WASHINGTON — Today, the U.S. Small Business Administration (SBA) and the U.S. Department of War (DoW) announced a new memorandum of agreement building on the Smaller War Plants Commission (SWPC) to expand access to strategic capital for small businesses in the defense industrial base. By aligning DoW’s strategic-investment capabilities through its Economic Defense Unit (EDU) with SBA’s lending and investment expertise, the partnership will help defense-critical manufacturers, suppliers, and innovators access more capital to grow production, strengthen domestic supply chains, and deliver for America’s warfighters. The agreement advances the SWPC mission to identify, support, and scale the small businesses essential to America’s military strength.
“The American military is already the strongest fighting force the world has ever known, and President Trump has made clear that we will keep it that way—not by accepting a hollowed-out industrial base, but by building an Arsenal of Freedom that can outproduce, out-innovate, and outlast any adversary,” said Secretary of War Pete Hegseth. “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. Together, the Department of War and SBA are restoring the industrial dominance that underwrites America’s military advantage and securing peace through strength.”
“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,” said SBA Administrator Kelly Loeffler. “Together with the Department of War, we are delivering on that promise by supercharging the flow of strategic capital to American defense suppliers to accelerate growth, innovation, and asymmetric advantage for our warfighters. Thanks to President Trump, we are ending the era of foreign dependence and rebuilding the industrial strength that supports the Arsenal of Freedom and keeps America free and strong.”
Last month, the SBA and DoW established the SWPC as a historic, whole-of-government effort to expand the domestic capacity that supports the world’s strongest military. The Commission draws its name from the World War II-era Smaller War Plants Corporation and the Small Defense Plants Administration, SBA predecessor agencies that connected small manufacturers with the financing, contracting tools, and technical support they needed to scale their critical role in building the Arsenal of Freedom.
Building on the SWPC framework, the agreement creates an integrated capital pathway for qualified small businesses that support America’s defense industrial base by aligning the DoW Economic Defense Unit (EDU) with the SBA Office of Investment and Innovation (OII) and Office of Capital Access. EDU will identify firms with financing needs through its Business Operators for National Defense (BOND) efforts and refer potential loan candidates to SBA, which will leverage its existing 7(a) and 504 lender networks to help connect eligible firms with SBA-backed capital.
The agreement also enables SBA to support EDU’s execution of Department of War-funded redeemable preferred-equity investments in small and medium-sized businesses that create, expand, or restore industrial capacity critical to national security—including munitions, platforms, technological processes, essential materials, and the exploration, development, and mining of strategic and critical metals and minerals. SBA will provide due diligence, underwriting, transaction support, and portfolio-management assistance, while EDU retains responsibility and ultimate decision-making authority for its investments.
Through the new MOA, the agencies will:
- Identify defense-critical businesses: Through the Department of War’s Business Operators for National Defense efforts, EDU will identify small businesses engaged in defense-industrial-base activities that need financing and refer prospective loan candidates to SBA.
- Connect firms to SBA-backed capital: SBA will leverage its existing capital networks to support the financing needs of eligible businesses referred by EDU, consistent with applicable program requirements.
- Deploy strategic preferred equity: EDU may originate and source Department of War-funded redeemable preferred-equity investments for businesses that create, expand, or restore industrial capacity critical to national security.
- Apply SBA investment expertise: SBA will support potential equity investments through legally authorized due diligence, underwriting, investment structuring, transaction documentation, monitoring, and management support—helping ensure investments are disciplined, mission-focused, and positioned to strengthen the defense industrial base.
- Drive results and accountability: The agencies will establish joint investment guidance, conduct quarterly portfolio reviews and resource planning, and collaborate on annual reporting on investment performance and exits.
Under President Trump’s leadership, the SBA and DoW are taking concrete action to expand the domestic industrial capacity that strengthens America’s supply chains, equips our warfighters, and sustains the world’s strongest military. Through the Smaller War Plants Commission, qualified small businesses can connect with federal resources designed to help them grow, innovate, and support America’s defense industrial base. To learn more about available resources, visit www.sba.gov/swpc.
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About the U.S. Small Business Administration
The U.S. Small Business Administration helps power the American dream of entrepreneurship. As the leading voice for small businesses within the federal government, the SBA empowers job creators with the resources and support they need to start, grow, and expand their businesses or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.