WASHINGTON, D.C. — The U.S. Small Business Administration and Department of War are creating a federal commission to expand financing and contracting opportunities for small defense manufacturers, targeting production bottlenecks and supply-chain vulnerabilities across industries ranging from munitions and drones to microelectronics and shipbuilding.
The Smaller War Plants Commission was established through a memorandum of understanding between the agencies and will serve as a coordinating body for federal efforts to increase domestic defense-production capacity.
Small businesses account for more than 70% of the U.S. defense industrial base, according to the agencies. The initiative seeks to give those suppliers greater access to capital, federal contracts and technical assistance while identifying regulatory and operational barriers that constrain production.
The commission will develop an inventory of small-business manufacturing capacity through the Civil Reserve Manufacturing Network, identifying suppliers, production capabilities and gaps considered critical to national defense.
Priority sectors are expected to include munitions and components, drones and one-way attack systems, microelectronics, strategic and critical minerals, shipbuilding and repair components, sensors, batteries, castings and forgings, and textiles.
The SBA and War Department also plan to identify defense-critical industries for increased access to existing SBA lending, investment, contracting and technical-assistance programs, subject to applicable eligibility requirements.
One financing mechanism will be the SBA’s Made in America Loan Guarantee through its International Trade Loan program. Eligible manufacturers can receive a federal guarantee covering as much as 90% of a qualifying loan, compared with a standard guarantee of as much as 75% under the agency’s flagship 7(a) program.
The financing can be used for equipment, facility modernization, inventory, acquisitions and expansion of domestic production capacity.
The agencies plan to combine those loan guarantees with investment and contracting opportunities for selected manufacturers, an approach intended to provide companies with both financing for expansion and potential demand for increased production.
The commission will also deploy joint teams to identify regulations and operational requirements that delay production or make it more difficult for smaller manufacturers to expand.
SBA Administrator Kelly Loeffler tied the initiative to reducing U.S. dependence on foreign supply chains, arguing that decades of manufacturing migration have weakened domestic capacity supporting the military.
The program will help small companies “expand, innovate, and hire to deliver world-class, Made in America capabilities to our warfighters,” Loeffler said.
War Secretary Pete Hegseth said the government intends to direct capital, private investment and contracting opportunities toward companies producing ships, munitions, electronics and other military components.
The commission is modeled on the Smaller War Plants Corporation, a World War II-era organization established to help small companies obtain financing, federal contracts and technical assistance for military production. Its authorities ultimately passed through successor organizations before reaching the SBA in 1953.
Under the new framework, the agencies will provide the White House with regular reports covering industrial capacity, supply-chain readiness, federal investment and progress under the initiative.
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