Shaking Up Federal Grants: What to Expect Under the Trump Administration

Partnerships between the government and private companies are key drivers of innovation. A study of U.S. patents from 1982 to 2012 found collaborations with the federal government produce more “disruptive” inventions than when private companies invent on their own. Emerging and established companies may be able to better innovate using government collaboration.

The availability for government collaboration may be reduced because of recent changes enacted by the Trump Administration including an across-the-board reduction in federal grants. 

Collaboration in Action: Recent Funding Developments

On December 19, 2024, the U.S. Department of Commerce’s Economic Development Administration (EDA) received reauthorization by Congress to continue promoting American innovation and competitiveness by providing grants to communities across the country. On January 14, 2025, the EDA announced plans to award approximately $210 million in implementation grants, ranging from $22 million to $48 million, to six Tech Hub Designees as part of a new round of funding that received bipartisan support from Congress. These plans build on a July 2024 announcement of $504 million for twelve other Tech Hubs across the United States.

Tech Hub Designees are regions that have been formally designated as a leading center for technology and innovation. Each region is eligible to receive a portion of the allotted implementation grants to drive economic growth. However, it is unclear at this time how the new Secretary of Commerce’s priorities will impact grant disbursement to these designated regions.

A significant source of federal funding for startups is the Small Business Innovation Research (SBIR) program, a public-private partnership that funds research and development by small businesses. On January 27, 2025, President Trump’s Office of Management and Budget (OMB) issued a memo directing a temporary pause on all activities related to the disbursement of federal financial assistance. This pause was to allow the Trump Administration to ensure that funding aligns with federal priorities.

In response to concerns raised by the temporary pause, a federal court issued a temporary restraining order (TRO) directing federal agencies not to “pause, freeze, impede, block, cancel, or terminate” any awards or obligations on the basis of the OMB memo or President Trump’s executive orders.

Despite a formal recission of the OMB memo on January 29, 2025, confusion remains on whether the funding pause is still in effect through other means, such as executive orders. Recent challenges of the TRO by the Trump Administration have been unsuccessful. However, the ability to rely on federal government grants as a source of capital and support remains uncertain. For many startups and small companies, these grants are a necessary lifeline.

Next Steps: Staying Informed and Strategic

The landscape continues to evolve. It is vital for startups, universities, and small‑ to mid‑sized companies who use grants to stay informed about funding opportunities and incorporate uncertainty into your strategic planning.

At least for the time being, all SBIR grant proposals can still be submitted through Research.gov, meaning private companies seeking federal grants for technological innovation should continue to submit proposals by stated deadlines and maintain compliance with standard grant terms and conditions. Staying informed and building additional time into planning schedules is strongly advised since many agencies are experiencing operational delays during this period of administrative review.

Woods Rogers is monitoring the changes to federal government funding and will keep you updated on developments. If you have questions about how we can favorably position your company for raising capital, from private raises to submitting curated grant proposals, please contact the authors of this article, your Woods Rogers attorney, or a member of the Emerging Growth team. 

The authors thank incoming Woods Rogers Associate Madyson Kent for her co-authorship, research, and insightful contributions to this article. Madyson is pursuing her JD at Washington and Lee University School of Law.