Pentagon announces $984M in loans available for U.S. firms developing ‘critical’ tech

The Department of Defense is set to issue nearly a billion dollars in loans to private companies to scale the production of technologies the department has deemed critical.

The Office of Strategic Capital announced the notice of funding availability Monday, laying out eligibility criteria and an application process for industrial base companies interested in applying for a piece of the $984 million appropriated for loans. The investments could range from $10 million to $150 million, according to the notice, published in the Federal Register.

Specifically, the program is looking to invest in “the construction, expansion, or modernization of commercial equipment in the United States” that will in some way support the development of 31 critical technologies laid out in the 2024 National Defense Authorization Act. The list of technologies includes autonomous mobile robots, cybersecurity, data fabric, a variety of microelectronics applications, mesh networks, quantum computing and more.

The notice explains that OSC “aims to build on successful examples of administering efficient, cost-effective financial tools to advance national security priorities. By aligning government and private sector incentives around technologies vital to national security and economic interests, DoD aims to use the power of the market and economic competition to attract the capital required for critical technology investment.”

“With this Notice of Funding Availability, OSC establishes itself as a credible lending partner for U.S.-based companies that manufacture and produce critical technology components,” Deputy Secretary of Defense Kathleen Hicks said in a prepared statement. “This demonstrates that DOD is dedicated to using every tool in our toolbox to secure America’s and our military’s enduring technological advantage.”

Summarizing the program’s eligibility and selection criteria, the notice says investment decisions will be based on “compliance with statute, the extent to which an investment supports U.S. national security or economic interests, the impact that direct loans would have on the project or transaction, and the creditworthiness of the investment, among other factors OSC will evaluate in the application process.”

Interested parties — which include individuals, companies, partnerships, trusts, governmental entities and more — are invited to submit the first part of the application for loans by Jan. 2, 2025. The Office of Strategic Capital will then invite select entities that prove eligibility and project or transaction suitability to submit a second application. Funding from the appropriations will remain available through Sept. 26, 2026.

The notice of funding availability marks the first time the Office of Strategic Capital has set out to issue private investments since its establishment in December 2022. Congress, in December 2023, officially enacted the office with the signing of the 2024 NDAA into law. Appropriators then gave OSC its first funding for loans this past March.

While a key function of the office is to support the commercialization and scaling of technologies that could benefit defense and national security, it is also strategically meant to deter innovative American companies from seeking capital that may support the work of the United States’ strategic competitors.

“Through these congressional authorities and appropriations, the 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,” OSC Director Jason Rathje said Monday. “OSC’s implementation of its congressional mandate will ultimately increase both public and private investment to secure a robust and resilient U.S. industrial base.”