The Pentagon announced its first direct lending program on Monday, offering nearly $1 billion in loans to U.S. companies developing critical defense technologies. The Defense Department’s Office of Strategic Capital (OSC) issued a Notice of Funding Availability (NOFA), marking the start of the application process for private firms looking to scale production of components essential to national security.
The OSC’s loan program will provide loans ranging from $10 million to $150 million to U.S.-based companies in 31 technology areas identified as critical in the 2024 National Defense Authorization Act. These areas include microelectronics fabrication, space launch, quantum sensing, cybersecurity, and edge computing. The funds will support construction, modernization, and expansion of facilities to strengthen the U.S. defense industrial base.
“DOD now has proven financial tools to enable millions of dollars of investment in national security priorities at limited cost to the department and the taxpayer,” said OSC Director Jason Rathje. He added that the program aims to help companies attract additional investment and unlock growth opportunities to meet defense production demands.
To qualify, applicants must meet eligibility requirements, ensuring their projects are economically viable and ready for rapid commercialization. Initial applications will be accepted from January 2 to February 3, 2025, with funding available through September 2026.
The program is part of a broader Pentagon effort to secure a resilient U.S. industrial base, addressing supply chain challenges in defense production. OSC aims to align government and private-sector investments in critical technologies to maintain America’s technological edge and deter companies from seeking funding from strategic competitors like China.
Established in December 2022, OSC received lending authority through the 2024 National Defense Authorization Act, with $984 million allocated for loans. The initiative is designed to incentivize private capital investment in defense technologies that may otherwise struggle to secure funding due to high costs or long repayment timelines.
Deputy Secretary of Defense Kathleen Hicks highlighted the program’s significance, stating, “This demonstrates that DOD is dedicated to using every tool in our toolbox to secure America’s and our military’s enduring technological advantage.”
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