trade Agreements Act: products generally must be made in the U.S. or a designated country.

Good news #5: Binational programs built for cross-border teams

The U.S. has funding partnerships with a number of countries, and here your international ties are an asset instead of a hurdle. Most work the same way: a company from each country teams up on a joint project, and the governments share the cost.

• Israel: BIRD Foundation. Pairs an unrelated U.S. company and Israeli company on joint R&D, funding up to 50% of costs and up to $1.5 million. It takes no equity or IP, and you only repay through royalties if the product sells. It also runs dedicated programs for energy, homeland security and cybersecurity.
• India: USISTEF. The U.S.-India Science & Technology Endowment Fund backs joint U.S.-India entrepreneurial projects with at least one partner from each country. Grants can be for up to Rs. 2.50 crores or approximately $400,000.
• UK and Australia: AUKUS Innovation Challenges. DIU runs these with Australia’s and the UK’s defense innovation offices. The first one, on electronic warfare, drew 173 companies from the three countries. This is not open currently but worth watching.
• NATO countries: DIANA. Covered above, it’s open to dual-use companies across all NATO member states.

Good news #6: Help that’s easy to overlook

• The R&D tax credit. If you have a U.S. entity doing research in the U.S., this credit is worth a close look. Qualified small businesses can apply up to $500,000 a year against payroll taxes, so it helps even before you’re profitable. The 2025 tax law also restored immediate expensing for domestic R&D, while foreign R&D still amortizes over 15 years. That’s one more reason to do the work stateside. (Talk to a tax professional about your situation.)
• Global Entrepreneur in Residence (GEIR) programs. If the real blocker is immigration status, these programs use universities’ cap-exempt H-1B status to help international founders build here. New York is funding new ones, like a healthtech-focused GEIR at Weill Cornell, and Empire State Development released a new round of its Global Entrepreneurs Program for host institutions this month.
• Free advising. Not money, but it saves money. SBA-funded Small Business Development Centers, run with universities and state governments, offer free help with funding, planning and growth strategy.

So what do I tell founders?

1. Start with what you qualify for today, not what you wish you qualified for.
2. Decide where you’re going to build. State money follows jobs, so the state you choose matters.
3. Stack your options. A state grant, an accelerator, the R&D credit and a first government sale can add up to a real runway.

The bad news is real, but it’s rarely the end of the conversation. If you’re trying to figure out which of these doors fits your company, Proposal Arc is here to help. Reach out to me at amisha@proposalarc.com, and let’s talk it through.

This post is general information, not legal, tax or immigration advice. Programs and deadlines change, so always check the current solicitation.