The small business needs to document that it has the necessary capital, or show that outside private funding is available and continently committed. Only if you won a previous Phase 1 award from the same agency for the same solicitation topic. Federal agencies fund Phase 1 feasibility studies to evaluate potential applications - then only fund reasonable prototypes, if any at all, that solve their research problem. Awards are made in the form of grants or contracts. The small business suffers no equity loss, awards do not require repayment, and the small business grows the business using awards.
Grants represent a project support means, and contracts represent a procurement process.
Both require specific deliverables by the small business with respect to the solicitation and the original proposal. It is a contract or grant entered into between the sponsoring federal agency and a small business concern for the performance of experimental, developmental, or research work. Small businesses selected as awardees in the Phase 1 and 2 competition processes must complete negotiations for the specified work prior to actual receipt of funding. The funding agreements clarify expectations, define milestones, and allow both parties to insure optimized outcomes. Award funding is not provided or guaranteed until a funding agreement has been completed.