The U.S. Pentagon, in collaboration with the Small Business Administration (SBA), is set to inject billions of dollars into small businesses after all new investor licensing from the SBA, especially under the Small Business Investment Company Critical Technologies Initiative (SBICCT). This exciting move further seeks to strengthen national security, which is achieved in tandem with the triggering of economic growth by injecting more money privately in small, innovative entities.
As the SBICCT program, the partnership between DoD-SBA seeks to scale critical technologies that are critical to the competitive edge of U.S. defense and economic competitiveness. By combining the technical expertise of the DoD with SBA’s proven framework for the Small Business Investment Company program, this brings these elements together in an integrated way to meet this critical need. Simply by offering federally guaranteed loans to private investors, it will open doors to increased funding for small businesses developing those key technologies: advanced manufacturing, cybersecurity, and artificial intelligence.
This is when small businesses are increasingly being seen as an integral component of both the innovation of the economy and national defense. Small businesses currently constitute 73% of the U.S. defense industrial base, with more than 25% of annual contracts handed out by the Pentagon to these enterprises. The Pentagon views these enterprises as the future means of strengthening supply chains and promoting competitiveness in the defense market.
Finally, broader reforms of the SBIC program by the Biden administration constitute another step in the right direction for this initiative. Modernization reforms that in recent times have resulted in developing the new “Accrual Debenture” financial tool place these funds closer to matching the often longer timelines involved in technology development. These capital gap-filling efforts, therefore, seek to bring much-needed finance to areas of this economy that are being skirted and potentially left behind—particularly for disadvantaged small businesses and critical industries.
With such high emphasis from the Pentagon on having an enduring defense industrial base, the public-private partnership unleashed through the SBICCT is likely to see important investments into small businesses and thus generate innovation, jobs, and further add strength to U.S. national security.
It is a significant opportunity for the small business owners and the investors, with such great collaboration between the public and the private sector responding to the national priorities with economic growth support.
