The Pentagon and the Small Business Administration signed a new agreement Monday to expand access to strategic capital for small businesses across the U.S. defense industrial base. The arrangement is designed to support companies involved in supplying, manufacturing, and developing goods needed for national security.

The agreement builds on the Smaller War Plants Commission, which was announced in late August. The commission will help suppliers, innovators and manufacturers obtain additional capital to strengthen domestic supply chains and increase production.

The new agreement puts particular attention on the smaller businesses that provide materials, components and technology used by American warfighters. It connects the Pentagon’s efforts to identify businesses with financing needs to the SBA’s capital programs and lender networks.

NEW: @SBA_Kelly and @SecWar have signed an MOA to supercharge strategic investment in small businesses across America’s defense industrial base.

This new agreement builds on the SBA and @DeptofWar’s Smaller War Plants Commission, designed to help defense-critical suppliers grow production and strengthen domestic supply chains. Battle readiness runs through Main Street, and the Trump Administration is proud to end the era of foreign dependence by empowering the small manufacturers that make up 70% of our defense industrial base. https://t.co/1OTlcSVYlB — SBA (@SBAgov) October 12, 2026

War Secretary Pete Hegseth said the commission would direct strategic capital toward the companies responsible for crucial parts of the nation’s military supply network.

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“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,” Hegseth said in a statement. “Together, the Department of War and SBA are restoring the industrial dominance that underwrites America’s military advantage and securing peace through strength.”

Under the agreement, the Pentagon’s Economic Defense Unit will coordinate with the SBA Office of Investment and Innovation and Office of Capital Access. That alignment is intended to connect companies identified by the Pentagon with financing resources available through the SBA.

The Economic Defense Unit will identify firms with capital needs through its Business Operators for National Defense efforts. It will then refer potential companies to the SBA for help connecting with funding sources.

The SBA will use its existing lender networks to connect those businesses with SBA-backed funds. The process gives companies involved in the defense industrial base a route toward capital through financing channels already overseen by the agency.

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The agreement also permits the SBA to back investments by the Economic Defense Unit in small and medium-sized businesses. Those investments will focus on businesses working to restore or expand industrial capacity considered necessary for national security.

The areas covered by the arrangement include essential materials, munitions, and the mining of strategic and critical metals and minerals. These sectors were specifically identified as part of the effort to strengthen production and domestic supply chains.

SBA Administrator Kelly Loeffler said the federal government had committed to supporting the smaller manufacturers that make up a substantial share of the country’s defense industrial base.

“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% of America’s defense industrial base,” Loeffler said.

According to Loeffler, small manufacturers represent 70% of the U.S. defense industrial base. That figure places those businesses at the center of the agreement’s effort to expand access to capital and support increased industrial capacity.

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Today, SBA launched https://t.co/ULOyNwg2fm in collaboration with @DeptofWar—the new digital home of the Smaller War Plants Commission and the premier resource hub for small defense firms ready to expand production. From capital to contracting, the Trump Administration is backing the businesses that deliver for our warfighters - and rebuilding the industrial might behind American military dominance. — SBA (@SBAgov) October 12, 2026

The SBA oversees close to $500 billion in its small business portfolio. The agency’s role under the agreement will draw upon that portfolio, its lender networks and its offices focused on investment, innovation and access to capital.

When the Smaller War Plants Commission was announced in August, it was presented as an equivalent to the Smaller War Plants Corporation. Congress established that corporation in the 1940s to help smaller businesses build war supplies during World War II.

The earlier corporation secured contracts, made loans, and provided technical assistance to smaller businesses. The newly announced agreement similarly centers on helping smaller firms obtain capital and participate in production connected to national security needs.

Through the agreement, the Pentagon will identify businesses and investment needs while the SBA brings its financing networks and capital programs to the effort. The arrangement targets suppliers, manufacturers, and innovators involved in the materials, technologies, and production capacity relied upon by American warfighters.

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