Pentagon, SBA sign agreement expanding capital access for defense industrial base

The Pentagon and the Small Business Administration (SBA) signed a new agreement on Monday that will expand access to strategic capital for small businesses in the U.S. defense industrial base.

The agreement, first reported by The Hill, is building on the Smaller War Plants Commission (SWPC), which was announced in late August , and will aid suppliers, innovators and manufacturers in gaining access to more capital to strengthen domestic supply chains and expand production.

“The Smaller War Plants Commission will now be able to surge strategic capital to the small businesses that build the ships, munitions, microelectronics, materials, components, and technologies our warfighters rely on,” Defense Secretary Pete Hegseth said in a statement. “Together, the Department of War and SBA are restoring the industrial dominance that underwrites America’s military advantage and securing peace through strength.”

The agreement aligns the Pentagon’s Economic Defense Unit (EDU) with the SBA Office of Investment and Innovation and Office of Capital Access. The EDU will identify firms with financing needs through its Business Operators for National Defense efforts and refer potential companies to SBA, which will leverage its existing lender networks to help connect those firms with SBA-backed funds.

The agreement also will allow SBA to back EDU’s investments in small and medium-sized businesses that work on restoring and expanding the industrial capacity necessary for national security, including essential materials, mining of strategic and critical metals and minerals and munitions.

“When we established the Smaller War Plants Commission, we committed to putting the full weight of the federal government behind the small manufacturers that comprise 70 percent of America’s defense industrial base,” SBA Administrator Kelly Loeffler said.

The SWPC was billed in August as an equivalent to the Smaller War Plants Corporation, which was established by Congress in the 1940s to help smaller businesses in building war supplies during World War II. The commission secured contracts, made loans and offered technical assistance.

The SBA oversees close to $500 billion in its small business portfolio and the small manufacturers comprise 70 percent of the U.S. defense industrial base, according to Loeffler.